Twin Cities Housing Market
Twin Cities Housing Market
The Twin Cities housing market story for July in Minneapolis-St. Paul is much the same as it has been month over month for a couple of years. For sellers, it’s celebration and uncorking the champagne bottle and for buyers, it is a test of fortitude and commitment to home ownership. The Twin Cities is following a national trend of the past two years where inventory continues to shrink and median sale price continues to increase. How long this market is sustainable, is anyone’s guess but with unemployment holding at 4.3 percent the demand to purchase a home remains high.
A look at the numbers for July has available homes for sale at 12,407 which is a drop of 18.3% from July of 2016. The month's supply of inventory sits at 2.5 compared to 3.1 last year same time, a 19.4% decline. Buyers in the Twin Cities closed on 6,020 homes, 2.6% less than July 2016 at 6,128. Declining inventory, pending sales, closed sales and days on market was half the story, the other half being an increase in median sale price, of $254,000 up 5.9% over last year, the percentage of list price received at 99.2 representing a gain of 0.8% over July of last year.
Maybe you remember the old children’s game of musical chairs that was once popular at birthday parties. When the music stopped, the small humans who were left without a seat were out of the game. This is the current market situation. There is simply not enough homes for all the buyers who want a seat at the ownership table. The quest to buy a home at the lower price levels is a serious challenge and the once rare multiple offers situation has become the norm for desirable properties. Moreover, it is not unusual to have those same properties stay on the market no longer than a day!
While new construction is on the rise, it will take some time before new homes make a significant difference in market supply catching up with demand. It simply will not happen overnight. Looking at a 12 month rolling total of new construction sales in July, it was up 21.1% over last year which also represented the strongest status in the market. The price range of $190.001 to $250,000 had the strongest sales with a 3.5% increase, while townhomes were the market segment with strongest sales up 7.5%.
Twin Cities Metro Housing Statistics
- Extraordinary strong buyer demand vs. limited supply of homes continues to dominate this market story
- Home values are still climbing and this is not expected to change in the foreseeable future
- Townhomes, with a 6.1% increase for a median sales price of $184,700 saw the largest price gains
- Quickest selling price range $190,001 to $250,000 at 44 days on the market
- Slowest selling price range $1,000,001 and above at 197 days on market until sale
- Largest increase in sales in the $1,000,001 and above segment with an increase of 25.1%
Twin Cities Real Estate Inventory
- new listings down -3.9 %
- inventory of homes for sale down -16.5%
- the month's supply of inventory down -18.3%
- the month's supply of inventory currently at 2.5
- new construction inventory up 3.9% (12 months rolling average)
As we close the summer, keep in mind that interest rates are still at historical lows under 4% for buyers with strong credit. However, most financial experts agree that the Fed will be raising interest rates at least one more time before the year ends. The next Fed meeting is in mid-September, with two additional meetings scheduled before year’s end. Also keep in mind that the expectation is that the Fed is going to engage in an unprecedented bond sale, and it is uncertain how that will affect mortgage interest rates, up or down.
The data used in this report was for the entire Twin Cities Metro. Stats for the individual cities within the region may tell a different story. If you are interested in looking deeper the reports are available to the public from the Minneapolis Association of Realtors website.
As always, thanks for reading.
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*Market data source Minneapolis Area Association of Realtors.