Twin Cities Housing Review June 2019
Twin Cities Housing Market Overview
As we look at June and the end of the second quarter, we observe a continuing trend of a more equitable and viable real estate market emerging. We also continue to enjoy strong housing market performance in part due to low unemployment, strong retail sales and the longest US economic expansion in history.
Overall, the dynamics of the market have not changed noticeably this year. Although new listings fell by 3.1 percent when compared to last June, the median sale price increased by 7.2 percent while days on the market flat-lined at 40. We are slowly approaching balance in the price range of $350K to $500K, but certainly not there yet. When we go above that range, we do reach a balance between buyer and seller. The highest price range is a buyer's market. Meanwhile, back in lower price land, inventory is scarce. I know, I know. You have been hearing this story for a long time now.
The High’s and Low’s of the Market
Looking at June of this year compared to 2018, new listings are down 3.1 percent. That decrease also brought pending sales down 2.9 percent and inventory levels down 1.3 percent. Meanwhile, the Median sales price increased by 7.2 percent, which is causing sellers to smile. Closed sales decreased 8.2 percent as did a percentage of list price received slightly by 0.3 percent. Time on the market until sold flatlined.
A Deeper Dive into the Numbers
The most significant gain in sales rests at the highest end of the market above $1,000,001with a 13.8 percent increase over last year at this time. The most significant price gains were in the condo market, with a median price of $182,900, up 11.5 percent. The fastest-selling properties were in the $190,001 to $250,000 price range at 34 days. Homes in the $1,000,001 and above bracket took the longest to sell averaging 166 days. Reviewing supply we see market-wide inventory levels were down 1.3 percent. Single-family homes lost the least inventory at a 1.1 while the stock of townhomes declined 3.4 percent and condos 2.8.
Our economy continues to chug along nicely, but there are signals that the expansion is slowing down. The expectation for the rate of inflation is to remain below 2 percent, which the Fed considers a healthy pace. Following a string of increases in the interest rate, the Fed is expected to lower the rates this year, reacting to pressure from the White House to spur economic activity. However, the current interest rate for a 30 year fixed loan when I checked today is 3.875 percent, and that is good news for both buyers and sellers alike.
New Construction in the Twin Cities
When we look at inventory levels of new homes in the Twin Cities, we find that inventory is up 10.5 percent and months supply is up 7.3 percent. We also see the new construction sales up 2.9 percent, outpacing previously-owned homes. When we compare June of this year to last year in the new construction segment of the market, we find pending sales up 2.9 and the median sale price up 1.5 percent. It took a little longer to sell new homes with days on the market increasing to 96, 5.5 percent jump. Meanwhile, the percentage of list price received dropped 0.3 percent.
Still, not enough new homes are being built to keep up with housing demand, especially at the lower price levels. Nothing has changed over the months. Builders cannot make a profit constructing homes for the entry-level market because of the high costs of material, regulations, and labor shortages.
From the June BATC Hotsheet
Now for the good news! Single-family construction soared like an eagle in June, with building permit number up 21 percent after four months of declines. “With mortgage rates falling, the economy steaming ahead and low existing housing inventory, now is a great time to build a home,” said John Rask, president of Housing First Minnesota. “There is serious demand for single-family housing in the Twin Cities and the strong permit numbers we see this month is what we expected to see all year.”
According to the Keystone Report for Housing First Minnesota data, 711 new building permits were issued to construct 1,480 units of housing. Lakeville took top awards with 52 permits, Lake Elmo second with 46, Blaine with 37, Plymouth with 35, and last but not least Woodbury with 33 building permits issued. The value of the completed housing for those permits is estimated to be $289, 089,940.
Minneapolis-St.Paul Housing Market June Summary
Overall when you look at the market for housing in the Twin Cities, there is a lot to make us feel optimistic. Housing values continue to climb. Mortgage rates have us smiling. New construction is increasing. The only factor to really fault is the shortage of housing at the lower pricing levels.
While it’s challenging to see entry-level buyers struggle to secure a deal on their first home, I always remain hopeful. Our baby boomer population is reaching retirement age at the pace of 10,000 a day. I’m hoping more of them will be inspired to put their homes on the market and opt for a smaller or different housing option. Those homeowners living in their first home with a yen to move up may finally take a leap of faith and do it.
In the meantime, the glass looks half full as I peer through my rose-tinted lenses.
Twin Cities Housing June 2019 compared to June 2018*
- new listings down -3.1%
- pending sales down -2.9%
- closed sales down 8.2%
- days on the market until closing flat at 0%
- inventory of homes for sale down -1.3%
- month’s supply of inventory flat at 0%
- median sale price up +7.2% to $290,000
- original list price received down -0.3%
- the $100,000,001 and above price range saw the most gains, up +13.8%
- Condos earned the most significant price gains for housing type, up +11.5%
- new construction sales topped existing homes, up +2.9%
- fastest-selling homes were priced from $190,001 to $250,000 (35 days)
Twin Cities Housing Stats from July 2018 to June 2019*
- new listings up down – 1.2%
- pending sales down -2.5%
- closed sales down -3.4%
- overall median sales price up +5.7%
*data source Minneapolis Area Association of Realtors.
As always, `thanks for reading.
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