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.

In the face of mixed signals, assessing market health can be a challenge. The economy remains healthy, mortgage rates are outrageously low and yet sales aren’t rising. That’s in part because we simply haven’t built enough homes to keep pace with the demand. Despite attractive mortgage rates, the supply of available homes is so tight that sales are struggling to keep pace. Rising home prices typically incentivize more sellers to list. But with nowhere to go because of the shortage, listing activity is down. New construction has been hampered by rising land, labor and material prices as well as regulation, forcing builders to create new supply in the high-end luxury market often at the expense of more affordable entry-level product. But the demand from millennials (and some baby boomers) is concentrated in the affordable price points, creating multiple-offers and frustrated buyers.

But it’s that tight inventory that’s still driving prices higher. Sales prices reached a new all-time high of $290,000 in June—likely our high for the year. New listings stumbled 3.1 percent while pending sales were down 2.9 percent. Days on market remained flat compared to June 2018 while the ratio of sold to list price fell for a fifth consecutive month. In some ways, the market is improving for buyers, even though sellers are still enjoying strong pricing power, favorable negotiating leverage and quick market times. For the last nine months, buyers have seen more active listings for sale than the year prior. We still have a tale of two markets: strong demand, weak supply and price growth in the affordable brackets compared to a slight oversupply, slow market times and weaker pricing in the upper brackets.

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

• Sellers listed 8,473 properties on the market, a 3.1 percent decrease from last June
• Buyers closed on 6,604 homes, an 8.2 percent decline
• Inventory levels decreased 1.3 percent from last June to 12,063 units
• Months Supply of Inventory was flat at5 months
• The Median Sales Price rose 7.2 percent to $290,000, a record high for any month
• Cumulative Days on Market remained stable at 40 days, on average (median of 16)
• Changes in Sales activity varied by market segment
  • Single family sales fell 7.5 percent; condo sales fell 13.3 percent; townhome sales decreased 6.1 percent
  • Traditional sales declined 6.8 percent; foreclosure sales dropped 46.4 percent; short sales fell 48.1 percent
  • Previously owned sales were down 8.1 percent; new construction sales rose 2.0 percent

Quotables

“The market is quiet right now, not every month shows significant change. Inventory is low, buyer demand is still evident and interest rates are phenomenal,” said Todd Urbanski, President of Minneapolis Area REALTORS®. “The untold story is the increase in net worth for homeowners. Rising prices mean rising equity. It can be a challenge to find a home, but homeownership is the best avenue to wealth-building.”

“The idea of the ‘housing market’ as a singular entity can be misleading,” said Linda Rogers, President-Elect of Minneapolis Area REALTORS®. “Cities, neighborhoods and different segments can often show tremendous variation.”
From The Skinny Blog.

Gardeners aren’t the only ones struggling with spring weather this year. The season’s late start and temperature swings suppressed housing market activity early this year, but those effects are moderating. The latest numbers for Twin Cities residential real estate show some strength amidst ongoing signs of change. Prices reached a new record of $281,000. New listings reversed course and rose 4.5 percent. Closed sales were down about 7.0 percent though pending sales—a measure of future closings—fell just 1.1 percent. Market times rose 5.7 percent year-over-year, the second increase since March 2015. Another sign of a changing market is the ratio of sold to list price has fallen for five of the last six months. In conjunction with other indicators, this suggests the market is improving for buyers, even though sellers still have strong pricing power, favorable negotiating leverage and quick market times.

The number of active listings for sale decreased slightly compared to the prior year. Even so, buyers have seen inventory gains for seven of the last eight months. After seven months of gains, months supply was flat at 2.0 months, suggesting the market is still undersupplied. Well-priced, turnkey properties continue to be highly sought-after. Mortgage rates remain cooperative at around 4.1 percent, which is good news for buyers. The market is tightest at the entry-level prices, where multiple offers and homes selling for over list price are commonplace. The move-up and upper-bracket segments are less competitive and better supplied.

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

Sellers listed 7,679 properties on the market, a 4.5 percent increase from last April
Buyers closed on 4,384 homes, a 6.9 percent decrease
Inventory levels for April declined 1.2 percent compared to 2018 to 9,667 units
Months Supply of Inventory was flat at 2.0 months
The Median Sales Price rose 5.2 percent to $281,000, a record high for any month
Cumulative Days on Market rose 5.7 percent to 56 days, on average (median of 21)
Changes in Sales activity varied by market segment

Single family sales declined 7.1 percent; condo sales rose 9.1 percent; townhome sales fell 9.1 percent
Traditional sales decreased 5.2 percent; foreclosure sales declined 30.3 percent; short sales fell 38.9 percent
Previously-owned sales were down 8.9 percent; new construction sales surged 20.3 percent

Quotables

“Things still seem to be rebalancing a bit,” said Todd Urbanski, President of Minneapolis Area REALTORS®. “Low and stable rates have definitely helped, and so has the ongoing economic expansion.”

“We’re doing better here than many other parts of the country,” said Linda Rogers, President-Elect of Minneapolis Area REALTORS®. “It’s important for buyers and sellers to understand local dynamics, not national headlines.”

All information is according to the Minneapolis Area REALTORS® based on data from NorthstarMLS. Minneapolis Area REALTORS® is the leading regional advocate and provider of information services and research on the real estate industry for brokers, real estate professionals and the public. We serve the Twin Cities 16-county metro area and western Wisconsin.

From The Skinny Blog.