Twin Cities Housing Review December 2018
Minneapolis-St Paul Housing Data
As we say adios to 2018 and move into the new year, expectations include some long-awaited changes. In the last half of the year, we saw increases in new listings, decreases in sales, and median sales prices on homes rising more slowly.
The increases we are experiencing in no way are enough to balance the market at the lower pricing tiers. However, first-time buyers and downsizing boomers will begin to find more home buying options in the coming year. That fact alone will make buyers smile.
A Look at December Housing Numbers
Looking at a comparison of December 2018 to the same time last year, we see new listings up 3.5 percent, closed sales down 9.9 percent, list price received down 0.2 percent, and the median sale price of $258,000 up 4 percent. Pending sales showed a decline of 3.3 percent, while the month’s supply of inventory rose 13.3 percent. Days on the market decreased by 6.6 percent.
What story do these numbers tell us about the housing market in Minneapolis and Saint Paul? Pretty good news. We are finally starting to see more housing choices at lower pricing levels. Sellers are more flexible when they receive less than full-price offers. This situation takes some pressure off of buyers.
Sellers also have reason to smile. Property values continue to rise, with median sales prices up 4% over December 2017. Additionally, sales of homes are still brisk as we see days on the market drop to 57 from last year’s 61 days. Rising prices and shorter time on the market means demand for housing remains strong and desirable properties are moving to active contingent status quickly.
The Economic Picture
The Twin Cities economy continues to shine. Unemployment numbers for December were 2.8 percent, well below the national average of 3.9. Wages in the area grew 4.7 percent this past year.
The good news about mortgage interest rates is they continue down from the 52 weeks high of 5.2 percent. According to Bankrate, the benchmark 30-year fixed-rate mortgage fell this week to 4.59 percent. The decrease in rates is excellent news for both buyers and sellers.
In December, pending sales for new home sales were up 6.6 percent compared to 2017. The median sales price grew moderately with a 1.4 percent increase in the cost of new homes in the Twin Cities. In the new construction category, Inventory advanced 22 percent and the monthly supply by 13.2 percent. Still not anywhere as much as needed, but we’ll take it.
December was a strong month for new construction; however, when we look at 2018, building permits were flat. Tom Wiener, president of Housing First Minnesota, observed that “Despite slower growth than expected in 2018, it was a solid year for new home construction. There’s high demand for new housing in the Twin Cities, and builders are innovating to meet homebuyers' needs and budgets.”
We need to do better. As David Siegel, executive director of Housing First Minnesota, said, “Rising construction and regulatory costs combined with increasing mortgage rates are only adding to the housing affordability problem in the Twin Cities. We need to address this issue so we can bring down the cost of housing for Minnesota families.”
Twin Cities data for December 2018 compared to December 2017*
- new listings up +3.5%
- pending sales down -3.3%
- closed sales down -9.9%
- days on the market until closing was 57, down -6.6%
- inventory of homes for sale down +4.5%
- month’s supply up +13.3%
- median sale price up +4.0% to $258,000
- original list price received down -0.2%
- the highest sales gain was in the $250,001 to $350,000 price tier, up 10.4%
- the most significant price gain segment was townhomes up +9.2%
- new construction sales topped existing homes, up +6.6%
- the price range that sold fastest was $190,001 to $250,000 at 33 days
* Data supplied by The Minneapolis Association of Realtors
As always, thanks for reading.
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