The number of homes on the market in Sioux Falls is shrinking.
Inventory levels dropped by nearly 16 percent last month. And if the trend continues, realtors are predicting a housing shortage in the spring.
Builder Chad Javers is proud of his Parade of Homes house that sold just one week after being finished.
After surviving the recession, Javers is happy to be busy again.
“You drive down every street and it seems like every house has either a sale pending sign on all the new construction, or they're pre-sold homes out there,” Javers said. “We're looking at starting several more specs just to be ready for spring because spring is going to be really busy.”
Javers says he can get the loans to build spec house, despite tighter lending restrictions because he has an established relationship with his bank. But the spec homes being built may not be enough.
“It's easier to get a loan for a presold home because you have a buyer lined up and we have a lot of presold homes going on and we have a lot going ourselves. Those loans are easier to do,” Javers said. “It's a spec home loan that's a lot harder to get. That's where we're going to see a shortage of homes where there are not going to be as many spec homes available as far as new construction.”
“The spec houses, there are probably going to be more of them out there in the spring but by contrast it is not going to make up for the shortage I think is going to happen in the spring," Realtor Don Welker said.
Welker says the anticipated housing shortage may motivate owners to put their homes up for sale, but they still have to have someplace to go.
“I think it's going to be a lot more difficult come spring. With the interest rates as low as they are, I think they are going to continue to be low for a little while and the more people are going to come into the market; especially with the way Sioux Falls is growing, I think it's going to shrink it up even more," Welker said.
If the inventory of homes on the market doesn't meet demand, you could expect to see bidding wars on houses. That’s something we haven't seen since before the recession hit.