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July 2022 Housing Report

New listings down as total number of homes for sale increases
MINNEAPOLIS (August 15, 2022)
 — In July, closed sales fell 19.2% compared to a year ago, with 7,904 transactions across the state. New listings were also significantly down, declining 14.2% compared to July 2021, although the total number of homes for sale rose 6.4%. Across the state, there was a 1.9-month supply of homes on the market, up almost 19%. Despite signs of a slowing market, the average home price was up 9% to $391,958, and total days on the market decreased nearly 4% to 25 days, indicating that competition for homes in an affordable price range remains high. Sellers were still receiving 101% of their asking price, although that number was down 1.7% from July of last year.

“After two years of record-breaking sales, the market is beginning to look more normal. And that’s good news for buyers,” said Chris Galler, CEO of Minnesota Realtors. “While there’s still fierce competition for the best homes at affordable price points, the increasing inventory is beginning to ease those frantic bidding wars. Buyers are feeling less pressured and taking the time to do inspections. The sale may take longer, but the upside is it reduces the likelihood of future legal disputes. Rising interest rates remain a barrier, especially for first-time homebuyers who are locked out of the market. In the short term, this is increasing demand for rentals and pushing up prices. As the overall housing supply grows and inflationary pressures ease, the trends will favor those who want to own a home.”

May be an image of text that says '13,539 Homes for Sale $339,900 Median Sales Price +6.4% vs July 2021 7.9% vs July 2021 Minnesota Realtors® July 2022 Housing Report 7,904 Closed Sales -19.2% vS July 2021 25 Days on Market 3.8% vs July 2021'

July year-over-year summary of key market indicators:

  • Closed sales decreased 19.2% to 7,904
  • Median sales price increased 7.9% to $339,900
  • Average sales price increased 9.0% to $391,958
  • New listings decreased 14.2% to 9,958
  • Pending sales decreased 19.5% to 7,298
  • Days on the market decreased 3.8% to 25 days
  • Homes for sale increased 6.4% to 13,539

Closed Home Sales Across Minnesota by Region

In July, closed sales declined in 12 out of 13 regions compared to a year ago, bringing Minnesota’s average number of closed home sales down 19.2% year over year. Only one region reported an increase: North Central at 4.9%. The smallest declines were seen in East Central at 8.1%, Southwest Central at 8.7%, and Upper MN Valley at 13.5%. The largest declines were reported in Northwest at 31.5%, Southwest at 31.7% and Headwaters at 39.2%. See the chart below for more details comparing closed home sales for July 2022 to July 2021.

The seven-county Twin Cities region comprises Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington counties. The official Minneapolis-St. Paul-Bloomington metropolitan statistical area recognized by the Census Bureau consists of 16 counties, on which MAR & SPAAR local associations report.
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June 2022 Housing Report

Median sales price climbs and number of overall homes for sale rises
MINNEAPOLIS (July 15, 2022) — In June, closed sales of homes declined by nearly 14% compared to a year ago, with a total of 9,208 properties sold across the state. New listings were down 6.4% year-over-year even as the total number of homes for sale increased 8.2% to 12,298 properties. Overall housing inventory increased significantly, up 21.4% over last June to 1.7 months’ supply of homes on the market. Despite softening activity relative to last year, consumer demand drove the median sales price up 6.2% to $345,000, and the average price increased 9% to $401,319. Sellers were still receiving an average of 102.5% of their asking price, although this marks a slight 0.7% decline compared to June of last year.

“Although new listings were down, the state’s total housing supply was up, drawing more prospective buyers into the market,” said Chris Galler, CEO of Minnesota Realtors. “As we look at the decline in closed sales, it’s important to remember that these numbers are relative to last June’s abnormally heated market. What we are seeing this month is more closely aligned with historical norms for this time of year. Still, as higher interest rates and inflation continued to play a role, many first-time buyers were sidelined. The buyers who are successfully competing have the money to stay in the game. This dynamic is unlikely to change until we can help more buyers close the gap with tools like downpayment assistance, and broadly increase construction of more affordable homes.”

May be an image of text that says '12,298 Homes for Sale $345,000 Median Sales Price 8.2% vs June 2021 Minnesota Realtors® 6.2% vs June 2021 June 2022 Housing Report 9,208 Closed Sales 23 Days on Market 13.7% vs June 2021 8.0% vs June 2021'

June year-over-year summary of key market indicators:

  • Closed sales decreased 13.7% to 9,208
  • Median sales price increased 6.2% to $345,000
  • Average sales price increased 9.0% to $401,319
  • New listings decreased 6.4% to 11,417
  • Pending sales decreased 16.6% to 8,124
  • Days on the market decreased 8.0% to 23 days
  • Homes for sale increased 8.2% to 12,298

Closed Home Sales Across Minnesota by Region

In June, closed sales declined in 11 out of 13 regions compared to a year ago, bringing Minnesota’s average number of closed home sales down 13.7% year over year. Only one region reported an increase: North Central at 5.9%. The smallest declines were seen in Headwaters at 1.5%, Southwest Central at 5.1%, and Arrowhead at 9.7%. The largest declines were reported in the 7-County Twin Cities at 16.0%, East Central at 18.8% and Northwest Central at 20.7%. See the chart below for more details comparing closed home sales for June 2022 to June 2021.


The seven-county Twin Cities region comprises Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington counties. The official Minneapolis-St. Paul-Bloomington metropolitan statistical area recognized by the Census Bureau consists of 16 counties, on
which MAR & SPAAR local associations report
.

View full regional and county reports here.

View statewide report here.

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May 2022 Housing Report

Median sales price of a home climbs as inventory increases
MINNEAPOLIS (June 10, 2022)
 — The supply of homes coming on the market rose in May, with new listings up 3.6% compared to a year ago. Across the state, there were 10,408 homes for sale, a 4.8% rise over May 2021. Even so, closed sales were down 6.5% compared to last year as the median sales price increased 10.2% to $341,500. Overall, there was a 1.4-month supply of homes on the market, up almost 17% from the year before. Even though sales were down, competition for properties was heated. Sellers received an average 103.2% of the asking price, a 0.3% increase over last year.“The increase in new listings and higher levels of inventory is encouraging for buyers coming into the market,” said Chris Galler, CEO of Minnesota Realtors. “We should remember that the decline in closed sales compares to the unusually heated environment of 2021. What we’re seeing is aligned with historical norms for this time of year. However, it is still difficult for first-time homebuyers to break in. Higher interest rates, and inflationary pressures in the wider economy are taking a toll on this group. Buyers who are successfully closing on properties can leverage more financial resources to compete. The fact that homes regularly sell for more than the asking price is drawing more sellers into the market. This trend is likely to continue playing out for the remainder of the 2022 selling season.”

May year-over-year summary of key market indicators:

  • Closed sales decreased 6.5% to 7,622
  • Median sales price increased 10.2% to $341,500
  • Average sales price increased 8.8% to $393,572
  • New listings increased 3.6% to 11,380
  • Pending sales decreased 12.0% to 8,577
  • Days on the market decreased 10.3% to 26 days
  • Homes for sale increased 4.8% to 10,408

May be an image of text that says '10,408 Homes for Sale $341,500 Median Sales Price 4.8% vs May 2021 Minnesota Realtors® +10.2% vS May 2021 May 2022 Housing Report 26 7,622 Closed Sales Days on Market -6.5% vs May 2021 10.3% vs May 2021'

Closed Home Sales Across Minnesota by Region

In May, closed sales declined in 11 out of 13 regions compared to a year ago, bringing Minnesota’s average number of closed home sales down 6.5% year over year. Two regions reported increases: Northwest at 19.4%, and Southeast at 3.5%. The smallest declines were seen in Upper MN Valley at 2.4%, Headwaters at 3.2%, and Southwest at 8.9%. The largest declines were reported in Arrowhead at 20.3%, West Central at 22.0%, and Southwest Central at 25.7%. See the chart below for more details comparing closed home sales for May 2022 to May 2021.

The seven-county Twin Cities region comprises Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington counties. The official Minneapolis-St. Paul-Bloomington metropolitan statistical area recognized by the Census Bureau consists of 16 counties, onwhich MAR & SPAAR local associations report.

View full regional and county reports here.

View statewide report here.

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April 2022 Housing Report

By MNR News posted 5/11/22

New listings shrink, interest rates creep up, and demand remains high

MINNEAPOLIS (May 10, 2022) — With closed sales down by almost 11% over last April, the sales season was off to a comparatively slower start. Historically, the numbers indicated a return to more normal patterns for this time of year. Declines in new listings, which were down nearly 7% compared to a year ago, contributed to softening sales. Statewide, there were 8,567 homes for sale, down 9.6% from April 2021. This equates to just over a one-month supply of properties on the market, a trend that has persisted since the end of 2020. Despite the limited inventory, buyer demand remains high, pushing the median home sales price in Minnesota up 11.5% to $340,000. On average, sellers received 102.8% percent of their asking price, a 0.7% increase over April 2021.

“As low inventories and high consumer demand have become the new normal, market pressures continue driving up the median price of a home,” said Chris Galler, CEO of Minnesota Realtors. “Interest rates continue to rise, too. A 30-year fixed mortgage is now 5.6% and still climbing. That’s why the affordability index, which measures whether the average family earns enough to obtain a mortgage on a typical home, dropped 29% over last year. This environment disproportionately impacts lower- and mid-income buyers—especially first-time homebuyers. Increasing the availability of affordable homes calls for a range of solutions, from down-payment assistance and more new construction to incentives for fence-sitting homeowners to sell their properties. There are no magic bullets, but over time these approaches will yield good results.”

April year-over-year summary of key market indicators:

  • Closed sales decreased 10.9% to 6,444
  • Median sales price increased 11.5% to $340,000
  • Average sales price increased 12.6% to $388,667
  • New listings decreased 6.7% to 9,814
  • Pending sales decreased 9.5% to 8,124
  • Days on the market decreased 16.7% to 30 days
  • Homes for sale decreased 9.6% to 8,567

May be an image of text that says '8,567 Homes for Sale $340,000 Median Sales Price -9.6% vs April 2021 11.5% vS April 2021 Minnesota Realtors® April 2022 Housing Report 30 6,444 Closed Sales Days on Market -10.9% vsApril vS April 2021 vs April 2021'

Closed Home Sales Across Minnesota by Region

In April, closed sales declined in 12 out of 13 regions compared to a year ago, bringing Minnesota’s average number of closed home sales down 10.9% year over year. Only one region reported an increase: Southwest Central at 3.6%. The smallest declines were seen in Southeast at 7.3%, 7-County Twin Cities at 8.5%, and Southwest at 8.9%. The largest declines were reported in South Central at 19.8%, Headwaters at 22.9%, and West Central at 28.6%. See the chart below for more details comparing closed home sales for April 2022 to April 2021.

The seven-county Twin Cities region comprises Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington counties. The official Minneapolis-St. Paul-Bloomington metropolitan statistical area recognized by the Census Bureau consists of 16 counties, on
which MAR & SPAAR local associations report.

View full regional and county reports here.

View statewide report here.

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March 2022 Housing Report

New listings decline while demand remains high
MINNEAPOLIS (April 21, 2022) — Closed sales fell by just over 8% compared to March of last year, indicating a softening, though still robust housing market. New listings in March were down nearly 6% compared to a year ago with 8,926 properties coming on the market. Statewide inventory shrank by almost 11% to 7,808 homes for sale, which is just one month’s worth of supply. Consumers were not deterred by the tight market. Buyer demand drove the median home sales price in Minnesota up 9.2%to $322,000.On average, sellers were receiving 101.5% percent of their asking price, a 0.8% increase over March of last year.

“The decline in closed sales during March is in line with recent state and national trends and reflects homeowners’ reluctance to sell their homes and become buyers in a hyper-competitive environment where interest rates and home prices are rising,” said Chris Galler, CEO of Minnesota Realtors. “The same dynamic is motivating consumers to compete fiercely for diminishing inventory. This likely will be the trend for the rest of the year. In the bigger picture, it signals a return to more normal market conditions like those preceding the pandemic. Ultimately, we anticipate this will stabilize what has been a historically overheated housing market.”

May be an image of text that says '7,808 Homes for Sale $322,000 Median Sales Price 10.7% vS Mar. 2021 Minnesota Realtors® 9.2% vs Mar. 2021 March 2022 Housing Report 5,511 Closed Sales 37 Days on Market -8.4% vs Mar. 2021 -11.9% vs Mar. 2021'

March year-over-year summary of key market indicators:

  • Closed sales decreased 8.4% to 5,511
  • Median sales price increased 9.2% to $322,000
  • Average sales price increased 8.4% to $368,161
  • New listings decreased 5.8% to 8,926
  • Pending sales decreased 12.2% to 7,211
  • Days on the market decreased 11.9% to 37 days
  • Homes for sale decreased 10.7% to 7,808

Closed Home Sales Across Minnesota by Region

In March, closed sales declined in 11 regions compared to a year ago, bringing Minnesota’s average number of closed home sales down 8.4% year over year. Two regions reported increases: the Upper MN Valley at 34.5%, and Southeast at 5.1%. The smallest declines were seen in Southwest Central at 2.1%, Central at 2.2%, and South Central at 4.0%. The largest declines were reported in Northwest at 31.8% and West Central at 32.3%. See the chart below for more details comparing closed home sales for March 2022 to March 2021.

The seven-county Twin Cities region comprises Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington counties. The official Minneapolis-St. Paul-Bloomington metropolitan statistical area recognized by the Census Bureau consists of 16 counties, on
which MAR & SPAAR local associations report
.

View statewide report here.

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Why Are Home Prices Still On the Rise?

MINNPOST.COM

By: Greta Kaul, MinnPost’s data reporter.

 

Anybody who knows anybody house hunting in the Twin Cities right now has probably heard the horror stories: in the current real estate market, some people are putting offers on houses far and above the sellers’ asking price — and getting beat by people making even higher offers.

In recent years, low interest rates and high demand for a limited number of houses currently on the market has driven home prices up and up and up — and up, and up — even through a pandemic recession.

Even with mortgage interest rates rising — and expected to rise more soon — home price increases show no signs of slowing down, yet.

Why prices are up?

The rise in housing prices is nothing new, though prices weren’t rising quite this steeply until the pandemic hit. If you go back to about 2012, the market started to show a steady recovery from the price plummet of the Great Recession.

“The market rebuilt strong all the way through, up until the COVID pandemic,” said Chris Galler, the CEO of Minnesota Realtors. Then, the market picked up — for a few major reasons on both the demand and supply side of the equation.

On the demand side, things went a little nuts during the pandemic. Many office workers were suddenly using their homes as offices. The kids were home from school, too, which caused many to re-think their living situations and what they wanted out of a home.

Between government stimulus checks and staying home, household savings increased, allowing some people to save up for down payments. At the same time, low mortgage interest rates — under 3 percent for a 30-year fixed-rate mortgage at times during the pandemic — made it cheaper to borrow money.

And on top of all that are generational dynamics. Many millennials — people in mid-late-20s to early 40s — are the biggest generation since baby boomers — are in a prime home buying age group, which means a lot of people are in the market. At the same time, baby boomers are living longer and staying in their houses longer than past generations had, restricting the supply of units on the market.

The supply-side issues have roots in the Great Recession, when the construction of homes ground to a halt after the bottom fell out of the real estate market. In Minnesota as elsewhere, the number of homes built lagged behind growth in the population.

“Supply is lagging demand at tremendous levels,” said Libby Starling, director of the Federal Reserve Bank of Minneapolis’ Community Development and Engagement Department, who estimates that the seven-county Twin Cities metro’s housing stock is short 80,000 housing units relative to what’s needed to keep pace with population growth.  “What we’re seeing is the pressure of demand when there’s simply not enough supply to meet it.”

While home construction has picked up, it’s not making up for the lost years. Additionally, the rising cost of building materials means new homes are less affordable than they might be otherwise.

***Put the demand and supply issues together and you have a lot of competition for a limited housing stock. Realtors often consider the market to have good inventory levels if there are six months worth of homes for sale, meaning it would take about six months to sell all the houses on the market. Inventory has been a lot lower than that lately, dropping from 0.9 months last February to 0.7 months this February in the Twin Cities,*** according to Minnesota Realtors. 

Low inventory and high demand has prompted realtors to try to entice sellers into the market. In high-demand neighborhoods, some realtors knock on doors or drop off flyers that encourage homeowners to sell their houses or specify the types of homes their clients are looking for, including their budget.

“We’re having to actually go and pursue things through all different avenues to find things for [buyers],” said Tracy Baglio, who has been a realtor in the Twin Cities for decades and is the former president of the St. Paul Area Association of Realtors.

It’s in this environment that houses are selling quickly. Stories of multiple over-asking offers within the first day on the market are common. And in the Twin Cities, sellers, on average, are getting 100.9  percent of the list price for their homes compared to 100.2 percent a year ago, according to Minnesota Realtors.

All the supply and demand mismatch has created an especially tough homebuying environment for people looking to buy in the lower end of the market, Starling said.

Starling said some analysis suggests that with tight inventory in the middle of the market, households that can afford $400,000 or $500,000 homes are instead placing high bids on homes under that budget, beating out lower bids. Investors, too, are able to put attractive offers on homes, driving up prices.

“[That’s having the subsequent effect on affordability for lower income households, for whom these are the only options,” Starling said.

Another bubble?

Given fast-rising home values, Starling said it’s valid to ask whether this is another housing bubble, like the one that preceded the Great Recession. But the situation today is different in many ways that make it unlikely housing prices will see a major recession like they did at that time.

 

Chris Galler
Chris Galler

Leading up to the 2008 recession, people could borrow a lot of money to buy a house, without putting much — if anything — down, Galler said. This caused prices to rise as people paid large sums for homes. Lenders were also less scrutinizing of credit scores, which led some people to get in way over their heads, Galler said. When the Great Recession hit and home values dropped, many people were underwater on their mortgages, owing more than their houses were worth. Ultimately, there was a rash of foreclosures.

 

 

Today, Galler said, is different. Lending standards are stricter. Lots of houses are being bought with 20 percent or more down.

At a basic level, the fundamentals are pretty different now compared to then, Starling said, and without some huge factor — like the shutdown of a major Twin Cities employer that moves thousands and thousands of jobs out of the state, it’s not likely.

“I think the fundamentals are very much that we need more housing to keep up with household growth in our region,” she said. “Household growth is slowing but still we have a lot of housing needs to catch up on.”

Slowdown ahead?

While housing prices don’t seem likely to drop rapidly like they did when the 2008 bubble burst, there are some signs that the rapid growth in prices may start to slow down.

During the pandemic, there were a lot of factors injecting money into the economy: government stimulus payments, an increase in savings as people stayed home and low interest rates helped money flow, contributing to faster-than-usual inflation.

Mortgage interest rates began to tick up in early 2021. In mid-March, the Federal Reserve raised interest rates, and has signaled they will rise further – an effort to slow down inflation — in the future.

Even with interest rates rising steadily over last year and the recent rate hike — weekly 30-year fixed-rate mortgage interest rates averaged  4.7 percent in the last week, a jump from less than 4 percent in March — the housing market hasn’t shown signs of slowing down yet.

The effect of the recent rate hike, mid-March, likely hasn’t been seen in the market yet, said Andrew Babula, director of the real estate program at the University of St. Thomas Opus College of Business. Many people closing on houses now were locked into rates before the hike. 

Behavior around housing doesn’t change as quickly as it does around, say, grocery store or gasoline purchases, Galler said. If you look at the trajectory of interest rates over time, they still remain very low.

“People say, well, once we hit the high interest rates people won’t buy homes,” Galler said. “They will. They did during the ’80s, when we had 15, 16, 17, 18 percent interest rates.”

Now, with interest rates expected to rise further, some people may be trying to buy quickly before they rise more.

But the effect of the rate hikes are likely to show up eventually, Babula said.

“The expectation is that is going to slow things down,” he said. Given that supply and demand issues remain, the rate will likely have some dampening effect on price increases but not stop them entirely.

“Prices will probably not continue to increase at the rate … they have been, but they’ll either remain pretty steady or slowly go up,” he said.

Still a good time to buy?

Given all the factors at play — rising prices and rising interest rates, a lot of buyers may be asking themselves whether now is a good time to buy a house.

That depends more on the homebuyer’s situation than it does on market factors, Galler said.

If people feel secure in their job, like the neighborhood they’re buying in, can afford the mortgage payment and plan to stay for at least five to seven years, those are good reasons to buy a house, Galler said.

“Price appreciation has been significant because of  low inventory the last few years and very, very low interest rates. But it probably will go back to a more normalized marketplace and that’s where that five to seven years really comes in,” he said.

Baglio said the fact that investors — who buy based on numbers and not emotions — are buying is an indication the market is strong.

Her biggest advice for prospective buyers in this market is to have patience in this competitive market.

“Just have patience for the right thing,” she said.

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January 2022 Housing Report

Closed sales are down as new listings decline.

MINNEAPOLIS (February 10, 2022) — Strong buyer demand and a shrinking number of homes for sale in Minnesota drove prices up in January. Closed sales of residential homes were down 9.9% compared to January 2021, while inventory plummeted 24.3%. As homebuyers competed in a tight market, the median price rose 8.5% to $295,000. The affordability index, which measures whether a typical family earns enough income to qualify for a mortgage loan on the average home, was down 15.4% over last year. New listings dropped 11.2% and there were only 6,631 homes for sale across the state, 24.3% less than a year ago. It is still a seller’s market, as homeowners received 98.7% of their asking price, an increase of 0.4%.“As the year opens, inventory shortages continue to frustrate many buyers. And those that do close on homes are paying significantly more,” said Chris Galler, CEO of Minnesota Realtors. “Affordability is a significant concern as home prices increase faster than wages. Also, the Federal Reserve has indicated they will increase interest rates in the next few weeks. Higher interest rates, higher home prices and low inventory levels will challenge many first-time home buyers trying to enter the marketplace.”

January year-over-year summary of key market indicators:

  • Closed sales decreased 9.9% to 4,365
  • Median sales price increased 8.5% to $295,000
  • Average sales price increased 9.0% to $338,754
  • New listings decreased 11.2% to 4,791
  • Pending sales decreased 10.9% to 4,497
  • Days on the market decreased 10.9% to 41 days
  • Homes for sale decreased 24.3% to 6,631

May be an image of text that says 'Homes for Sale 6,631 -24.3% vs Jan. 2021 Median Sales Price $295,000 8.5% vs Jan. 2021 Minnesota Realtors® Jan. 2022 Housing Report Days on Market Closed Sales 4,365 -9.9% vs Jan. 2021 41 -10.9% vs Jan. 2021'

Closed Home Sales Across Minnesota by Region

In January, closed sales declined in 11 regions compared to a year ago, bringing Minnesota’s average number of closed home sales down 9.9% year over year. Two regions reported increases, with Southwest Central marking double-digit gains, at 10.4%and South Central at 7.8%. Seven regions saw double-digit closed home sale declines. The largest of these were North Central, down 40.9%, East Central, down 24.6%, and Northwest, down 24.4%. See the chart below for more details comparing closed home sales for January 2022 to January 2021.The seven-county Twin Cities region comprises Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington counties. The official Minneapolis-St. Paul-Bloomington metropolitan statistical area recognized by the Census Bureau consists of 16 counties, on which MAR & SPAAR local associations report.

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2021 Twin Cities Housing Report

 Tags: Market DataPress Releases

 

Tight Supply And Record Demand Pushed Prices Higher, Market Times Lower And Sapped Inventory

Minneapolis–Saint Paul, Minnesota (January 24, 2022) – In 2021, housing demand reached a 20-year high while the number of homes for sale hit a 20-year low, according to an annual report issued by Minneapolis Area REALTORS® and the St. Paul Area Association of REALTORS®. That dynamic has been driving virtually every other housing indicator. For sellers, the year brought record prices, blazing fast market times, offers over asking price and a thin market where their homes stood out. 

“While the year was undeniably strong, we did see sales activity slow and price gains moderate in the second half of the year,” said Mark Mason, President of the Saint Paul Area Association of REALTORS®. “Ten percent price growth or higher simply isn’t sustainable long term. But we do expect the landscape to remain competitive in 2022 after not knowing what to expect the last couple years.” 

For buyers, motivation from historically low mortgage rates, a desire for more space for remote work and learning, and an economy recovering from the pandemic crashed right into the supply shortage. These factors have caused some buyer fatigue and raised affordability concerns. The supply-demand imbalance has created a competitive environment where multiple offers are commonplace. 

“Some aspiring buyers grew frustrated with a market favoring sellers. I worked with several buyers who wrote upwards of five offers but we kept losing out, particularly in the more affordable segments,” said Denise Mazone, President of the Minneapolis Area REALTORS®. “The [housing] shortage is so persistent. We need about five to six times our current inventory levels just to reach a balanced market. That said, these low mortgage rates have partly offset the effect of rising prices on monthly payments.” 

While single family homes make up most of our market, sales of townhomes and condos rose ten times as fast. Labor constraints and supply chain disruptions meant builders listed fewer—and buyers closed on fewer—newly built homes than in 2020. Despite some concerns around forbearances, lender-mediated activity (foreclosures and short sales) declined significantly from already low levels to about half a percent of all sales. 30-year fixed rates started the year at 2.65 percent and ended at 3.1 percent, though they’ve already touched 3.45 percent in 2022 given rising inflation. That could dampen demand in 2022 and restrain price growth which, if combined with an increase in listings, may start to impact market balance. We’ve been in a seller’s market for 10 straight years; perhaps a shift in the power balance is just what disheartened buyers need. 

2021 By The Numbers Compared To 2020 

  • Sellers listed 75,536 properties on the market, a 1.1 percent decrease from 2020 
  • Buyers closed on 66,319 properties, up 2.7 percent (65,937 pending sales, up 0.2 percent) 
  • The Median Sales Price rose 11.4 percent to $339,900
  • Inventory levels fell 26.4 percent to 6,742 units on average over the last 12 months 
  • Months Supply of Inventory was down 33.3 percent to 1.2 months on average (5-6 months is balanced) 
  • Days on Market decreased 34.9 percent to 28 days, on average (median of 11, down 38.9 percent) 
  • Changes in Sales activity varied by market segment 
    • Single family sales were up 0.8 percent; condo sales grew 25.1 percent; townhome sales increased 2.6 percent 
    • Traditional sales rose 3.5 percent; foreclosure sales were down 53.1 percent; short sales fell 51.7 percent 
    • Previously owned sales increased 3.7 percent; new construction sales fell 6.2 percent 
    • $1M+ luxury sales surged 50.6 percent to a record high 

Charting The Market

Seller activity (new listings) was down slightly from 2020 and reached its lowest level since 2014 despite record sales. Some drivers include hesitance around showings during a pandemic, having no place to go, refinancing to a lower rate, weak new construction activity and Baby Boomers aging in place instead of listing their homes. Disheartened buyers have been thirsty for more inventory for years.

 

 

 

 

Housing demand has rocketed higher over the last two years. Buyers were motivated by a desire for more space to work and learn from home, historically low interest rates, more options due to remote work and maybe even a fear of missing out. The condo and luxury $1M+ sub-markets outperformed other market segments. Sales would’ve undoubtedly been higher if we had sufficient supply.

 

 

 

 

With supply at a 20-year low and demand at a 20-year high, it’s no surprise the median sales price rose to set a new record. Home prices have risen 126.6% from their low point in 2011 and 47.8% from their prior 2006 peak. Rising prices boost equity and theoretically should motivate some reluctant sellers. But it also gives rise to affordability challenges.

 

 

 

 

Inventory levels declined almost every year since 2007, bringing housing supply levels down 84.4% from their peak. On average, buyers had 6,800 options during the year and nearly 9,000 in September. This supply-side constraint has led to bidding wars and rising prices. The shortage has frustrated some buyers—particularly at the entry-level price points. More supply is vital to market health and to increase housing opportunities.

 

 

 

 

Multiple offers—often above asking price—has allowed sellers to yield 101.9% of their asking price. That varied by area, property type and price point. Sellers find that listings stand out in an undersupplied market. Proper pricing was still important for motivated sellers. But a historic high for this ratio of sold to list price reflects highly motivated buyers as well as the imbalance between supply and demand.

 

 

 

 

Homes are selling at the fastest pace on record. Between May and July, half the homes sold in under a week, but more like 11 days for the year. That’s down 90.5% from 2008. Here again the inventory shortage and historic demand meant buyers pounce on attractive listings right away. Homes didn’t linger on the market for long. Even so, more homes selling in record time and at record prices couldn’t entice more sellers onto the dance floor.

 

For the full detailed report see link below:

http://marketstatsreports.showingtime.com/MAAR_04cpm/MAAR_ANN_2021_revised.pdf

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December 2021 Housing Report

Competition for scarce stock pushes median price up
MINNEAPOLIS (January 12, 2022)
 — Marking a chilly end to a hot year in the Minnesota housing market, closed sales of residential homes were down 4.0% compared to December 2020. As new listings sank 14.3% over the previous year, buyers continued chasing diminishing inventory, driving up the median sales price by 8.0% to $300,000. The average home sold within just 36 days, that is six days faster than the 42-day average in December 2020. Sellers were still well positioned to benefit from buyer demand, receiving 98.7% of their asking price, a 0.2% increase over last December. As the year closed, there was barely a month’s supply of homes in the state’s housing stock—down nearly 25% from December 2020.“As 2021 ends, we see the return of a normal seasonal cycle. Gaps compared with the previous year reflect the remarkably high volume of sales in December 2020. Seen in the larger historical context, 2021 ended on a high and healthy note,” said Chris Galler, CEO of Minnesota Realtors. “The increasing median and average price for homes reflects the fact that buyers are still actively competing for properties. Limited inventory will continue for the foreseeable future due to escalating construction costs, labor and materials shortages, zoning requirements and regulatory burdens. As buyer demand increases, home prices will rise. Even if interest rates go up in the spring, these initial increases are unlikely to diminish Minnesotans’ appetite for buying homes in 2022.”

December year-over-year summary of key market indicators:

  • Closed sales decreased 4.0% to 7,137
  • Median sales price increased 8.0% to $300,000
  • Average sales price increased 9.4% to $351,135
  • New listings decreased 14.3% to 3,591
  • Pending sales decreased 12.4% to 4,595
  • Days on the market decreased 16.3% to 36 days
  • Homes for sale decreased 24.5% to 7,121

Closed Home Sales Across Minnesota by Region

In December, closed sales declined in nine regions compared to a year ago, bringing Minnesota’s average number of closed home sales down 4.0% year over year. Four regions reported increases, with three areas marking double-digit gains: South Central at 22.1%Northwest at 14.0% and West Central at 10.2%. By contrast, four regions marked double-digit closed home sale declines: Headwaters down 20.0%, Southwest down 19.4%, Southwest Central down 15.6%, and Arrowhead down 14.6%. See the chart below for more details comparing closed home sales for December 2021 to December 2020.

The seven-county Twin Cities region comprises Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington counties. The official Minneapolis-St. Paul-Bloomington metropolitan statistical area recognized by the Census Bureau consists of 16 counties, on
which MAR & SPAAR local associations report
.
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5 Radon Facts

Although Minnesota is blessed with an abundance of clean air and water, a silent hazard lurks in the state’s rocks and soil. Produced from decaying uranium and radium, radon gas is present in Minnesota homes at three times the average level in the United States. Fortunately, steps can be taken to detect and mitigate.

Following are five facts about radon, and some resources for taking action.

1. What is Radon?
An odorless, colorless, radioactive gas that is a widespread health hazard in Minnesota.

2. Is Radon Bad for Health?
According to the U.S. Environmental Protection Agency (EPA), radon exposure causes 21,000 lung cancer deaths a year. 40% of Minnesota’s homes have elevated levels of the gas.

3. All Homeowners Should Test for Radon
Although the Minnesota Department of Health (MNDOH) recommends that all homeowners test for radon, it is not legally required. According to the EPA, radon levels of 4.0 picocuries (pCi/L) and above are hazardous to human health.

4. Radon Mitigation Systems Are Highly Effective

If testing reveals elevated levels of radon, installing a mitigation system is a highly effective way to reduce the threat. However, there are no federal or state laws requiring homeowners to do so.

5. Home Sellers Must Disclose the Presence of Radon

The Minnesota Radon Awareness Act requires homeowners to disclose any knowledge of radon concentrations in writing to any potential buyer. 

What You Need to Know About Radon Testing and Mitigation 

Testers must be licensed

As of January 2019, a new Minnesota law required all professional radon testers to get a state license and abide by stringent testing guidelines. 

What happens during a professional radon test?

The Minnesota Radon Licensing Act requires radon-testing professionals “to produce accurate, defensible, and reproducible test results.” For the most precise reading, separate tests are performed for each unique foundation type on your property: 

  • Basement 
  • Crawlspaces 
  • Slab-on-grade spaces below enclosed porch
  • Other areas as required 

Radon testers also must produce detailed reports about the type of equipment used, specifics about testing locations, internal and external environmental conditions during the test, and other factors. 

How much does a radon mitigation system cost?

When dangerous levels are discovered, MNDOH highly recommends installing a radon-mitigation system. These systems cost from $1,200 to $2,500 and can be installed by one of the nationally certified radon-mitigation professionals listed on MNDOH’s Radon Service Providers page. 

To learn more, visit the Radon page on the MNDOH website.