Twin Cities Housing Review July 2019
July Kicks Off the 3rd Quarter
There are currently numerous factors that affect the housing market. However, right now more than anything, it is the consistent lack of homes available for buyers in the lower pricing tiers. This fact holds true both in the Twins and in most markets across the nation.
It’s significant that while home values are still increasing, it is at a slower rate more closely matching income and wage growth. While you may be frowning if you are thinking about selling your home in the future, the alignment is healthy for the market. We all knew that sharply escalating prices for homes could not continue indefinitely.
Housing Market Trends Consistent
While we continue to see constraints on available homes for sale in the first-time buyer level, the market is becoming more balanced as we move up to higher price ranges. So sellers are still enjoying a market that favors them under $500,000.
Meanwhile, lower interest rates are helping to continue to make housing affordable in spite of the rising prices. Even though new listings were up 1.8 percent over July of 2018, inventory levels in the Twin Cities fell 4.4 percent. In spite of the fact, demand remains strong with closed sales up 4.5 percent and pending sales up 3.2 percent.
Although prices are not rising as quickly and steeply, the median selling price was up 5.9 percent over July of last year and up 7 percent as a rolling 12-month comparison. With days on the market flat at 38, homes are selling just as quickly even though prices are going up.
A Deeper Dive into the Numbers
Let’s take a look at the Minneapolis-St. Paul housing market from August 2018 to July 2019. The highest segment of the market, above $1,000,001 has the most significant gain in sales at 15.2 percent. The median sale price of $274,900 was up 7 percent with the most substantial rise in value found in the condo market, where we see a 12.1 percent increase in prices. Selling the quickest at 35 days is the $190,001 to $250,000 range and not surprisingly the slowest was the $1,000,001 and above segment at 166 days.
Inventory levels for housing were down 4.4 percent over the year. The market segment least effected was single-family homes, lower by 4.1 percent (2.7 months of supply). Condos currently rest at 2.1 months of supply and Townhomes the hardest hit in terms of inventory levels which are down to 1.7 months of supply.
We are currently still enjoying the most prolonged period of economic growth in our history. The US economy added 164,000 new jobs in July. Unemployment was at 3.7 nationally and 3.4 percent in Minnesota. Average wages increased by 3.2 over the last 12 months. Interest rates are still a bargain by any standard with mortgage rates under 5 percent.
However, it looks like the economy is sailing into the wind. The ongoing trade war is affecting the cost of goods for manufacturing, overseas sales of American products, and has hit American farmers hard. The stock market has fluctuated wildly on any news about tariffs or talks of an agreement. Consumer confidence has taken a slight dip. What does this all mean for housing going forward into the end of the year? We'll touch on that later.
New Construction in the Twin Cities Metro
New construction in the metro is again the bright spot for July. Single-family construction posted double-digit gains with 513 permits pulled for the month of July. That equates to a 12 percent increase over July of last year. “With the economy steaming ahead and interest rates dropping, homebuyers are showing continued interest in building new homes,” said John Rask, president of Housing First Minnesota. “As prices of existing homes continue to climb and inventory remains tight, we expect this trend to continue.”
Data from the Keystone Report for Housing First Minnesota shows 518 new building permits issued which translates into 919 units of housing. Here is where the new construction is happening. Lakeville came in first with 45 building permits. Ostego and Woodbury tied with 26 permits, while Blaine and Elk River tied with 24 each.
While the economy is still expanding, the rate of growth is slowing. Concerns about the trade war, the federal deficit, and stock market gyrations have caused concern. These facts have led many investors to seek the safe harbor of the bond market which has created opportunities for the real estate market in terms of lower interest rates.
Even in the face of a slowing economy, home values in the Minneapolis-St. Paul housing market rose in July. Even with higher prices, July sales increased 4.5 percent and homes sold just as quickly. The only factor that appears to put a damper on sales is the lack of homes available to purchase.
As we head into the fall, the expectation is that interest rates may decline even further. Meanwhile, home values are expected to rise more slowly and align with increases in wages, which is better for the long term sustainability of housing in the Twin Cities metro. If you are considering buying or selling a home, now is the perfect time to take advantage of the fall real estate market.
Twin Cities Housing July 2019 compared to July 2018
- new listings up 1.8%
- pending sales up 3.2%
- closed sales up 4.5%
- days on the market until sold flatlined at 0%
- inventory of homes for sale declined by -4.4%
- month’s supply of inventory down -4.0%
- median sale price up 5.9% to $283,700
- original list price received down -0.1%
- the price range of $100,000,001+ saw the most gains, up 15.2%
- Condos earned the most significant price gains for housing type, up +12.1%
- new construction sales topped existing homes, up 2.2%
- 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 2.4%
- pending sales down -1.5%
- closed sales up 4.5%
- overall median sales price up +5.9%
As always, `thanks for reading.
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