MEDIAN HOME PRICE JUST SHY OF RECORD HIGH AMIDST STRONGEST DEMAND IN A DECADE

With the sole exception of inventory, every market metric showed continued improvement during May. The number of signed purchase agreements in the 13-county Twin Cities increased 19.5 percent to 6,228. That marks the highest May pending sales count since 2005. Sellers, however, were only slightly more active than last year. New listings rose 0.3 percent to 8,590 for the month. Excluding April 2015, that’s the highest number of new listings for any month since the home buyer tax credit period of April 2010. Homes also sold in less time and sellers yielded a higher share of their list price.

The May 2015 median sales price of all MLS home sales increased 6.7 percent to $224,000. That’s within 3.6 percent of the May 2006 level and 6.3 percent of the record high seen in June 2006. Price per square foot offers a different perspective, as it accounts for the increasing square footage of homes selling. The average price buyers paid per square foot rose 3.5 percent to $128.

“Though it’s not the only important measure by a long shot, many factors have enabled prices to once again approach these levels,” said Mike Hoffman, Minneapolis Area Association of REALTORS® (MAAR) President. “It’s taken nearly 10 years just to get this close to break-even and this time the fundamentals are better, our population has grown and industry professionals and consumers are more cautious.”

Persistent rent hikes, low mortgage rates, solid job growth and some noticeable wage growth are all encouraging consumers to seriously consider homeownership. But sellers and builders have been reluctant to list and build at the same levels they did when demand was this high 10 years ago. That has kept us in a seller’s market for some time. The number of days a listing spends on the market also reflects this. Those selling their homes are waiting a median of 35 days before accepting an offer at a median of 99.5 percent of their current list price. May months supply of inventory fell 12.2 percent to 3.6 months. Markets with between five and six months of supply are considered balanced.

Over the last 12 months, buyer activity increased the most in the townhome segment, where properties are also selling the fastest. Condominium prices increased the most of any property type over the same period. New construction pending sales for May increased at about half the rate of previously-owned properties. The number of homes on the market in May fell for all property and construction types.

The finance environment remains attractive. Mortgage rates are hovering around 4.0 percent, compared with a long-term average of 7.0 percent. The Twin Cities housing affordability index increased 2.7 percent since May 2014. An educated and literate workforce combined with a healthy and diverse economy helps Minnesota compete for top talent and businesses on an international scale.

“Many brokerages are seeing record volume even as prices move toward 2006 levels,” said Judy Shields, MAAR President-Elect. “Buyers in a variety of segments in our wonderful region are eager to make homeownership a reality. Prospective sellers should take note—they’re likely to receive top dollar for their property.”
From The Skinny Blog.

“The trend is your friend.”

We don’t know who said it, or when. But we believe the spirit of that statement is to ignore the micro fluctuations in the data and focus on the overall, macro-level pattern. Let the trend speak to you. Ignore the noise in between. The noise is only there to confuse you. Actually, the noise is really there because buyer activity ebbs and flows with the freeze and thaw cycle as well as with the school year. Though it’s tempting to follow the seasonal peaks and valleys, it’s plain to see that prices and sales always decline between summer and fall, and then subside again between fall and winter. It’s as predictable as potholes in the Minnesota spring. As such, it’s less meaningful to compare June to October and far more meaningful to compare October of this year to October of last year. Because of this high degree of seasonality in our market, comparisons across all of our reporting environments utilize a year-over-year benchmark.

From The Skinny Blog.

The number of signed purchase agreements in the 13-county Twin Cities region reached a 10-year high for the month of April. The figure came up just shy of reaching a 10-year record high for any month. Buyers wrote 6,329 offers to purchase homes, a 26.0 percent increase from last April and the most for any month since June 2005. New listings also rose as sellers continued to regain confidence. The number of new listings increased 10.7 percent to 8,613 during the month. That’s the highest number of new listings for any month since the home buyer tax credit period of April 2010.

The median sales price sustained its upward trajectory, increasing 10.0 percent to $215,600. The median home price has now seen 38 months of year-over-year increases. Price per square foot—which accounts for the rising square footage of homes selling—rose a more modest 3.0 percent to $124. Months supply of inventory fell 5.6 percent to 3.4 months, and still points to an overall seller’s market. Days on market decreased for the first time this year. Those selling their homes are waiting an average of 85 days before accepting an offer.

“Overall, buyers are truly out in force this spring,” said Mike Hoffman, President of the Minneapolis Area Association of REALTORS® (MAAR). “Climbing rents, consistent job growth and finally some beginning signs of wage growth are all encouraging Twin Citizens to invest in homeownership.”

As a result of the strong demand, inventory shortages in the most popular price ranges and neighborhoods can still be challenging for many buyers. Over the last 12 months, inventory levels fell 1.1 percent in the $100,000 to $249,999 range but rose 22.2 percent in the $250,000 to $499,000 range. The number of active listings for homes priced above $500,000 rose 21.4 percent.

Among the different property types, inventory levels fell 4.6 percent for condos and 0.9 percent for townhomes, but rose 10.0 percent for single-family properties. The number of homes on the market rose 6.2 percent over the past 12 months for previously owned homes, but the figure increased 19.3 percent for new construction homes.

The finance environment remains favorable. Mortgage rates are approximately 3.9 percent, compared with a long-term average of 7.0 percent. The Twin Cities housing affordability index actually increased since this time last year.
A diverse and growing regional economy has served the Twin Cities housing market well throughout the years. According to the Bureau of Labor Statistics, the Twin Cities has the fifth lowest unemployment rates of any major metropolitan area in the nation at 4.0 percent. Forbes ranked Minnesota as one of the top 10 best states for business, seventh in economic climate and second in quality of life.

“The numbers combined with the sense of urgency really paint a clear picture,” said Judy Shields, MAAR President-Elect. “Buyers are quite motivated, hoping to get in before rates rise, though both buyers and sellers stand to benefit from the current market environment.” From The Skinny Blog.