MSP Real Estate Inventory Nears 14-Year Low As Demand Skyrockets
Home buyer demand continued to outstrip seller supply in the Twin Cities during November, forcing inventory to the brink of a 14-year low, the Minneapolis Area Association of Realtors (MAAR) said on Wednesday.
Following a trend that has lasted for months—including in October—the demand for houses is at its highest point in at least a decade. In November, pending home sales rose 9 percent year-over-year to the highest level recorded during any November since 2004.
The increase in closed sales was even more significant, growing by more than 25 percent this November over last year. MAAR said the increase marked the largest year-over-year improvement in closed sales for any month since February 2012.
All the while, just over 3,400 new properties entered the market last month, a 1.1 percent drop from November 2015, bringing the total active
Balmy weather played a factor in the drive to buy, MAAR president Judy Shields said in a statement. “While it’s not unheard of for pending sales to surpass new listings in a winter month,” she said, “it is relatively uncommon.”
Competitive bidding forced many buyers to act fast and bid high. On average, properties went for 96.7 percent of their original list price (a 0.8 percent rise from last November), and properties spent an average of 61 days on market until sale, which beat the 64-day average of the year so far.
The median sales price rose nearly 6 percent year-over-year to $232,000—beating out the median price homes sold at during the often-busier months of September and October.
Five to six months of housing supply is considered balanced, but the Twin Cities real estate market currently only has about two months worth. MAAR said this is the lowest figure on record for any month since 2003.
“Buyers are feeling the pressure to some degree but still remain sensible,” said Cotty Lowry, president-elect of MAAR, in a statement. “Overall, 2017 is expected to be another good year for housing.”
What remains unclear is how the Federal Reserve’s decision on Wednesday to raise the benchmark interest rate will affect housing demand in December and beyond.