The Twin Cities metro area kicked off 2017 with a healthy boost of new listings—the second strongest gain in new listings in nearly a year, according to new data from the Minneapolis Area Association of REALTORS® (MAAR).
- Sellers listed 4,304 properties—3.1 percent more than in Jan. 2016
- The new listings were not enough to satiate buyer demand as pending sales increased 4.3 percent
- High buyer demand led to a 25 percent decline in available inventory
- The median sales price increased 4.7 percent over last January to $225,000
- The overall average days on market (DOM) was 79, down 7 percent from last year
- For homes $190,000 - $250,000, the average DOM was 65 days
- For homes priced over $500,000, the average DOM was 145 days
More listings needed
Like a strong cup of espresso, positive movement in new listings gives the market a boost, but local experts agree more listings are needed to ensure healthy moderate price growth. If inventory levels continue to lag and prices rise quickly, buyers will begin to be priced out of the market.
Some buyers are already experiencing this phenomenon and have adopted the "drive until you qualify" adage, according to Edina Realty regional manager Jim Young.
Best areas to be a home seller
The balance between supply and demand in real estate is measured using a metric called the months’ supply, or absorption rate. (Learn how this metric works.) In short, a months' supply of more than six months is considered a buyers’ market; less than six means the market favors sellers.
In the 13-county metro area, the overall months’ supply of homes was 1.6 months at the end of January, putting us well into seller’s market territory, but some areas have even tighter inventories yet.
The following cities have less than one month’s supply of inventory, meaning high buyer demand is far outpacing sellers listing their homes:
- Mounds View
- Apple Valley
- St. Louis Park
- Spring Lake Park
- Columbia Heights
The situation can get even tighter when you look at neighborhood-level and price point data. The North Loop in Minneapolis has just two weeks’ worth of inventory. A professional Realtor can tell you what is happening in your area and what kind of demand there is for a home like yours.
Economic check up
- The Minneapolis-St. Paul area unemployment rate is 3.6 percent, among the top 10 best for metropolitan areas in the nation
- Mortgage rates have recently been in a holding pattern, but are expected to slowly rise throughout the year
- Incomes in the U.S. are finally starting to rise, which should help bring new buyers to the market, especially first-time homebuyers, as long as home prices don’t outstrip wage increases