Twin Cities Housing Still A Seller’s Market In October
Buyers looking for homes throughout the Twin Cities metro are facing a market unseen since the early 2000s, the Minneapolis Area Association of Realtors (MAAR) said on Monday.
Sellers received a median percent of 99.6 percent of the original list price for their homes in October, which ranks as the highest rate in 11 years. Homes, on average, aren’t spending more than 60 days on the market—down more than 14 percent from a year ago.
The number of houses available is also at a near-record low. Currently, there are just over 12,600 active properties, or approximately 19 percent less than the same month last year. If no additional homes were added to the market, MAAR predicts the inventory would bottom out in 10 weeks. A supply of five to six months is generally considered to be a balanced market.
“Demand is still soaring while listing activity has weakened,” said Judy Shields, president of MAAR, in prepared remarks. “Partly because of that, we expect prices to remain firm through the winter months barring any unforeseen events.”
Demand is highest for homes priced between $190,000 and $250,000, followed by those in the $250,000 to $350,000 range. The median sales price in October rose 6.5 percent from last year to $230,000 as sellers typically received multiple bids on their listing.
More than 4,400 pending sales were made last month, of which single-family homes led in number of sales. Sales of condos and townhomes, however, experienced the largest year-over-year sales increase, MAAR said.
“Buyers are still very much motivated by the current environment,” Cotty Lowry, MAAR’s president-elect, said in a statement. “It’s weak seller activity that is holding this market back. As this recovery moves into its sixth year, it’s critical to remember that markets and economies are never ‘due’ for a decline the way the Cubs were ‘due’ for a World Series win. There’s usually a reason.”
The Twin Cities region’s unemployment rate of 3.3 percent—the fourth lowest in the nation—has played a part in the continued demand for housing. Fixed mortgage rates, which stand at 3.55 percent locally for a 30-year fixed mortgage, are also amplifying demand. Historically, a 30-year fixed rate mortgage has averaged at about 8 percent, MAAR said.
Alongside the demand for existing homes, residential construction of new housing units (particularly single-family homes) has been on the rise. While previously owned properties continue to make up the largest share of sales in the Twin Cities area, MAAR noted that newly constructed properties posted a stronger year-over-year gain.