Ted Bergstrom

February 22, 2020

Latest housing report also shows falling inventory and rising prices

According to the latest housing report from the Minneapolis Area REALTORS® and the Saint Paul Association of REALTORS®, Twin Cities residential real estate started 2020 on solid but still uneven footing. Buyers were eager to ignite the spring market early, spurred by incredibly low mortgage rates and favorable weather, especially compared to last year. Tempering the market are falling inventory and rising prices.

“Buyers were again spoiled by rates that no one expected would be this low,” said Linda Rogers, President of Minneapolis Area REALTORS®. “That’s fueled more sales activity but we’re still missing the inventory piece.”

Sellers listed fewer homes for sale while buyers signed more purchase agreements and closed more deals. As a result, the number of homes for sale was almost 15 percent lower than last January. The supply squeeze wasn’t felt evenly across price points, though. While inventory of homes priced below $250,000 fell, the number of listings priced between $250,000 and $500,000 as well as $500,000 to $1,000,000 increased last month.

“The year is off to a solid start and metro area communities each have a unique story to tell when it comes to housing availability and price,” said Patrick Ruble, President of St. Paul Area Association of REALTORS®.

Some of the most competitive markets experiencing strong price growth are those with relatively higher levels of affordable or entry-level homes, such as Fridley, Vadnais Heights, Richfield, Brooklyn Center and Bloomington. That’s where multiple offers and homes selling for over list price are more common. Both millennial first-time buyers and downsizing empty nesters are competing over this limited supply of affordable homes close to the core cities. The move-up and upper-bracket home price segments are more balanced and better supplied.

January 2020 by the numbers (compared to a year ago)

• Sellers listed 4,330 properties on the market, a 1.8 percent decrease from last January
• Buyers closed on 2,870 homes, a 5.4 percent increase
• Inventory levels declined 14.9 percent to 7,595 units
• Months Supply of Inventory was down 16.7 percent to 5 months (5-6 months is balanced)
• The Median Sales Price rose 4.2 percent to $270,000
• Cumulative Days on Market increased 1.5 percent to 66 days, on average (median of 43)
• Changes in Sales activity varied by market segment
  • Single family sales rose 5.5 percent; condo sales fell 3.5 percent; townhome sales rose 11.7 percent
  • Traditional sales increased 7.1 percent; foreclosure sales dropped 26.0 percent; short sales fell 52.6 percent
  • Previously owned sales were up 5.5 percent; new construction sales climbed 11.1 percent

From The Skinny Blog.

December 18, 2019

The Twin Cities real estate market showed a mostly positive but slightly mixed bag of results for November. New listings were up 0.1 percent year-to-date but down slightly in November. Helping to offset that decline was a 25.0 percent gain in newly built homes from last November. That’s because a builder doesn’t have to buy a home after selling one. Despite a sellers’ market and depending on price point, sellers still face the challenge of securing the next property while listing their current home.

Closed sales were also down slightly in November, but year-to-date closings are almost even with 2018. Sales have risen for the previous four consecutive months. Additionally, pending sales—a signed contract indicating a forthcoming closing—have now risen for five consecutive months, including November. This points to solid demand heading into the new year. Despite tight inventory, surprisingly low borrowing rates are helping to support this demand.

The number of homes for sale declined overall, but most price ranges have shown some growth this year. Over the last 12 months, housing inventory levels have increased for homes priced between $200K-$300K, $300K-$500K and over $500K but fell for homes under $200K. That first-time buyer segment still hasn’t seen supply growth.

The median home price in the Twin Cities has risen for 93 months or nearly 8 years, reaching new record highs every year since 2016. This isn’t the case for every market segment or area. The supply-demand imbalance pushes prices higher along with a changing mix of homes selling. There’s been growth in luxury activity and in square footage.

Market times remain brisk and near record lows, but there were a few monthly increases in 2019. Homes priced under $250K sold in a median of 25 days, while that figure was 91 days for homes over $1M.

November 2019 by the Numbers (compared to a year ago)

• Sellers listed 3,970 properties on the market, a 1.3 percent decrease from last November
• Buyers closed on 4,672 homes, a 0.8 percent decrease
• Inventory levels decreased 9.2 percent from last November to 10,011 units
• Months Supply of Inventory was down 9.1 percent to 2.0 months
• The Median Sales Price rose 5.6 percent to $279,900
• Cumulative Days on Market declined 1.9 percent to 51 days, on average (median of 29)
• Changes in Sales activity varied by market segment

o Single family sales rose 2.1 percent; condo sales decreased 10.7 percent; townhome sales fell 4.9 percent
o Traditional sales increased 0.7 percent; foreclosure sales dropped 34.7 percent; short sales were flat
o Previously owned sales were flat; new construction sales climbed 5.3 percent

Quotables

“We’re on solid footing heading into year-end,” said Todd Urbanski, President of Minneapolis Area REALTORS®. “More inventory would be nice, but rates are fantastic, the economy is still growing and consumers are confident.”

“National news headlines have little to do with our local market,” said Linda Rogers, President-Elect of Minneapolis Area REALTORS®. “Our state and local economies are hardy and diversified, good news for home buyers.”
From The Skinny Blog.

November 19, 2019

The Twin Cities real estate market started the fourth quarter of 2019 on a strong note with buyer and seller activity rising in October compared to 2018. Buoyed by historically low interest rates, the number of new listings and pending sales rose last month and the median price of a home also increased.

New listings increased by 3.8 percent last month to nearly 6,300 properties on the market. Pending home sales increased 4.9 percent in October, continuing their steady rise since mortgage rates dipped below 4.0 percent in June. The increase also puts the number of pending sales in positive territory for the year. Continuing the market’s upward trend, the median price of a home in the Twin Cities rose to $280,000 in October, a 5.7 percent increase over last year.

October reversed a trend of rising days on market and continued September’s reversal of sellers accepting a slightly lower share of their list price compared to last year. With increased sales activity, quicker market times and sellers yielding strong offers, it’s no wonder more sellers decided to list. There are still some signs that the market is rebalancing, but buyers awaiting spooky news could see their patience tested based on October numbers.

While inventory has grown this year, supply remains tight for first-time buyers and downsizing households competing for homes under $350,000. At this price point, multiple offers and homes selling for over list price in record time is still common. Builders struggle to replenish inventory due to high costs, a labor shortage and regulatory constraints. The shortage of affordable homes has prompted many owners to stay put. With 2.3 months of supply, the Twin Cities market is still significantly undersupplied.

October 2019 by the Numbers (compared to a year ago)

• Sellers listed 6,258 properties on the market, a 3.8 percent increase from last October
• Buyers closed on 5,391 homes, a 1.3 percent increase
• Inventory levels decreased 5.8 percent from last October to 11,607 units
• Months Supply of Inventory was down 8.0 percent to 3 months
• The Median Sales Price rose 5.7 percent to $280,000
• Cumulative Days on Market declined 4.2 percent to 46 days, on average (median of 25)
• Changes in Sales activity varied by market segment

• • Single family sales rose 5.5 percent; condo sales increased 1.4 percent; townhome sales fell 0.5 percent
  • Traditional sales increased 4.8 percent; foreclosure sales dropped 21.1 percent; short sales fell 55.6 percent
  • Previously owned sales were up 4.4 percent; new construction sales climbed 2.6 percent

Quotables

“Interest rates are boosting buyer confidence,” said Todd Urbanski, President of Minneapolis Area REALTORS®. “Consumers may also be realizing that some of their fears around the market and economy could be overstated.”

“The latest figures show our key metrics returning to growth,” said Linda Rogers, President-Elect of Minneapolis Area REALTORS®. “We expect Minnesota and the Midwest to fare well should that change.”
From The Skinny Blog.

The latest numbers for Twin Cities residential real estate show a stable market with some ongoing signs of transition. Prices are still rising, supply is still tight, and demand has recovered even while market times have lengthened. Even though more buyers are closing on homes, the urgency has subsided somewhat. Days on market rose 2.4 percent from last September, marking the fifth year-over-year increase in the last seven months. Market times remain swift despite modest increases. Sales rose 3.4 percent and the median sales price increased 6.6 percent to $279,250. Pending sales—a measure of signed contracts and future demand—rose 2.9 percent. Both pending and closed sales are down slightly for the year so far, but that may change. New listings were up 2.5 percent, helping some buyers take advantage of historically low rates. Sellers have been accepting a slightly lower share of their list price compared to the year prior for seven of the last eight months—with September bucking that trend. This, along with other indicators, suggests the market is rebalancing in a way that could benefit buyers.

The number of active listings for sale is up over the last 12 months and for most of 2019. Even so, the market remains tight—particularly for first-time buyers and downsizers competing in the under $300,000 segment where multiple offers and homes selling for over list price remain commonplace. Despite the demand, builders struggle to replenish inventory in that undersupplied segment due to high land and material costs combined with a significant labor shortage and tricky regulations. The shortage of affordable homes has led to an increase in remodeling as people are staying in their homes longer. It’s challenging to find comparable home at a similar payment in the desired location. With just 2.5 months of supply, the Twin Cities is still significantly undersupplied.

September 2019 by the Numbers (compared to a year ago)

• Sellers listed 7,041 properties on the market, a 2.5 percent increase from last September
• Buyers closed on 5,358 homes, a 3.4 percent increase
• Inventory levels decreased 5.6 percent from last September to 12,478 units
• Months Supply of Inventory was down 7.4 percent to 5 months
• The Median Sales Price rose 6.6 percent to $279,250
• Cumulative Days on Market rose 2.4 percent to 43 days, on average (median of 22)
• Changes in Sales activity varied by market segment

• • Single family sales rose 5.5 percent; condo sales increased 1.4 percent; townhome sales fell 0.5 percent
  • Traditional sales increased 4.8 percent; foreclosure sales dropped 21.1 percent; short sales fell 55.6 percent
  • Previously owned sales were up 4.4 percent; new construction sales climbed 2.6 percent

Quotables

“Attractive interest rates have unleashed some of the pent-up demand from earlier this year,” said Todd Urbanski, President of Minneapolis Area REALTORS®. “But each price point, product type and area is unique.”

“Buyers are still very much motivated despite some challenges,” said Linda Rogers, President-Elect of Minneapolis Area REALTORS®. “It really shows the resilience of our region and the value of homeownership.”
From The Skinny Blog.

August 19, 2019

The current economic expansion recently became the longest on record, but it’s showing its age. Concerns around slowing growth have spiked amidst new economic data and gyrations in equity markets, but it’s also created opportunities for home buyers. The upside is that mortgage rates have fallen yet again as investors flock to the safety of longer-term U.S. government bonds, thereby driving down the 10-year treasury yield and the 30-year mortgage rates that follow it. That means markets expect monetary easing and lower interest rates to spur growth in the short-term. The risk of recession has grown, but the economy is still buzzing along at a decent pace. Buying a home is an emotional decision, and buyers sometimes pull back at any whiff of turbulence out of fear of hardship.

Twin Cities home buyers and sellers, however, did not pull back in July. Sales rose 4.5 percent and sellers even listed almost 2.0 percent more product than last July. Despite lower interest rates and modest inventory gains as tailwinds, the persistent shortage of homes on the market and affordability headwinds remain. Price increases and wage gains are more aligned now than in the past, but investors are still competing with millennial first-time buyers in the already competitive under $300,000 segment. Conversely, there’s some evidence of a slow-down in the luxury segment. Metrics to watch aside from sales and prices include market times, the ratio of sold to list price and months of supply. These three indicators could be hinting at potential market shifts ahead. That said, home price declines are unlikely until absorption rates rise above 6 months. We’re currently at 2.4 months.

July 2019 by the Numbers (compared to a year ago)

• Sellers listed 7,827 properties on the market, a 1.8 percent increase from last July
• Buyers closed on 6,628 homes, a 4.5 percent increase
• Inventory levels decreased 4.4 percent from last July to 11,961 units
• Months Supply of Inventory was down 4.0 percent to4 months
• The Median Sales Price rose 5.9 percent to $283,700, a record high for July
• Cumulative Days on Market remained stable at 38 days, on average (median of 18)
• Changes in Sales activity varied by market segment

• • Single family sales rallied 6.0 percent; condo sales increased 2.2 percent; townhome sales rose 0.8 percent
  • Traditional sales increased 5.6 percent; foreclosure sales dropped 17.6 percent; short sales fell 37.5 percent
  • Previously owned sales were up 5.6 percent; new construction sales rose 4.5 percent

Quotables

“There are lots of headlines out there vying for our attention,” said Todd Urbanski, President of Minneapolis Area REALTORS®. “The bottom line is that the best time to buy a home is when you’re ready. Over 70.0 percent of Minnesotans have made that choice, the vast majority of whom have seen their values increase.”

“No one thought mortgage rates would touch 3.6 percent again,” said Linda Rogers, President-Elect of Minneapolis Area REALTORS®. “Buyers who felt squeezed by a monthly mortgage payment should take another look and consider this a fleeting gift.”
From The Skinny Blog.