Home Prices Reach Record High; Sales Down but Inventory Up

By David Arbit on Tuesday, January 22nd, 2019

2018 ANNUAL WRAP-UP
Beauty is in the eye of the beholder. Sometimes, so are market statistics. For sellers, the big stories of 2018 were three records: prices, market times and percent of list price received at sale. For buyers, the major themes were increased new listings toward year-end, an annual inventory increase, changing interest rates and affordability pressure. Driven by sizable gains in new listings later in 2018 combined with moderating sales, for-sale housing supply finally bounced off its 15-year low. The ongoing housing shortage has created a competitive environment where multiple offers have become common. Thus, sellers are receiving strong offers in record time, but this fast-paced market can frustrate some consumers. Market times continued to shrink while absorption rates remained tight but showed signs of easing. Mortgage rates on a 30-year fixed loan started the year around 4.0 percent but touched 5.0 percent before settling on 4.5 percent. Foreclosure activity fell for a seventh straight year and is back around 2005 levels. Although single-family homes made up about 74.0 percent of all sales, both townhomes and condos had better sales performances. Similarly, previously-owned homes made up about 91.0 percent of sales but new construction showed a much stronger gain.

2018 BY THE NUMBERS
Sellers listed 75,969 properties on the market, a 0.3 percent decrease from 2017
Buyers closed on 59,189 homes, a 3.4 percent decrease from 2017 yet the 4th highest figure since 2003
Inventory levels for December rose 4.5 percent compared to 2017 to 8,128 units, reversing 3 years of declines
Months Supply of Inventory was up 8.5 percent to 1.7 months, also the first increase since 2014
-The Median Sales Price rose 7.7 percent to $265,000, an all-time record high
-Cumulative Days on Market declined 14.3 percent to 48 days, on average (median of 22)—a 12-year record low
Changes in sales activity varied by market segment

Single-family sales decreased 4.2 percent; condo sales rose 5.4 percent; townhome sales fell 3.3 percent
Traditional sales declined 2.0 percent; foreclosure sales fell 38.0 percent; short sales were down 36.2 percent
Previously-owned sales decreased 4.7 percent; new construction sales rose 12.7 percent

POIGNANT QUOTABLES
“The year definitely had some ups and downs. Beyond record prices and lower-but-still-strong sales, inventory finally turned around while some affordability concerns persisted. Our region is extremely high-performing when it comes to homeownership, employment, income, education, civic engagement and quality of life. Despite some manageable headwinds, homeownership and real estate is still a compelling investment for Minnesota,” said Todd Urbanski, President of the Minneapolis Area REALTORS®.

“Last year homebuyers became more selective even as market times shrank. Working with a REALTOR® was key as inventory was often limited,” said Patti Jo Fitzpatrick, President of the Saint Paul Area Association of REALTORS®. “We still saw some challenges around inventory and downsizing. We anticipate more balance this year as inventory eases. It’ll be interesting to see how things play out.”

CHARTING THE MARKET

Sellers posted a third consecutive decrease in activity but showed signs of turnaround, particularly in the second half of 2018. New listings were down just 0.3% compared to 2017. Many sellers are enjoying rising prices and quick market times but are waiting for more inventory choices before listing. Listings tend to stand out more in a tight inventory market versus one with growing supply.

Buyers were active in 2018, though 3.4% less so than in 2017. Closed sales remain strong. 2018 saw the 4th highest unit sales since 2003. Buyers were encouraged by low interest rates while some were spooked by rate hikes. Rising rents, a solid economy, upper bracket activity, as well as condos and new construction helped to finish off the year strong, despite a modest decrease.

With low-but-rising supply combined with high-but-moderating sales, it’s no surprise the median sales price rose 7.7% to $265,000. This marks a record high. Home prices have risen 76.7% from their low point in 2011 and 15.2% from their prior 2006 peak. Rising prices boost equity, motivate reluctant sellers and replenish local tax base, but can also cause affordability challenges.

Inventory levels finally rose 4.5% after reaching a 15-year low in 2017. Buyers had 8,128 options in December but over 13,000 in September. When combined with strong demand, this supply-side constraint has resulted in competitive bidding and rising prices. The shortage has frustrated some buyers—particularly at the entry-level price points. More supply is vital to ongoing market health and to increase housing opportunities.

Mostly due to fundamentals but also better pricing decisions, sellers yielded a higher share of their asking price. The median percent of original list price received reached a record high of 100.0 percent. Sellers had a 50/50 chance of receiving more than their original list price. The climate for sellers has improved immensely but that could be changing. Sellers are seeing good offers in record time, for now.

Homes are selling at a 12-year record pace. Listings spent a median of 22 days on market, 18.5 percent fewer than 2017 (avg. of 48). That is nearly half the market time of 2015 and under a quarter of the market time from 2011. Among other trends, relatively strong sales of homes selling in record time and at record prices has motivated some sellers. But these market dynamics won’t last forever.

From The Skinny Blog.

Weekly Market Report

For Week Ending January 19, 2019

Although snow and cold have been affecting a sizable portion of the nation this January, the initial assessment of early-year weekly real estate trends indicates a healthy level of new listings in many housing markets – even in wintry locales. Pending sales figures are generally showing a healthy balance compared to last year at this time. Combined with favorable mortgage rates, these early indicators bode well for active real estate markets across the nation. Let’s look at what happened locally.

In the Twin Cities region, for the week ending January 19:

  • New Listings increased 9.0% to 1,029
  • Pending Sales decreased 7.2% to 695
  • Inventory increased 2.1% to 8,029

For the month of December:

  • Median Sales Price increased 4.0% to $258,000
  • Days on Market decreased 6.6% to 57
  • Percent of Original List Price Received decreased 0.2% to 96.9%
  • Months Supply of Inventory increased 13.3% to 1.7

All comparisons are to 2018

Click here for the full Weekly Market Activity Report. From The Skinny Blog.

Weekly Market Report

For Week Ending January 12, 2019

The unemployment rate rose by 0.2 percent to finish December 2018 at 3.9 percent. Although the rate went up from the month prior, it was down by 1.2 percent compared to the same month last year. As the nation continues to wrestle with a partial government shutdown that has some people worried about the economy at large, it is important to note that the employment situation at large remains in a relatively strong position.

In the Twin Cities region, for the week ending January 12:

  • New Listings increased 14.9% to 1,026
  • Pending Sales increased 6.9% to 650
  • Inventory increased 2.8% to 7,969

For the month of December:

  • Median Sales Price increased 4.0% to $258,000
  • Days on Market decreased 6.6% to 57
  • Percent of Original List Price Received decreased 0.2% to 96.9%
  • Months Supply of Inventory increased 13.3% to 1.7

All comparisons are to 2018

Click here for the full Weekly Market Activity Report. From The Skinny Blog.

Weekly Market Report

For Week Ending January 5, 2019

The turn of a calendar year often creates a desire to resolve to do something different. Weight loss through a combination of regular exercise and healthy eating is often at the top of the list, followed by learning a new skill, quitting smoking, reading more, spending more time with loved ones, getting more organized, traveling and saving money. Annual evidence indicates that a bump in listing and buying activity also occurs each January, which appears to be the case again in 2019 for much of the country.

In the Twin Cities region, for the week ending January 5:

  • New Listings decreased 4.9% to 809
  • Pending Sales increased 0.7% to 553
  • Inventory increased 6.0% to 8,209

For the month of November:

  • Median Sales Price increased 8.2% to $265,000
  • Days on Market decreased 7.1% to 52
  • Percent of Original List Price Received decreased 0.1% to 97.3%
  • Months Supply of Inventory increased 10.5% to 2.1

All comparisons are to 2018

Click here for the full Weekly Market Activity Report. From The Skinny Blog.

Weekly Market Report

For Week Ending December 29, 2018

Although the 2018 U.S. stock market had its worst losses in a decade, employers added 2.64 million jobs in 2018 – the best year since 2015 – as well as 312,000 jobs during December. In addition, average hourly earnings increased 3.2 percent, matching the October 2018 percentage that marked a nearly ten-year high. The unemployment rate rose to 3.9 percent from 3.7 percent but is still historically low. These combined events give the impression of an economy that remains ultimately optimistic but is also recalibrating.

In the Twin Cities region, for the week ending December 29:

  • New Listings increased 22.2% to 297
  • Pending Sales increased 11.5% to 514
  • Inventory increased 0.2% to 8,608

For the month of November:

  • Median Sales Price increased 8.2% to $265,000
  • Days on Market decreased 7.1% to 52
  • Percent of Original List Price Received decreased 0.1% to 97.3%
  • Months Supply of Inventory increased 10.5% to 2.1

All comparisons are to 2017

Click here for the full Weekly Market Activity Report. From The Skinny Blog.

Weekly Market Report

For Week Ending December 22, 2018

The last few weeks of the year provide an opportunity for buyers, sellers and real estate practitioners alike to spend time with the family and friends that make owning a home that much more special. It also provides a time to plan for the potential for marginal increases in average household wages, median sales prices for homes, mortgage rates and total available homes for sale in 2019.

In the Twin Cities region, for the week ending December 22:

  • New Listings increased 11.1% to 469
  • Pending Sales decreased 7.4% to 680
  • Inventory increased at 9,053

For the month of November:

  • Median Sales Price increased 8.2% to $265,000
  • Days on Market decreased 7.1% to 52
  • Percent of Original List Price Received decreased 0.1% to 97.3%
  • Months Supply of Inventory increased 10.5% to 2.1

All comparisons are to 2017

Click here for the full Weekly Market Activity Report. From The Skinny Blog.