We are often asked “Which cities have the highest home prices?” Whether it’s a member, the media or the general public inquiring, it’s a fairly common question. Wonder no more! Below are tables showing the top 25 highest priced markets in the region. The top two tables rank all areas, regardless of market size. The bottom two tables only show areas with a certain volume of sales. The left table uses just June 2015 sales, while the table to the right uses 2015 YTD data. Of course, the measure used is median sales price.

Data to the people!

From The Skinny Blog.

The changing popularity of various home financing tools tells a unique story and shows how the government and private sector mortgage market shares have evolved through the housing crisis and subsequent recovery.

Following the ebbs and flows of the housing market itself, the mortgage finance marketplace has also transformed over the last decade. First, some scene setting. Each trendline above represents the percentage of closed sales in the Twin Cities 13-County MSA that utilized a particular form of mortgage financing, by month. No seasonal adjustments have been performed; the data is raw and comes directly from NorthstarMLS.

Between 2005 and mid-2007, conventional loans made up about 80.0 percent of all mortgages. With conventional mortgage liquidity—shall we say—plentiful, the government only represented about 5.0 percent of loans. As the economy and housing market began to unravel in 2007, the mortgage spigot was drying up. As such, the FHA started to take up that slack and became a dominant player in the mortgage marketplace. By the time of the first-time home buyer tax credit in late-2009, FHA loans comprised a whopping 45.0 percent of sales while conventional loans made up about 35.0 percent of sales. The remaining 20.0 percent include all-cash deals and other loan products.

Though its overall effectiveness remains somewhat debatable, that tax credit signaled a turning point—at least in the mortgage market. At that moment in late-2009, conventional loan market share began to recover and FHA market share started to shrink. Fast forward to present day and conventional loans now make up 60.0 percent of the market while FHA loans make up just 20.0 percent. Earlier in 2015, FHA loans made up about 15.0 percent of closed sales, which is consistent with 2004 levels. Most recognize this as a positive, as the private sector has once again assumed the majority of the risk associated with residential mortgage lending.

All-cash sales can also be illuminating, shining light in some of the more interesting nooks and crannies. Though not all cash sales reflect investor activity, it’s one of the better indications of investors in the market and can be used as a proxy.

Between 2004 and 2008, cash deals made up about 5.0 percent of all closed sales. By February 2011, about 28.0 percent of Twin Cities homes were purchased with cash—a record high. Note the dashed orange trendline. This was at the same time as distressed (foreclosure and short sale) market share was at its highest. Traditional sales volume had fallen dramatically and investors were picking up foreclosures for $0.30 – $0.70 cents on the dollar.

Of the consumers that could, even they were understandably nervous to make large purchases such as a home. Nowadays, about 12.0 percent of sales are done in cash, the lowest share in seven years, or since the middle of 2008. That reflects a mixture of fewer foreclosures and short sales, rising prices, a rising stock market attracting more capital and low inventory levels frustrating traditional buyers and investors alike.

The market numbers are well and good, but sometimes following the money can tell a unique story. The modes of financing behind the market can signal changes in investor behavior, consumer confidence, bank lending patterns and how those forces interplay with one another.
From The Skinny Blog.

The Twin Cities metropolitan housing market reached key milestones in June. Both pending purchase demand and closed unit sales officially reached 10-year highs. The last time demand was this strong was June 2005. The number of signed purchase agreements rose 19.2 percent to 6,266. Closed sales increased 22.0 percent to 6,928. Seller activity showed more modest gains compared to last year. New listings rose 4.6 percent to 8,678 during the month, which is a multi-year high. It’s the highest number of new listings for any month since April 2010. Excluding March and April of 2010, new listings were at their highest level for any month since June 2008. Despite that, the number of available properties fell 9.4 percent to 16,597 homes.

“Buyers have been extraordinarily active this spring and summer,” said Mike Hoffman, Minneapolis Area Association of REALTORS® (MAAR) President. “With both pending and closed sales activity officially reaching 10-year highs, consumers— particularly first-time buyers—understand that the timing is right. Therefore, sellers are also getting strong offers quickly.”

Given all this demand, the June 2015 median sales price climbed 4.7 percent to $229,900. That puts home prices within about 3.5 percent of the June 2006 record high of $238,000. However, the typical price per square foot, now at $128, is about 18.5 percent below its June 2006 record high.

The market landscape continues to favor sellers, even though it is still a historically attractive time to purchase real property. Because of the ongoing imbalance between supply and demand, the number of days a listing spends on the market fell 5.7 percent to 66 days. Sellers are accepting 97.8 percent of their original list price and 99.6 percent of their last list price. The Twin Cities metropolitan area currently has 3.6 months’ supply of inventory, which still signals a seller’s market. That figure dropped 18.2 percent from June 2014. This measure is essentially a ratio of supply and demand and indicates how long it would take to completely clear the market of all inventory assuming no new homes enter the marketplace.

According to the Federal Reserve, interest rates could still rise slowly later this year if the economy continues to perform well as it has been. Mortgage rates continue to hover on either side of 4.0 percent, compared with a long-term average of over 7.0 percent. The most recent data from the Bureau of Labor Statistics shows the Minneapolis-St. Paul-Bloomington metropolitan area has the third lowest unemployment rate of any major metro. That puts our region behind only sister cities Austin, TX and Salt Lake City, UT. Minnesota and the Twin Cities specifically are uniquely well positioned to compete in today’s global economy.

“With positive momentum in housing and the economy, agents across the region are helping buyers and sellers achieve their real estate goals,” said Judy Shields, MAAR President-Elect. “Since most sellers are also buyers, those sitting on the fence may not want to wait to make their move.”
From The Skinny Blog.