For Week Ending June 6, 2015
As we approach the halfway point of the year, we’ll begin to see some midterm report cards from anyone who wants to share an opinion or write a headline. If you have been reading these weekly excerpts, you already know that we are tracking along a predicted path. The residential real estate market was expected to be good at this point. Hiring is up, unemployment is low, sales are up, rates are low, prices are up and inventory is low. The gentle sway of up and low is making for an enjoyable ride, with no bubbles in sight.
In the Twin Cities region, for the week ending June 6:
- New Listings increased 1.4% to 2,183
- Pending Sales increased 10.9% to 1,413
- Inventory decreased 5.2% to 16,253
For the month of May:
- Median Sales Price increased 6.7% to $224,000
- Days on Market decreased 5.0% to 76
- Percent of Original List Price Received increased 0.7% to 97.5%
- Months Supply of Inventory decreased 12.2% to 3.6
All comparisons are to 2014
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.
For Week Ending April 4, 2015
Rent or buy? It is the question on the minds of many as we cast full sail into the selling season. Whilst stories are written about which cities and neighborhoods are better to rent or buy in, we can hang in the peace of a fairly stable market where there are good options available for rent and sale. Spring is sprung, yet there is no raining on the hit parade of homeownership.
In the Twin Cities region, for the week ending April 4:
- New Listings decreased 8.4% to 1,688
- Pending Sales increased 32.8% to 1,364
- Inventory increased 2.8% to 14,431
For the month of March:
- Median Sales Price increased 10.5% to $210,000
- Days on Market increased 7.4% to 102
- Percent of Original List Price Received increased 0.8% to 95.9%
- Months Supply of Inventory remained flat at 3.3
All comparisons are to 2014
The number of signed purchase agreements in the 13-county Twin Cities region surged by 30.0 percent to 5,301 contracts. Sellers were also confident, as new listings increased 21.4 percent to 7,887 during the month. That is the largest increase in pending sales since August 2011 and the highest March count since 2005. New listings showed the second largest increase since July 2013 and the highest March count since 2010. Inventory levels rose 0.7 percent to 14,127 homes, the second increase this year.
The median sales price rallied 10.5 percent higher to $210,000, the strongest gain in over a year. The median home price has now seen over 36 months of year-over-year increases. Price per square foot—which adjusts for the square footage of homes selling—rose a more modest 4.5 percent to $121. Absorption rates remained flat at 3.3 months, and suggest an overall sellers’ market. Days on market rose 7.4 percent to 102 days.
The role of foreclosures and short sales continued to diminish on both the list and buy sides. Traditional new listings comprised 92.2 percent of all seller activity, the highest level since October 2006. Traditional sales made up 84.9 percent of all closed sales, which is on-par with late-2007 levels.
The finance environment remains favorable. Mortgage rates continue to hover near multi-year lows at around 3.7 percent, compared with a long-term average of about 7.0 percent.
Improvements in the economy and household finances could partly offset the impact of rising prices and interest rates. The Twin Cities housing affordability index of 198 has been fairly stable since the end of 2014.
A diverse and robust regional economy has served the Twin Cities housing market well throughout various cycles. According to the Bureau of Labor Statistics, the Twin Cities has one of the lowest unemployment rates of any major metropolitan area in the nation at 4.0 percent.
From The Skinny Blog.