Krista Pinner of Springfield began house hunting in June of last year. She was looking for somewhere to accommodate her young family. Her previous experience in selling a house had taken the better part of a year. But this time around, things were completely different when she and her husband listed their home for sale last summer.
“It sold within 18 hours, sight unseen," Pinner says. The offer came in from a couple that lives out of state and hadn’t event sent someone to see it.”
Because Pinner hadn’t yet found another house to move into, the family lived in a rental home, hoping house prices would drop in the coming year. But instead, the housing market continued its aggressive tendency. When Pinner noticed a nearby house for sale a few months later, she was shocked to find how competitive the offers were.
“We saw the sign go up and called our realtor and got an appointment for the next morning," she says. "When we went in, there were four other couples there, and there had already been three offers.”
Despite offering $5,000 over the asking price of the house, Pinner and her husband lost the bid. According to statistics from Missouri Realtors, in April of this year, the average house in the state sold for around $254,000. That’s up 21% from the same time last year.
Some market watchers are a bit nervous right now because home prices also spiked right before the bottom fell out of the housing market in 2008. But Bud Jones, president of the Greater Springfield Board of Realtors, says he thinks the current situation is more sustainable than the housing bubble that caused the Great Recession.
“We’ve got good interest rates," Jones tells KSMU. "We’ve got a lot of people willing to buy. And even though home prices went up, obviously, it’s ok. It seems like a very palatable increase in prices. As much as they are higher, appraisals are staying up and it feels a little less like a house of cards than maybe in 2008 might have felt.”
Jones said he was familiar with one home in a Springfield area neighborhood that had 42 offers on it in 24 hours.
Still, the increased demand comes with its own challenges for the housing industry. Steve Mirowski, owner of Mirowski Inspections, says he’s had trouble finding qualified inspectors to hire, meaning he simply can’t keep up with the demand.
“I’ve been constrained by my supply for the last year," Mirowski says. "If I had had two more inspectors the last twelve months, I could have kept them busy.”
Mirowski says often in bidding wars, buyers skip getting a home inspection in order to win the bid, which is exactly what happened when the Pinners sold their home last year. Mirowski says this puts homebuyers at risk for missing serious problems that they then have to repair.
For the Pinners though, there were so few houses available that they didn’t even make it to the point of weighing whether to forego an inspection. Finally, the family bought a home in January that needed a bathroom added and other major work done.
“I wanted to buy a house that didn’t have to have constant upkeep or need any renovations. And I ended up buying a house that needed so many renovations, thousands of dollars’ worth of renovations,” Pinner says.
After not being able to find a contractor for the renovations, the Pinners decided to make the changes themselves. But here they faced another problem: the price of building materials had skyrocketed. And that increase in cost of materials has had an effect on renovations and building new homes.
Mike Cronkhite, owner of homebuilding company Cronkhite Homes, says labor has been steady for his business, but the COVID-19 pandemic caused shortages which raised the cost of building a house.
“There’s been a few shortage issues, but the main thing that is the most significant driver of costs to build these days is lumber,” Cronkhite tells KSMU.
According to the National Association of Homebuilders, the cost of lumber is up 300% compared to last year. Nationally, this has caused a new home to cost $36,000 more than before the shortage. According to NPR, during the pandemic, a boom in DIY home improvement and a cut in lumber mill production are two factors driving the shortage of lumber and other materials.
Cronkhite says those shortages, combined with an unusually wet spring in the Ozarks, have increased the time it takes to build a home. And that’s squeezing the housing market even further.
Without contractors available to help with renovations and building materials more expensive, Pinner says the family adjusted their expectations, and won’t be renovating until costs go back down.
