After seven years of a roller coaster real estate market of sharp declines followed by rapid increases in Minnesota and western Wisconsin, 2014 was marked by a return to a more “normal” looking environment. According to data from the Minneapolis Area Association of REALTORS®, total pending sales were down for the year, but the median sales price continued its upward, albeit slower, momentum.
For 2014 as a whole, pending sales were down 6.1 percent from 2013, but in December, pending sales were up 6.1 percent over December 2013, a good omen as we head into the spring buying and selling season.
Median sales prices rose to a seven-year high of $205,739 for 2014, a 7.2 percent increase over 2013. Last year, prices rose at an even faster clip of 14.4 percent. Several contributing factors have been playing into price increases, including limited inventory and the resurgence of traditional homes sales over foreclosures and short sales. Edina Realty experts believe we will continue to see sales price increases and normalization, probably around 2-3 percent.
Homes sold much faster in 2014 than they have in recent years, in an average of 78 days, down 6 percent from 2013 and down nearly 50 percent from 153 days in 2008. Even luxury homes in higher price points (which tend to spend more time on the market) are selling faster, which should bolster seller confidence in 2015.
In 2014, the industry was braced for an increase in interest rates, but it never happened. In fact, mortgage rates are at the lowest point since May 2013. While rates are expected to remain low, they will likely rise, possibly as high as 5 percent by the end of the year.
Recent changes to loan programs are expected to help first time homebuyers, who have been missing from the market recovery, including lower FHA fees and loans requiring just three percent down payments. These programs should help get more buyers – who still have to meet the more stringent qualification standards – to purchase a home and take advantage of the better affordability and benefits of owning versus renting.
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The Monthly Skinny
"The Monthly Skinny" is provided by the Minneapolis Area Association of Realtors
*Edina Realty Appointment Center statistics.
Based on information from the Minneapolis Area Association of REALTORS®, Inc. Data collected from the REGIONAL MULTIPLE LISTING SERVICE OF MINNESOTA, INC., for properties in the 13-county region exclusively.