Twin Cities Housing Market Review September 2019
The End of the Third Quarter
Can you believe summer is over, and we are firmly ensconced in fall? Halloween may be right around the corner, but I’m happy to say there is nothing scary about the Twin Cities housing market. Just the opposite.
Although we now head into the slowest time of the year for real estate, currently we are seeing lots of buying and selling activity. This activity is partly due to a dip in mortgage interest rates and a carryover of strong demand for housing.
Currently, you will see fewer homes for sale. However, there are fewer buyers, as well. There seems to be less urgency, generally speaking, allowing buyers to take a deep breath before deciding to make a purchase offer on a home. So if you have been on the fence about to buy or not to buy, this may be a great time to jump into the market.
The Continuing Saga of Low Inventory
I’m tired of saying it, and likewise, you are tired of hearing it, but lack of affordable inventory of homes is holding back an otherwise vibrant and robust housing market. At the lower price tiers, demand still outstrips supply with inventory falling 5.6 percent from September of 2018 with the most significant declines in prices below $250,000.
Home values have been steadily increasing since 2011. The median sale price increased 6.6 percent over last September and 6.6 percent over the 12-month rolling period as well. Even with it looking as if the economy may be moving into some headwinds, the demand for owning a home is healthy. With interest rates lower and the restraints on the inventory of homes, it’s no wonder values continue to rise.
The trade war has sparked uncertainty among investors who are moving towards the haven of long-term US bonds, pushing down the 10-year treasury yield. The 30-year mortgage interest rates follow the same trend. This movement is good news for buyers and sellers, making it a good time for real estate market activity. It is challenging to predict how this is going to play out in the coming weeks and months, but I feel fairly confident when I say interest rates will continue to be a bargain and likely to remain below or just at 4 percent.
The Economy, Politics and All That Other Jazz
The current economic growth we have been enjoying has become the longest on record. However, it’s beginning to exhibit signs of moderating with the job creation numbers for September, although still positive, falling along with a decline in consumer spending.
With no resolution to the trade wars on the horizon and the possibility of a recession looming later next year, businesses are reluctant to commit to expansion and new hiring. Likewise, consumers are starting to see that rainy day ahead and are not spending as freely.
That being said, it’s not doom and gloom for the housing market. As I mentioned earlier, investment in the long term US bond market is pushing interest rates lower, and right now the economy is a little slower but still buzzing along nicely. With values on real estate rising, purchasing a home is attractive and a sound investment. Ari Wolf from Meyers Research recently wrote, “Expectations about the economy drive behavior. As we see year-over-year increases in home sales throughout the rest of the year, especially double-digit growth rates in some markets, consumers could view now as a good opportunity to enter the market driving additional sales.”
New Construction in the Twin Cities Metro
Builders are ending the summer strong which is making up for the slow start at the beginning of the year. For the month of August 711 single-family permits were issued, reflecting an increase of 10 percent over August of 2018. We would still need to see a more substantial boost to alleviate the housing shortage, but every little bit helps, and we will take it! As John Rask, president of Housing First Minnesota put it, “It’s a good sign to see that builders are ending the summer strong. Housing inventory is still sitting well below what is necessary for a healthy housing market. We hope to see a continued increase in construction activity throughout the rest of the year.”
Let’s Look at the Numbers
Twin Cities housing market from October 2018 to September 2019 stats indicate that pending sales were down 0.5 percent. We saw the highest gain in sales at the $500,001 to $1,000,000 price range, with an increase of 14.6 percent.
The median sale price was $277,250 up 6.6 percent with the condo market winning top price fo the highest gain, 9.8 percent. The quickest selling homes fell into the $190,001 to $250,000 at 35 days with homes selling above $1,000,001 was the market turtle at 158 days.
Inventory was down 5.6 percent, with townhomes losing the least stock at 4.7 percent. We find the month’s supply of inventory for Condos is 2.3, Townhomes at 1.8, and single-family homes at 2.7 months of supply.
Twin Cities Housing September 2019 vs. September 2018
- new listings up 2.5%
- pending sales up 2.9%
- closed sales up 3.4%
- days on the market until sold up 2.4%
- inventory of homes for sale down -5.6%
- month’s supply of inventory down -7.4%
- median sale price up 6.6% to $279,250
- original list price received up 0.1%
- the price range of $500,001 to $100,000,000 saw the most gains, up 14.6%
- Condos earned the most significant price gains for housing type, up +9.8%
- new construction sales topped existing homes, up 3.3%
- fastest-selling homes were priced from $190,001 to $250,000 (35 days)
Twin Cities Housing Stats from August 2018 to July 2019
- new listings up 1.2%
- pending sales down -0.1%
- closed sales down 0.6%
- overall median sales price up +5.7%
*data source Minneapolis Area Association of Realtors.
As always, `thanks for reading.
You know where to find me – Joe Houghton