Listings and Pendings

September 18, 2019

With two-thirds of the year in the books, we’re getting a clearer picture of where the housing market stands. The latest numbers for Twin Cities residential real estate show stability along with signs of deceleration. The median sales price continued to rise, landing at $286,800 for the month. Pending sales—a measure of signed contracts and future demand—rose 3.2 percent but are down slightly for the year so far. New listings slipped 2.0 percent, thwarting some buyers’ hopes of taking advantage of historically low rates. Closed sales were down 0.9 percent for the month and are down 1.4 percent for the year. One sign of market shift is days on market, which rose 2.5 percent year-over-year. Market times remain swift, but that’s the fourth year-over-year increase this year. Another sign of a changing market is the ratio of sold to list price. Sellers have been accepting a slightly lower share of their list price compared to the year prior for seven of the last eight months. This, along with other indicators, suggests the market is rebalancing. The landscape seems to be improving for buyers, even though sellers still have strong pricing power, favorable negotiating leverage and quick market times.

The number of active listings for sale has been rising this year. Even so, the market remains tight—particularly for first-time buyers and downsizers competing in the sub-$300,000 segment where multiple offers and homes selling for over list price are commonplace. With just 2.5 months of supply, the Twin Cities is still significantly undersupplied. The move-up and upper-bracket segments are less competitive and better supplied. Given some of the recent economic uncertainty, it’s worth noting that the Twin Cities market is well-positioned to withstand an economic downturn.

August 2019 by the Numbers (compared to a year ago)

Sellers listed 7,678 properties on the market, a 2.0 percent decrease from last August
Buyers closed on 6,646 homes, a 0.9 percent decrease
Inventory levels decreased 5.5 percent from last August to 12,238 units
Months Supply of Inventory was down 3.8 percent to 2.5 months
The Median Sales Price rose 7.0 percent to $286,800, a record high for August
Cumulative Days on Market rose 2.5 percent to 41 days, on average (median of 21)
Changes in Sales activity varied by market segment

Single family sales rose 1.4 percent; condo sales decreased 6.2 percent; townhome sales fell 7.8 percent
Traditional sales increased 0.1 percent; foreclosure sales dropped 40.9 percent; short sales fell 45.5 percent
Previously owned sales were down 0.1 percent; new construction sales declined 5.0 percent

Quotables

“Some think the fall market isn’t for them, but tight conditions and favorable rates suggest momentum moving into 2020,” said Todd Urbanski, President of Minneapolis Area REALTORS®. “We’re at a moment when sellers are enjoying their position while buyers are taking advantage of lower than expected interest rates and more options.”

“Most markets remain stable across the metro,” said Linda Rogers, President-Elect of Minneapolis Area REALTORS®. “While there is a good amount of local variation, we just don’t see that many signs for concern.”
From The Skinny Blog.

August 19, 2019

The current economic expansion recently became the longest on record, but it’s showing its age. Concerns around slowing growth have spiked amidst new economic data and gyrations in equity markets, but it’s also created opportunities for home buyers. The upside is that mortgage rates have fallen yet again as investors flock to the safety of longer-term U.S. government bonds, thereby driving down the 10-year treasury yield and the 30-year mortgage rates that follow it. That means markets expect monetary easing and lower interest rates to spur growth in the short-term. The risk of recession has grown, but the economy is still buzzing along at a decent pace. Buying a home is an emotional decision, and buyers sometimes pull back at any whiff of turbulence out of fear of hardship.

Twin Cities home buyers and sellers, however, did not pull back in July. Sales rose 4.5 percent and sellers even listed almost 2.0 percent more product than last July. Despite lower interest rates and modest inventory gains as tailwinds, the persistent shortage of homes on the market and affordability headwinds remain. Price increases and wage gains are more aligned now than in the past, but investors are still competing with millennial first-time buyers in the already competitive under $300,000 segment. Conversely, there’s some evidence of a slow-down in the luxury segment. Metrics to watch aside from sales and prices include market times, the ratio of sold to list price and months of supply. These three indicators could be hinting at potential market shifts ahead. That said, home price declines are unlikely until absorption rates rise above 6 months. We’re currently at 2.4 months.

July 2019 by the Numbers (compared to a year ago)

Sellers listed 7,827 properties on the market, a 1.8 percent increase from last July
Buyers closed on 6,628 homes, a 4.5 percent increase
Inventory levels decreased 4.4 percent from last July to 11,961 units
Months Supply of Inventory was down 4.0 percent to4 months
The Median Sales Price rose 5.9 percent to $283,700, a record high for July
Cumulative Days on Market remained stable at 38 days, on average (median of 18)
Changes in Sales activity varied by market segment

- Single family sales rallied 6.0 percent; condo sales increased 2.2 percent; townhome sales rose 0.8 percent
- Traditional sales increased 5.6 percent; foreclosure sales dropped 17.6 percent; short sales fell 37.5 percent
- Previously owned sales were up 5.6 percent; new construction sales rose 4.5 percent

Quotables

“There are lots of headlines out there vying for our attention,” said Todd Urbanski, President of Minneapolis Area REALTORS®. “The bottom line is that the best time to buy a home is when you’re ready. Over 70.0 percent of Minnesotans have made that choice, the vast majority of whom have seen their values increase.”

“No one thought mortgage rates would touch 3.6 percent again,” said Linda Rogers, President-Elect of Minneapolis Area REALTORS®. “Buyers who felt squeezed by a monthly mortgage payment should take another look and consider this a fleeting gift.”
From The Skinny Blog.

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