Housing seemed to have a slow start to the spring selling season, but appearances deceive. Dig into that spring soil and you begin to unearth differences in individual areas and market segments. Inventory is slowly rising in some areas. Activity is picking up in the upper price tiers. Rents continue to climb in most metros. And interest rates are generally lower than a year ago, to the surprise of some and the delight of others.
New Listings in the Twin Cities region increased 8.9 percent to 8,315. Pending Sales were up 0.1 percent to 5,295. Inventory levels rose 6.5 percent to 17,436 units.
Prices forged onward. The Median Sales Price increased 4.7 percent to $219,900. Days on Market was down 6.8 percent to 69 days. Absorption rates slowed as Months Supply of Inventory was up 7.9 percent to 4.1 months.
Housing is one part of a broader ecosystem that thrives on a strong economy that churns out good jobs. First-quarter employment figures were adequate but not thrilling, but second-quarter numbers figure to be more positive. Access to mortgage capital remains an ongoing concern. As cash and investor deals fade, first-time buyers typically step to the forefront, but tight credit can and has been a real hurdle.
Inventory Rising as Foreclosure Rate Hits Seven-Year Low
Minneapolis, Minnesota (July 14, 2014) – In June, for a fourth month in a row, homeowners in the 13-county Minneapolis-St. Paul metropolitan area listed more properties for sale than the same month the year prior. New listings rose 8.9 percent to 8,315 homes. That’s uptempo music to the ears of buyers eager to find a property that suits their needs. Pending sales were mostly flat with last June – up just 0.1 percent to 5,295 newly signed purchase agreements. Closed sales were down just 2.2 percent compared to last June.
As a result of this mix of activity, inventory levels also posted a year-over-year increase for a fourth consecutive month. The number of homes for sale rose 6.5 percent to 17,436. Further inventory gains are likely to continue, and there should soon be more options to choose from than in the recent past.
Most indicators suggest a transition from rapid recovery toward stability and normalization. Months’ supply was higher for a third month in a row, increasing to 4.1 months of supply, thanks to recent inventory increases. Even with more supply and flat demand, the mix of sales continues to skew away from distressed properties and toward traditional homes that sell at higher price points. Consequently, the median sales price rose 4.7 percent to $219,900 – the highest June median sales price since 2007 and the highest median price for any month since September 2007.
Though new listings rose 8.9 percent compared to June 2013, traditional new listings rose 19.4 percent while foreclosure and short sale new listings fell 40.1 percent and 39.5 percent, respectively. Similarly, though pending sales were only up 0.1 percent, traditional pending sales rose 11.8 percent while foreclosure and short sale pendings fell 43.6 percent and 42.7 percent. And again, overall inventory was up 6.5 percent but traditional inventory was up 23.7 percent as foreclosure inventory fell 33.9 percent and short sale inventory plummeted by 52.3 percent.
With more properties for sale, consumers now have the largest pool of homes for sale since August 2012. Inventory hasn’t shown this many consecutive year-over-year increases since late 2010. Notably, a growing share of that inventory falls into the more desirable traditional segment.
“The gains in inventory combined with declines in foreclosure sales puts us in a unique position,” said Emily Green, President of the Minneapolis Area Association of REALTORS® (MAAR). “With supply up and demand for foreclosures virtually disappearing, price growth may moderate but should remain positive.”
Indeed, the Twin Cities have now had 28 straight months of year-over-year median price gains. Foreclosures and short sales made up only 9.5 percent of all new listings and only 12.6 percent of all closed sales. Those are the lowest figures since May 2007 and September 2007, respectively. Homes are still selling quickly. Days on market was down 6.8 percent to 69 days, on average. Sellers are receiving an average of 97.2 percent of their original list price at sale.
“Monthly job growth is approaching 300,000 nationally, and the Twin Cities in particular has the lowest unemployment rate of any major metro area,” said Mike Hoffman, MAAR President-Elect. “We’re positioned well for continued growth.”
All information is according to the Minneapolis Area Association of REALTORS® (MAAR) based on data from NorthstarMLS. MAAR is the leading regional advocate and provider of information services and research on the real estate industry for brokers, real estate professionals
For more information about buying or selling a home, contact the real estate professionals at Hometown Realty in Hutchinson, MN. 320-587-6115.