Category Archives: The Skinny

Higher rates continue to cool sales while prices continue their ascent

  • Buyer activity dropped 37.7 percent with 3,611 pending sales
  • Median sales price of Twin Cities homes rose 4.7 percent to $356,002
  • 30-Year mortgage rates are averaging around 7.0 percent, the highest since 2002

(November 15, 2022) – According to new data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, pending sales were down by over a third in October compared to last year. The decline in buyer activity is largely a response to increased mortgage interest rates and many completing purchases in the last couple years. Meanwhile, home prices continue their ascent.

SALES & LISTINGS

Several rate hikes by the Federal Reserve have had their desired effect: to slow borrowing activity and slow the demand for capital. This has significantly cooled home sales activity across the nation, including in the Twin Cities. In October, buyers saw their mortgage interest rates increase to 7.1 percent, a 20-year record. Facing higher monthly payments (about 35.0 percent higher), buyers were reluctant to sign contracts. Pending sales fell 37.7 percent to 3,611 purchase agreements and 4,035 transactions closed, down 33.5 percent. The Twin Cities has not seen a year-over-year decline in demand this substantial since the summer of 2010.

“We quickly forget how the last two years were extraordinary and historic years for housing. There will always be a lull after that. But these rates are exacerbating this,” according to Denise Mazone, President of Minneapolis Area REALTORS®. “The reality is that this is a more typical market but doesn’t feel that way compared to the last few years. Sellers getting 104.0% of their list price in 4 hours with 40 offers is neither normal nor sustainable.”

Seller activity was also down as many hesitated to become buyers and trade in their favorable rates for higher payments. Softer demand has meant homes spend more time on the market—36 days on average or nine days longer than last October but one day longer than 2020. Sellers listed 5,019 properties on the market, 19.7 percent fewer than this time in 2021. Those that did list tended to accept a smaller share of their asking price, averaging 98.2 percent of list price.

INVENTORY & HOME PRICES

The median home price in the Twin Cities increased by 4.7 percent to $356,002. While up, the increase is down from some double-digit price gains in 2020 and 2021. In fact, it’s the smallest increase since the onset of the pandemic. Although the rate of price growth is slowing, prices continue rising as both the homes and buyers in the market skew toward higher price points. Inventory levels remain tight despite the recent shifts toward a more balanced market. The softening in demand has been met with a similar decline in new listings, keeping the balance relatively tight.

“Between changing rates, inflation, an election and a possible recession, there’s a lot of uncertainty in the air right now,” said Mark Mason, President of the Saint Paul Area Association of REALTORS®. “Despite all that, our region still has thousands of eager buyers every month searching for their next home.” October ended with 8,756 homes for sale, 5.1 percent more than last year. Weaker buyer activity has shifted our industry back towards a more balanced marketplace (4-6 months of supply), but buyers should understand we are still in a seller’s market. Month’s supply of inventory rose 26.7 percent to 1.9 months.

LOCATION & PROPERTY TYPE

Market activity varies by area, price point and property type. New home sales fell 18.3 percent while existing home sales were down 33.8 percent. Single family sales fell 32.2 percent, condo sales declined 36.4 percent and townhome sales were down 33.1 percent. Sales in Minneapolis decreased 30.0 percent while Saint Paul sales fell 33.4 percent. Cities like Corcoran, Elko New Market, St. Paul Park and Belle Plaine saw the largest sales gains while Princeton, Centerville, East Bethel and North St. Paul all had notably lower demand than last year.

For more information on weekly and monthly housing numbers visit www.mplsrealtor.com or www.spaar.com

OCTOBER 2022 HOUSING TAKEAWAYS (COMPARED TO A YEAR AGO)

  • Sellers listed 5,019 properties on the market, a 19.7 percent decrease from last October
  • Buyers signed 3,611 purchase agreements, down 37.7 percent (4,035 closed sales, down 33.5 percent)
  • Inventory levels grew 5.1 percent to 8,756 units
  • Month’s Supply of Inventory rose 26.7 percent to 1.9 months (4-6 months is balanced)
  • The Median Sales Price rose 4.7 percent to $356,002
  • Days on Market rose 33.3 percent to 36 days, on average (median of 22 days, up 57.1 percent)
  • Changes in Sales activity varied by market segment
    • Single family sales decreased 32.2 percent; Condo sales were down 36.4 percent & townhouse sales fell 33.1 percent
    • Traditional sales declined 33.1 percent; foreclosure sales rose 45.0 percent; short sales were unchanged from last year
    • Previously owned sales decreased 33.8 percent; new construction sales declined 18.3 percent


From The Skinny Blog.

Rates push sales down further as home prices continue to grow

  • Buyer activity dropped 29.7 percent for pending sales and 23.9 percent for closings
  • Median sales price of Twin Cities homes rose 6.3 percent to $362,000
  • Sellers received 98.9 percent of their original list price, on average

(September 16, 2022) – According to new data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, pending sales were down by over a quarter in September compared to last year. Sellers also accepted a smaller share of their asking price as their listings took longer to sell. Despite this, the homes that are selling are transacting at higher price points than last year.

Sales & Listings

Higher mortgage rates and historically strong demand in 2021 have pushed closed home sales down by double digits for four straight months. Last month had 3,969 signed purchase agreements, 29.6 percent short of 2021 levels and the lowest September figure since 2014. As the hyper-demand from the buying frenzy of the past two years wanes, those who remain in the market have regained some leverage.

“Our buyers can pause and breathe a bit— they no longer feel compelled to skip inspection or go way over list price,” according to Denise Mazone, President of Minneapolis Area REALTORS®. “But some sellers think they’re in the same position they were in a year ago, while some buyers think they’re going to get deals like it’s 2010. As usual, the truth is somewhere in the middle.”

Seller activity was down as many sellers remain apprehensive about also becoming buyers. Softening demand has meant homes linger on the market a bit longer—31 days on average or 34.8 percent longer than last September. Fewer homeowners are willing to relinquish their interest rates and list their homes. Sellers listed 6,002 properties on the market, 17.8 percent fewer than this time in 2021. Those that did list their homes tended to accept a smaller share of their asking price. But, they get to purchase in a less frenzied market.

Inventory & Home Prices

The median home price in the Twin Cities increased by 6.3 percent to $362,000. While still up, the growth is down from double-digit price gains seen in 2020 and 2021 and is the second smallest increase in two years. Although the rate of price growth is slowing, prices remain firm and resilient in the face of declining buyer activity. Housing supply levels remain tight, despite the recent market shifts. And, the softening in demand has been accompanied by a decline in new listings, so both sides have downshifted in tandem without creating the sort of asymmetry or imbalance that could abruptly shake up prices.

“Some might see a disconnect between lower demand and strong pricing right now.” said Mark Mason, President of the Saint Paul Area Association of REALTORS®. “While prices remain firm and resilient, the rebalancing we’ve seen means sellers shouldn’t expect dozens of offers at 10 percent or more above list price on the same day they list. Buyers may feel like they have a greater likelihood of success.”

September ended with 9,002 homes for sale, only 3 more units than last year. The momentum has been shifting back towards a more balanced marketplace (4-6 months of supply), but buyers should understand we are still in a seller’s market. Month’s supply of inventory rose 18.8 percent to 1.9 months.

Location & Property Type

Market activity varies by area, price point and property type. New home sales fell 0.2 percent while existing home sales were down 24.4 percent. Single family sales fell 22.1 percent, condo sales declined 19.8 percent and townhome sales were down 26.3 percent. Sales in Minneapolis decreased 14.7 percent while Saint Paul sales fell only 10.1 percent. Cities like Pine City, Corcoran, Rush City and Delano saw the largest sales gains while Clear Lake, Centerville, St. Anthony and River Falls all had lower demand than last year.

September 2022 Housing Takeaways (compared to a year ago)

  • Sellers listed 6,002 properties on the market, a 17.8 percent decrease from last September
  • Buyers signed 3,964 purchase agreements, down 29.7 percent (4,860 closed sales, down 23.9 percent)
  • Inventory levels were flat at 9,002 units
  • Month’s Supply of Inventory rose 18.8 percent to 1.9 months (4-6 months is balanced)
  • The Median Sales Price rose 6.3 percent to $362,000
  • Days on Market rose 34.8 percent to 31 days, on average (median of 19 days, up 58.3 percent)
  • Changes in Sales activity varied by market segment
    • Single family sales decreased 22.1 percent; Condo sales were down 19.8 percent & townhouse sales fell 26.3 percent
    • Traditional sales declined 23.1 percent; foreclosure sales rose 60.9 percent; short sales were up 50.0 percent (from 2 to 3)
    • Previously owned sales decreased 24.4 percent; new construction sales declined 0.2 percent


From The Skinny Blog.

Home price growth slows as market times rise and demand cools

  • Median sales price was up just 5.6 percent to $369,750, the smallest gain since June 2020
  • Buyer activity pulled back as pending sales fell 23.8 percent
  • Homes took 26 days to sell, 18.2 percent longer than the 22 days last August

(September 16, 2022) – According to new data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, both sales and listing activity were down in August while home price growth has slowed to its lowest level in two years but remains positive. Sellers also accepted lower offers as market times rose.

Inventory & Home Prices

The median home price in the Twin Cities reached $369,750 but the year-over-year growth rate is slowing. While prices are not falling, they’re not rising as quickly as they were. The 5.6 percent price growth in August is below the roughly 8.0 to 16.0 percent gains seen over the last two years. The deceleration in price growth likely reflects the pullback in demand caused by higher interest rates and economic uncertainty. Closed sales were down 20.3 percent in August compared to last year. Buyers also still face low inventory and limited options, although there’s evidence that’s changing.

“We’re seeing a less competitive landscape as the market has slowed given current interest rates,” said Denise Mazone, President of Minneapolis Area REALTORS®. “But the silver lining is that a less frenzied market could spell more inventory and opportunity for persistent buyers.”

August ended with 8,552 homes for sale, nearly flat compared to last year. Although the region is still a seller’s market, the momentum has been shifting back towards a more balanced marketplace. Month’s supply of inventory rose 13.3 percent to 1.7 months.

Sales & Listings

Buyer activity has softened compared to recent years. This is partly caused by higher mortgage rates, but it also reflects demand being pulled forward (i.e. sales that would’ve occurred in 2022/23 instead took place in 2020/21). August showed 4,981 signed purchase agreements, 23.8 percent short of 2021 levels and the lowest August figure since 2014. But seller activity reached its lowest level since August 2012. The easing of demand has impacted how quickly homes sell. Homes remained on market for an average of 26 days, 18.2 percent longer than last August.

“Sellers may notice that their homes are taking an extra few days to go under contract,” according to Mark Mason, President of the Saint Paul Area Association of REALTORS®. “But nobody talks about the fact that even this slower pace is still fast historically. A cooling of red-hot demand and a less intense landscape means a more sustainable and accessible marketplace.”

Sellers listed 6,186 properties on the market, 19.9 percent fewer than last August. Many Baby Boomers are choosing to age in place and aren’t listing their homes. Some homeowners are reluctant to trade into a higher mortgage rate on a higher priced home given economic uncertainty. And, some sellers are choosing to wait given their lack of options once their home sells. The industry has also underbuilt housing for about 15 years, and it will take time to rise out of that deficit.

Location & Property Type

Market activity varies by area, price point and property type. New home sales fell 11.0 percent while existing home sales were down 20.3 percent. Single family sales fell 19.7 percent, condo sales declined 26.7 percent and townhome sales were down 17.4 percent. Sales in Minneapolis decreased 23.3 percent while Saint Paul sales fell 18.9 percent. Cities like Monticello, Golden Valley, and Orono saw the largest sales gains while Stillwater, Chanhassen, and Fridley had lower demand than last year.

August 2022 Housing Takeaways (compared to a year ago)

  • Sellers listed 6,186 properties on the market, a 19.9 percent decrease from last August
  • Buyers signed 4,981 purchase agreements, down 23.8 percent (5,568 closed sales, down 20.3 percent)
  • Inventory levels dropped 1.3 percent to 8,552 units
  • Month’s Supply of Inventory rose 13.3 percent to 1.7 months (4-6 months is balanced)
  • The Median Sales Pricerose 5.6 percent to $369,750
  • Days on Market rose 18.2 percent to 26 days, on average (median of 15 days, up 50.0 percent)
  • Changes in Sales activity varied by market segment
    • Single family sales decreased 19.7 percent; Condo sales were down 26.7 percent & townhouse sales fell 17.4 percent
    • Traditional sales declined 20.0 percent; foreclosure sales fell 20.8 percent; short sales were up 40.0 percent (from 5 to 7)
    • Previously owned sales decreased 20.3 percent; new construction sales declined 11.0 percent


From The Skinny Blog.

Higher rates continue to cool demand, home prices still on the rise

  • Median sales price was up 7.1 percent to $375,000, the slowest increase since June 2020
  • Buyer activity was down, pending sales fell 23.3 percent
  • Homes took 22 days to sell, 15.8 percent longer than the 19 days last July

(August 15, 2022) – According to new data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, buyers in the Twin Cities have struggled to keep pace with the highs of 2021. Pending sales were down 23.3 percent in July compared to last year as buyers signed 4,807 purchase agreements. Buyers have been hampered by increased mortgage rates, still-low inventory, strong home prices and some economic uncertainty.

Sales & Listings

Buyer activity has been softening for 11 of the last 12 months as most acknowledge the frenzied demand of 2020 and 2021couldn’t last. July’s pending sales volume was 12.8 percent lower than July of 2019, reflecting affordability and supply challenges but also hinting at how demand was expedited from 2022/3 into 2020/1. “Many Twin Citizens eager to take advantage of historically low rates and purchase a home leapt at the chance,” said Denise Mazone, President of Minneapolis Area REALTORS®. “Combined with rising rates, that’s left a hole in our buyer pool this year, but there is still plenty of pent-up demand for homes. Plus there’s evidence rates are easing somewhat.” There has not been an influx of supply onto the market. Home sellers listed 6,845 homes last month, down 17.0 percent from last July. Selling activity has been fairly stable overall since 2020, but continuously lagging behind the supply needed to fuel the market demand, until the recent slowdown in sales.

Inventory & Home Prices

Homes in the metro sold for a median of $375,000 last month, 7.1 percent more than last July. That was the slowest growth rate in two years and amounts to $205 per square foot. The recent downshift in buyer activity has offered a small reprieve for persistent buyers thirsty for inventory and less competition. The metro ended July with 8,694 homes for sale, 4.5 percent more than last July. In a welcome development for buyers, inventory levels have grown for three consecutive months and months supply rose to 1.7. That suggests the supply squeeze is loosening but it’s important to recognize we’re still in a strong seller’s market. “Aspiring home buyers still face competition and multiple offers, just slightly less so than the last couple years, “according to Mark Mason, President of the Saint Paul Area Association of REALTORS®. “So while the market has rebalanced slightly, it still favors sellers.”

Location & Property Type

Market activity varies by area, price point and property type. New home sales fell 18.8 percent while existing home sales were down 16.4 percent. Single family sales fell 18.1 percent, condo sales declined 24.5 percent and townhome sales were down 20.8 percent. Sales in Minneapolis decreased 17.5 percent while Saint Paul sales fell 25.0 percent. Cities like Monticello, Golden Valley, and Orono saw the largest sales gains while Stillwater, Chanhassen, and Fridley had lower demand than last year.

July 2022 Housing Takeaways (compared to a year ago)

  • Sellers listed 6,845 properties on the market, a 17.0 percent decrease from last July
  • Sellers signed 4,807 purchase agreements, down 23.3 percent (5,442 closed sales, down 20.2 percent)
  • Sellers levels grew 4.5 percent to 8,694 units
  • Month’s Supply of Inventory rose 13.3 percent to 1.7 months (4-6 months is balanced)
  • The Median Sales Price rose 7.1 percent to $375,000
  • Days on Market rose 15.8 percent to 22 days, on average (median of 11 days, up 57.1 percent)
  • Changes in Sales activity varied by market segment
    • Single family sales decreased 18.1 percent; Condo sales were down 24.5 percent & townhouse sales fell 20.8 percent
    • Traditional sales declined 18.9 percent; foreclosure sales fell 12.5 percent; short sales were down 14.3 percent
    • Previously owned sales decreased 16.2 percent; new construction sales declined 18.8 percent


From The Skinny Blog.

Buyers grapple with affordability challenges amidst rising rates and home prices

  • Median sales price reached a record $380,000 despite declining sales
  • June inventory up 9.8 percent, a second consecutive year-over-year increase
  • Softer demand led to longer days on market, up 5.0 percent to 21 days, on average

(July 18, 2022) – According to new data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, Twin Cities home prices rose as sellers continued receiving strong offers despite slightly longer market times. Meanwhile, buyers signed 18.4 percent fewer purchase agreements than last year. While these signal a rebalancing marketplace, the persistent shortage of homes in the region should keep prices resilient.

Home Prices & Sales

The median home price hit a record $380,000 last month, an 8.6 percent increase from last June and a 23.4 percent increase since the beginning of the pandemic in June of 2020. For the last few years, historically low mortgage rates have offset the effect of rising prices on monthly payments. With rates recently moving from under 3.0 percent to 5.5 percent, the impact of rising prices has increased monthly payments. “While buyers should know that mortgage rates are still well below their long-term average, the increase in rates has had a real impact,” said Denise Mazone, President of Minneapolis Area REALTORS®. “Today’s buyers are more sensitive to that.” Indeed, the housing affordability index reached its lowest level since at least 2004. Buyers signed 5,544 purchase agreements last month, 18.4 percent fewer than last June. That’s the lowest June figure since 2014. But, the decline can be misleading because it’s compared to a uniquely strong market last year. Comparing to pre-pandemic levels, June closings were down just 3.6 percent from June 2019.

Inventory & Listings

A silver lining of moderating buyer activity is its effect on the inventory shortage throughout the region. The metro ended June with 8,020 homes for sale, 9.8 percent more than last June. Inventory gains have been rare, but with a mere 1.6 month’s of supply, buyers are thirsty for more choices. “It’s reassuring to see more homes on the market after a few years of under 2.0 months of supply,” according to Mark Mason, President of the Saint Paul Area Association of REALTORS®. “That said, the gain came mostly from fewer buyers and not more sellers, so we still need more supply and more building activity to balance out the market.” While the Twin Cities saw demand weaken, seller activity was more stable. New listings were down 6.7 percent from last year, with 7,901 homes coming on the market. But relative to June 2020, seller activity increased 4.4 percent.

Location & Property Type

Market activity varies by area, price point and property type. New home sales fell 12.1 percent while existing home sales were down 15.1 percent. Single family sales fell 13.8 percent, condo sales declined 24.5 percent and townhome sales were down 15.1 percent. Sales in Minneapolis decreased 21.7 percent while Saint Paul sales fell 15.8 percent. Cities like Rogers, Minnetrista, and Waconia saw the largest sales gains while New Richmond, Apple Valley, and Farmington had lower demand than last year.

June 2022 Housing Takeaways (compared to a year ago)

  • Sellers listed 7,901 properties on the market, a 6.7 percent decrease from last June
  • Buyers signed 5,544 purchase agreements, down 18.4 percent (6,422 closed sales, down 15.4 percent)
  • Inventory levels grew 9.8 percent to 8,020 units
  • Month’s Supply of Inventory rose 23.1 percent to 1.6 months (4-6 months is balanced)
  • The Median Sales Price rose 8.6 percent to $380,000
  • Days on Market rose 5.0 percent to 21 days, on average (median of 8 days, up 14.3 percent)
  • Changes in Sales activity varied by market segment
    • Single family sales decreased 13.8 percent; Condo sales were down 24.5 percent & townhouse sales fell 15.1 percent
    • Traditional sales declined 15.2 percent; foreclosure sales rose 39.1 percent; short sales were up 100.0 percent (from 4 to 8)
    • Previously owned sales decreased 15.1 percent; new construction sales decreased 12.1 percent


From The Skinny Blog.

Twin Cities housing supply up for the first time in two years

  • There were 6,766 homes on the market at the end of May, 5.3 percent more than May 2021
  • Median Sales Price reached a record $375,000, up 9.0 percent from last May
  • Pending Sales were down 11.8 percent from last year’s May peak

(June 16, 2022) – According to new data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, the Twin Cities metro area ended the month of May with 6,797 homes, 5.3 percent more homes than last May. This is the first year-over-year inventory increase since March of 2020.

Home Prices & Inventory

Inventory growth in the Twin Cities real estate market has been rare over the last 13 years. Despite record sales in 2021, home buyers were met with fewer listings from which to choose. Since the Great Recession, there have only been three periods with multiple consecutive months of year-over-year supply growth. If continued, the 5.3 percent inventory growth in May could hint at a new trend. Meanwhile the median home price rose 9.0 percent to $375,000. While this does amount to a record high, it’s likely June and July will exceed that level. The housing affordability index reacted to higher prices and rates with a reading of 94, meaning the median income was 94.0 percent of the necessary income needed to qualify for the median priced home under current interest rates. Given more listings and fewer sales, a loosening in inventory could cap price gains, but that takes time to play out and prices are unlikely to soften in the short term. Meanwhile, the metro sits at 1.3 month’s supply of inventory, 18.2 percent more than the year prior. A balanced market has four to six months’ supply. “There’s a sense out there that things are rebalancing somewhat,” said Denise Mazone, President of Minneapolis Area REALTORS®. “But it’s important to remember that we have a long way to go before we’re in oversupply territory so prices should remain firm for now.”

Listings & Sales

The Twin Cities saw increased seller activity in May for the first time this year—a possible indication of a rebalancing market. New Listings rose 3.2 percent to 7,930 homes last month. Growth in new listings is a contributor to higher inventory levels as is the partly rate-driven decline in buyer activity. Pending sales fell 11.8 percent in May as buyers signed purchase agreements on 6,076 homes. Declining year-over-year demand has been a theme all year since we’ve been comparing to the extremely strong 2021 market. Compared to 2020, pending sales were up 4.8 percent. “We may not have the same frenzy as last year, but REALTORS® are still busy compared to pre-pandemic levels,” according to Mark Mason, President of the Saint Paul Area Association of REALTORS®. “Listings are still selling quickly, even with record prices and higher rates.” Half of all homes went under contract in under 7 days, which is even with the year prior. The good news for sellers is that—despite a cooling in demand—buyers offered 4.1 percent over list price on average, a small increase compared to last May.

Location & Property Type

Market activity varies by area, price point and property type. New home sales rose 6.7 percent while existing home sales were down 3.2 percent. Single family sales fell 4.1 percent, condo sales declined 3.8 percent and townhome sales were up 4.0 percent. Sales in Minneapolis decreased 7.0 percent while Saint Paul sales fell 3.5 percent. Cities like Vadnais Heights, Buffalo, and Champlin saw the largest sales gains while Ramsey, St. Michael, and Andover had lower demand than last year.

May 2022 Housing Takeaways (compared to a year ago)

  • Sellers listed 7,930 properties on the market, a 3.2 percent increase from last May
  • Buyers signed 6,076 purchase agreements, down 11.8 percent (5,446 closed sales, down 3.8 percent)
  • Inventory levels grew 5.3 percent to 6,797 units
  • Month’s Supply of Inventory rose 18.2 percent to 1.3 months (4-6 months is balanced)
  • The Median Sales Price rose 9.0 percent to $375,000
  • Days on Market fell 4.2 percent to 23 days, on average (median of 7 days, even with May 2021)
  • Changes in Sales activity varied by market segment
    • Single family sales decreased 4.1 percent; Condo sales were down 3.8 percent & townhouse sales rose 4.0 percent
    • Traditional sales declined 2.7 percent; foreclosure sales fell 7.9 percent; short sales were up 100.0 percent (from 3 to 6)
    • Previously owned sales decreased 3.2 percent; new construction sales increased 6.7 percent


    From The Skinny Blog.

Home prices hit $370,000 as rates push affordability to lowest level since 2004

  • Both pending and closed home sales were down about 9.0 percent from last April
  • Inventory was down 9.2 percent to 5,758 units, the twenty-fifth consecutive month of declines
  • Median Sales Price reached a record $370,000, up 10.0 percent from last year

(May 16, 2022) – According to new data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, the Twin Cities metro area saw rising prices, fast market times and strong offers—often over asking price—during April. But rising mortgage rates have forced the affordability index below 100 for the first time since at least 2004.

HOME PRICES & INVENTORY

While the median home price rose 10.0 percent to reach a new record of $370,000—and will likely do so again over the next couple months—declines in affordability have continued to weigh on some buyers who are already fatigued from writing several offers. Historically low interest rates have been offsetting the effect of rising prices on monthly mortgage payments. But that’s quickly changing as the Federal Reserve races to combat high inflation by raising rates. Even so, the long-term average 30-year fixed mortgage rate is about 8.0 percent, above where we currently stand at around 5.2 percent. The affordability index fell to 95, meaning the median income was 95.0 percent of the necessary income needed to qualify for the median priced home under prevailing interest rates.

Despite affordability concerns, the supply-demand imbalance will likely keep prices firm. Some buyers may need to re-evaluate their target price to keep monthly payments at a level they’re comfortable with. We ended April with 5,758 homes on the market, 9.2 percent fewer than April 2021 and the twenty-fifth straight month of year-over-year inventory declines. This amounts to just 1.1 months’ supply of inventory, giving sellers the upper hand (a balanced market has four to six months’ supply). “Even with several justifiable concerns, this market continues to outperform,” according to Mark Mason, President of the Saint Paul Area Association of REALTORS®.

LISTINGS & SALES

Due to several factors, buyer activity has moderated somewhat. First, we’re comparing against the highs of the Covid housing craze from last spring. Second, inventory is even lower and further pressuring sales. Third, rising rates have likely taken some buyers out of the market. Buyers signed 9.2 percent fewer purchase agreements than April of last year and closed on 9.0 percent fewer homes. Sellers listed 7.0 percent fewer homes than last April. Sellers may feel attached to their interest rate and reluctant to list their homes to avoid higher interest rates.

While still high, it’s possible inflation has peaked. Financial experts report that annual inflation moderated for the first time in months. “It’s the rates and payment piece that is of concern to many of the buyers I work with,” said Denise Mazone, President of Minneapolis Area REALTORS®. “The reality is that people will need to buy and sell homes in any environment, but this really puts pressure on those who are on a budget.” Listings spent 9.7 percent fewer days on market than April 2021 on average. But the median days on market showed half of all homes went under contract in under 8 days, which is even with last April’s pace. This could be a sign of stabilization, yet sellers accepted offers 3.8 percent higher than their list price, on average.

LOCATION & PROPERTY TYPE

Market activity varies by area, price point and property type. New and existing home sales fell 3.5 and 8.0 percent, respectively. Single family sales fell 8.3 percent while condo sales rose 1.5 percent. Sales in Minneapolis declined 3.2 percent while Saint Paul sales fell 17.7 percent. The Longfellow, University, Summit Hill and West Seventh neighborhoods saw the largest sales gains while Hopkins, Mounds View, Wyoming and Somerset also had significant demand increases.

APRIL 2022 BY THE NUMBERS (COMPARED TO A YEAR AGO)

  • Sellers listed 7,046 properties on the market, a 7.0 percent decrease from last April
  • Buyers signed 5,693 purchase agreements, down 9.2 percent (4,706 closed sales, down 9.0 percent)
  • Inventory levels fell 9.2 percent to 5,758 units
  • Month’s Supply of Inventory remained level at 1.1 month (4-6 months is balanced)
  • The Median Sales Price rose 10.0 percent to $370,000
  • Days on Market fell 9.7 percent to 28 days, on average (median of 8 days, same as April 2021)
  • Changes in Sales activity varied by market segment
    • Single family sales decreased 8.3 percent; Condo sales rose 1.5 percent & townhouse sales declined 10.9 percent
    • Traditional sales were down 7.8 percent; foreclosure sales fell 24.2 percent; short sales were up 25.0 percent (from 4 to 5)
    • Previously owned sales declined 8.0 percent; new construction sales fell 3.5 percent

April 2022 HOUSING CHARTS

From The Skinny Blog.

Limited inventory pushes median price over $350,000 as spring market heats up

  • Supply is down during the worst inventory shortage in decades
  • Median Sales Price reaches a record $353,000
  • Median days on market is up marginally compared to the frenzy of 2021

(April 15, 2022) – According to new data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, the Twin Cities metro area set a new record median sales price of $353,000, a 7.5 percent increase from March 2021. Even though that’s the first time the metro-wide median price exceeded $350,000, the rate of increase is 30.0 percent less than it was a year ago. The ongoing inventory shortage is mostly to blame, although the 12.0 percent decline in housing inventory this March was far less than the 43.0 percent decline last March.

LISTINGS & SALES

Last month sellers listed 6,416 homes on the market, 4.8 percent fewer than March 2021, but 4.2 percent greater than 2019. Some aging empty nesters are staying put and aging in place while others have chosen to remodel or expand their current home instead of listing it. Many homeowners are “married” to their interest rates and are reluctant to give up their monthly payments given rising rates. Buyers signed 9.2 percent fewer purchase agreements than March of last year and closed on 10.4 percent fewer homes. The declines partly reflect the unique strength of the 2021 market but also possibly a reaction to increased mortgage rates.

The monthly payment on a $350,000 home with 10.0% down increases by $187 per month when rates move from 4.0 to 5.0 percent. “Some buyers are trying to get ahead of further rate increases,” said Denise Mazone, President of Minneapolis Area REALTORS®. “But the truth is that equity gains over time are likely to outpace the slightly higher payments.” Listings spent 10.3 percent fewer days on market than last March on average, after a 36.1 percent decline the year prior. But the median days on market showed a year-over-year increase for only the third time since September 2019. This could be a sign of a more balanced market. Yet sellers accepted offers 2.7 percent higher than their list price, on average.

HOME PRICES & INVENTORY

Home price are expected to continue rising given a chronically undersupplied market with strong demand, but perhaps at a lesser rate. The median price rose 7.5 percent to $353,000; the average price rose 7.0 percent to $409,754—both record highs. On average, buyers are spending about $200 per square foot. The Twin Cities presently has about four week’s supply of inventory (0.9 months), while a balanced market has roughly four to six months’ supply. But over a decade of underbuilding has meant steep competition for most listings. That coincides with a huge Millennial generation aging into prime homeownership years, not to mention the desire for more space for working and learning from home. Even though inventory levels were down, there are signs that supply is beginning to stabilize. “While inventory levels remain low, there are listings that come on market and go under contract quickly that don’t always show up in the month-end inventory count,” according to Mark Mason, President of the Saint Paul Area Association of REALTORS®.

LOCATION & PROPERTY TYPE

Market activity varies by area, price point and property type. New home sales rose 1.4 percent compared to a 10.5 percent dip for previously owned homes. Single family sales fell 9.3 percent while condo sales were down 5.3 percent. Sales in Minneapolis declined 8.8 percent while Saint Paul sales were down 18.2 percent. Hastings, Hugo and Lino Lakes saw the greatest increase in closed sales while Prior Lake, Richfield and Minnetonka saw sales fall by 35.0 percent or more.

MARCH 2022 BY THE NUMBERS (COMPARED TO A YEAR AGO)

  • Sellers listed 6,416 properties on the market, a 4.8 percent decrease from last March
  • Buyers signed 5,252 purchase agreements, down 9.2 percent (3,934 closed sales, down 10.4 percent)
  • Inventory levels fell 12.1 percent to 5,004 units
  • Month’s Supply of Inventory was down 10.0 percent to 0.9 months (4-6 months is balanced)
  • The Median Sales Price rose 7.5 percent to $353,000
  • Days on Market fell 10.3 percent to 35 days, on average (median of 12 days, up 9.1 percent from March 2021)
  • Changes in Sales activity varied by market segment
    • Single family sales decreased 9.3 percent; Condo sales fell 5.3 percent & townhouse sales declined 10.3 percent
    • Traditional sales were down 9.2 percent; foreclosure sales fell 6.9 percent; short sales were up 28.6 percent (from 7 to 9)
    • Previously owned sales dropped 10.5 percent; new construction sales rose 1.4 percent

MARCH 2022 HOUSING CHARTS

From The Skinny Blog.

Sales begin seasonal upswing, but down from last two unusually strong Februarys

  • Twin Cities saw 3,809 signed purchase agreements, down 10.5 percent from February 2021 but above 2019 levels
  • The number of homes for sale at month-end fell 19.0 percent from last year
  • Median Sales Price rose 8.3 percent to $340,000

(March 15, 2022) – According to new data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, buyer activity in the Twin Cities metro showed its first month-over-month gain since August 2021. As the Covid reshuffle continues to temper, sales are down compared to February of 2020 and 2021, but up from 2019 levels.

LISTINGS & SALES

Buyers signed 10.5 percent fewer purchase agreements than last year and closed on 15.3 percent fewer homes. Since 2020, seller activity has remained especially sluggish—the 4,427 new listings are 18.2 percent fewer than February 2020. While the seasonal uptick toward spring market has begun, it may prove challenging to match activity levels from the prior two years, as the pandemic and the prospect of rising rates shifted activity up from 2022 and 2023 into 2020 and 2021 to accommodate working and learning from home.

“Homes sold more quickly last month than they did last February, and prices rose over 8.0 percent,” said Denise Mazone, President of Minneapolis Area REALTORS®. “While we may not reach the heights of 2020 and 2021, the market remains competitive, homes are still selling rapidly often with multiple bids, and buyers and sellers need to be prepared to move quickly.” Market times have been falling for years, but today’s listings spend even less time on the market. Two years ago, half of the listings went under contract in under 40 days, but last month, half of the listings spent fewer than 19 days on the market. That’s more than a 52.0 percent drop.

HOME PRICES & INVENTORY

The median sales price in the Twin Cities rose 8.3 percent from last February to $340,000. That’s exactly half the 16.6 percent year-over-year rate of price growth seen in May 2021. Rising prices are expected to continue in a persistently undersupplied market with historically strong demand. The Twin Cities presently has about three week’s supply of inventory (0.8 months), where a balanced market would supply four to six months’ worth of homes given recent demand.

Inventory levels dipped 19.0 percent from this time last year. Compounded with a 38.2 percent fall from 2020 to 2021, the metro is facing an inventory shortage that should keep prices strong, market times fast, multiple offers fairly commonplace and some sellers getting above asking price. “Homeowners have gained significant equity, particularly over the last few years,” according to Mark Mason, President of the Saint Paul Area Association of REALTORS®. “Having a knowledgeable advisor to navigate a fast and complex process can help buyers be more competitive and successful.”

LOCATION & PROPERTY TYPE

Market activity varies by area, price point and property type. New construction sales fell 15.5 percent compared to only a 12.2 percent dip in sales of previously owned homes. Single family sales tumbled 9.8 percent while condo sales were down an even 10.0 percent. Between Minneapolis and St. Paul, the latter took the harder hit in sales losses. Saint Paul’s sales were 24.8 percent down compared to Minneapolis’ loss of 15.1 percent. Hastings, Delano and Rush City all had more than double the sales from last year while Hugo, Little Canada and East Bloomington weren’t far behind. Sales fell by around 50.0 percent in Prior Lake, New Hope, Big Lake and Golden Valley.

February 2022 by the numbers compared to a year ago

  • Sellers listed 4,427 properties on the market, a 7.3 percent decrease from last February
  • Buyers signed 3,809 purchase agreements, down 10.5 percent (2,769 closed sales, down 15.3 percent)
  • Inventory levels fell 19.0 percent to 4,361 units
  • Month’s Supply of Inventory was down 20.0 percent to 0.8 months (4-6 months is balanced)
  • The Median Sales Price rose 8.3 percent to $340,000
  • Days on Market fell 8.7 percent to 42 days, on average (median of 19 days, down 5.0 percent from February 2021)
  • Changes in Sales activity varied by market segment
    • Condo sales fell 16.0 percent, single family sales fell 14.8 percent & townhouse sales fell 4.6 percent
    • Traditional sales were down 12.6 percent; foreclosure sales were down 44.4 percent; short sales fell 100.0 percent
    • Previously owned sales dropped 12.6 percent; new construction sales decreased by 15.9 percent

February 2022 housing charts


From The Skinny Blog.

Twin Cities Housing Market Starts off the Year Slowly, For Now

  • Metro-wide Inventory is down 24.2 percent since the start of 2021
  • Month’s Supply of Inventory (absorption rate) is at a record low, ~ 3 weeks of supply
  • Median Sales Price rose 10.4 percent to $332,250

(February 15, 2022) – According to new data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, inventory levels in the Twin Cities metropolitan area have reached a decades-long low of 4,221 homes at the end of January. At the current rate of demand, this inventory would last little more than three weeks without the addition of new listings. The market would require six months of supply in order to be considered balanced.

LISTINGS & SALES

Real estate in the Twin Cities saw a peak of buyer activity throughout 2021, but only now are we able to see the extent of that increased demand. Year over year comparisons of pending sales indicate a noticeable drop of 11.7 percent from last January, but a more historical perspective shows that the 3,170 purchase agreements signed last month are comparable to January of 2019 and 2018. Closed sales show a similar picture, 2022 is not starting off with the same fervor as 2021. The same goes for sellers, resulting in an 11.5 percent drop in supply since last January.

“The year began about as expected, with both sales and listings unable to match their year-ago levels,” said Denise Mazone, President of Minneapolis Area REALTORS®. “But don’t get the wrong idea, the market is expected to remain pretty hot this year as demand continues to outpace supply but also as buyers hope to get ahead of rising rates.”

INVENTORY

While the supply of new listings has historically been a concern for over a decade, the public could usually count on consistent year-over-year activity from sellers until 2020. A sharp fall in supply two summers ago followed by a rebound in 2021 led to variations in seller activity unseen since 2015. Last month sellers listed 3,605 properties on the market, our lowest level of seller activity since 2005.

“It’s important that market participants understand what less than 1.0 month of supply means,” according to Mark Mason, President of the Saint Paul Area Association of REALTORS®. “This means well-priced and attractive listings will sell quickly and often with multiple offers in play. Buyers should be patient but prepared to write strong, non-contingent offers while sellers should be ready to move quickly.”

HOME PRICES

The stark contrast between lackluster seller activity and the remaining rush of demand from buyers leaves the Twin Cities with a housing market where half of its listings last no longer than 21 days, down 4.5 percent from a year prior. This strong seller’s market has driven up the price of listings, now at $332,250 which is the highest January median sales price on record. These market dynamics, if left unchanged, show signs of high market prices and stiff competition for buyers as the weather warms.

LOCATION & PROPERTY TYPE

Market activity varies by area, price point and property type. The condominium market has seen a significant increase in the past year, yet January was the first significant drop in the number of condo sales, down 11.5 percent. New construction has hit a downward trend since last summer and this trend continues with a 6.8 percent decrease in sales. Between Minneapolis and St. Paul, the state capitol city fared better for the first month of the year, seeing a 2.3 percent increase in closed sales while Minneapolis experienced a 16.1 percent drop in sales. The suburban cities that showed the most sales growth in January were Savage (100 percent), Chanhassen (50.0 percent), and Stillwater (45.5 percent) while those that lost the most sales from last year were West Bloomington (- 43.9 percent), Lakeville (- 43.0 percent), and St. Louis Park (- 41.7 percent).

January 2022 by the numbers compared to a year ago

    • Sellers listed 3,605 properties on the market, an 11.5 percent decrease from last January
    • Buyers signed 3,170 purchase agreements, down 11.7 percent (3,020 closed sales, down 10.4 percent)
    • Inventory levels fell 24.2 percent to 4,221 units at month-end
    • Months Supply of Inventory was down 20.0 percent to 0.8 months (4-6 months is balanced)
    • The Median Sales Price rose 10.4 percent to $332,250
    • Days on Market fell 2.4 percent to 41 days, on average (median of 21 days, down 4.5 percent from January 2021)
    • Changes in Sales activity varied by market segment
      • Single family sales fell 11.0 percent; Condo sales declined 11.5 percent & townhouse sales were down 4.5 percent
      • Traditional sales decreased 9.3 percent; foreclosure sales tumbled 32.4 percent; short sales fell 69.2 percent
      • Previously owned sales were 9.9 percent lower; new construction sales were 6.8 percent lower

January 2022 housing charts

From The Skinny Blog.