Despite tight market Twin Cities real estate activity up in 2019

February 6, 2020

The Twin Cities housing market continued to show steady growth in 2019 according to the annual market wrap-up from the Minneapolis Area REALTORS® and the St. Paul Area Association of REALTORS®. At a joint news conference in St. Paul, the associations announced a growing economy, favorable rates and a persistent scarcity of homes for sale have uplifted home prices for eight consecutive years. Lower mortgage rates helped offset declining affordability brought on by rising home prices.

“In our market, like others across the country, lack of housing inventory has been a recurring theme for buyers. It continued in 2019 as buyers, looking for entry level options and more affordable choices, felt the most pressure. Buyers, however, have remained persistent resulting in gains, both in sales volume and price appreciation,” said Patrick Ruble, President of the Saint Paul Area Association of REALTORS®. “Fortunately, the region’s economy continues to grow, unemployment remains low and we are seeing growth in wages. We have a healthy market and look forward to some of the sticking points, such as the limited inventory, easing in the coming year.”

Sellers reversed three years of declines with a modest 0.2 percent increase in new listings in 2019. Buyers overturned a sales decline in 2018 with a 0.8 percent increase in purchases. The ongoing housing shortage has led to a competitive environment where multiple offers are commonplace, frustrating some consumers. Therefore, sellers are receiving strong offers in near record time. Market times did, however, increase 2.1 percent from 2018 while the ratio of sold to list price declined 0.1 percent. These two metrics could be early indicators of a shifting balance.

“Overall 2019 was a good year for real estate. After a slow start, activity picked up once rates fell back below 4.0 percent mid-year,” said Linda Rogers, President of the Minneapolis Area REALTORS®. “The second half of the year saw consistent sales gains, as record prices and declining affordability were offset by favorable rates and wage growth. Buyers were persistent despite tight inventory—particularly under $300,000. That’s no surprise, as the Twin Cities are a wonderful place to live, work and play.”

Rates remained attractive during the year. Despite starting the year around 4.5 percent, mortgage rates fell to 3.7 by year-end. Single family and new construction sales led the pack; so it’s no surprise that four-bedroom homes and homes over 2,500 square feet saw the largest gains. There’s still a “tale of two markets” dynamic at play: the under $350,000 or first-time buyer segment is severely undersupplied but also in high demand. The move-up market for homes over $500,000 is much better supplied, giving buyers more options and negotiating room.

“The Twin Cities housing market is a reflection of what’s been happening statewide,” said Bob Clark, President of the Minnesota Association of REALTORS®. “Realtors across Minnesota finished the year with slight increases in closings, new listings and continued growth in home prices.”

2019 by the Numbers

Sellers listed 76,345 properties on the market, a 0.2 percent increase from 2018
Buyers closed on 59,843 homes, a 0.8 percent increase from 2018
Inventory levels for December fell 19.6 percent compared to 2018 to 7,431 units
Months Supply of Inventory was down 21.2 percent o 1.5 months
The Median Sales Price rose 5.7 percent to $280,000, a record high
Cumulative Days on Market increased 2.1 percent to 49 days, on average (median of 23)
Changes in sales activity varied by market segment

Single-family sales increased 1.5 percent; condo sales fell 1.7 percent; townhome sales were down 1.4 percent
Traditional sales rose 1.8 percent; foreclosure sales decreased 31.9 percent; short sales fell 35.2 percent
Previously-owned sales increased 0.3 percent; new construction sales rose 6.9 percent

For other year-end residential real estate information and for stand-alone December 2019 data, visit www.mplsrealtor.com.

From The Skinny Blog.

November a mixed bag; new listings up, sales down

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.

Listings, Sales, Prices: All Rise

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.

Sales, prices still rising despite some changes this year

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.

Things still feeling pretty stable out there, thanks for asking

September 18, 2019

With two-thirds of the year in the books, we’re getting a clearer picture of where the housing market stands. The latest numbers for Twin Cities residential real estate show stability along with signs of deceleration. The median sales price continued to rise, landing at $286,800 for the month. Pending sales—a measure of signed contracts and future demand—rose 3.2 percent but are down slightly for the year so far. New listings slipped 2.0 percent, thwarting some buyers’ hopes of taking advantage of historically low rates. Closed sales were down 0.9 percent for the month and are down 1.4 percent for the year. One sign of market shift is days on market, which rose 2.5 percent year-over-year. Market times remain swift, but that’s the fourth year-over-year increase this year. Another sign of a changing market is the ratio of sold to list price. Sellers have been accepting a slightly lower share of their list price compared to the year prior for seven of the last eight months. This, along with other indicators, suggests the market is rebalancing. The landscape seems to be 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 has been rising this year. Even so, the market remains tight—particularly for first-time buyers and downsizers competing in the sub-$300,000 segment where multiple offers and homes selling for over list price are commonplace. With just 2.5 months of supply, the Twin Cities is still significantly undersupplied. The move-up and upper-bracket segments are less competitive and better supplied. Given some of the recent economic uncertainty, it’s worth noting that the Twin Cities market is well-positioned to withstand an economic downturn.

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

Sellers listed 7,678 properties on the market, a 2.0 percent decrease from last August
Buyers closed on 6,646 homes, a 0.9 percent decrease
Inventory levels decreased 5.5 percent from last August to 12,238 units
Months Supply of Inventory was down 3.8 percent to 2.5 months
The Median Sales Price rose 7.0 percent to $286,800, a record high for August
Cumulative Days on Market rose 2.5 percent to 41 days, on average (median of 21)
Changes in Sales activity varied by market segment

Single family sales rose 1.4 percent; condo sales decreased 6.2 percent; townhome sales fell 7.8 percent
Traditional sales increased 0.1 percent; foreclosure sales dropped 40.9 percent; short sales fell 45.5 percent
Previously owned sales were down 0.1 percent; new construction sales declined 5.0 percent

Quotables

“Some think the fall market isn’t for them, but tight conditions and favorable rates suggest momentum moving into 2020,” said Todd Urbanski, President of Minneapolis Area REALTORS®. “We’re at a moment when sellers are enjoying their position while buyers are taking advantage of lower than expected interest rates and more options.”

“Most markets remain stable across the metro,” said Linda Rogers, President-Elect of Minneapolis Area REALTORS®. “While there is a good amount of local variation, we just don’t see that many signs for concern.”
From The Skinny Blog.