Twin Cities Home Market Hits Record-Breaking Sales In May
With huge demand for homes in the Twin Cities, home sellers recorded the best May sales in history, the Minneapolis Area Association of Realtors (MAAP) said on Tuesday.
Last month marked the 18th consecutive month where home purchase activity surpassed year-ago levels. Not only did the number of sales rise—up 5.3 percent from the prior year to 6,167 homes sold—but the median sales price rose as well. Record demand pushed median prices in May to rise nearly 6 percent to $236,826. This amount comes second only to the all-time high that was set in June 2006.
“Interest rates and job growth are fueling the demand in our market,” said Cotty Lowry, president-elect of MAAR in a statement. “But we have a serious inventory shortage that we know is holding back buyers, meaning there is still pent-up demand that may not have existed in a more balanced market.”
The average home now lasts only 60 days on market, a sharp decline of 21 days from a year ago. This means buyers are acting faster and sellers often hold most of the bargaining chips. As a result, the median percent of the list price received in May was 100 percent, or exactly what sellers first priced their homes. Furthermore, half of all homes sold for more than their asking price.
Moving forward, if no additional sellers were to bring their house to market, the existing inventory would run out in 2.7 months given the current purchase speed, MAAP said. This is the lowest May month’s supply of inventory on record, dating back 13 years. Five to six months of supply is generally considered a balanced market.
Minnesota’s low unemployment rate—3.4 percent compared to 4.7 percent nationally—has spurred buyers, many of whom are first-time homebuyers, to hit the market. Nevertheless, they aren’t jumping on every residence that’s for sale.
“Despite record demand, not every home sells the day it hits the market in multiple offers,” said MAAR president Judy Shields. “Some areas are more susceptible than others. Sellers hoping for short market times should know price strategy is still one of the most important factors in marketing your home.”