To describe the current Twin Cities real estate market using temperature is a tricky task. Think of it as a warm lake with some cool spots. The number of signed purchase agreements and closed sales were down just slightly last month. New listings and inventory also continued to cool, but the homes that are put on the market (especially under $300,000) are red hot—with fast sales and rising prices.
Key insights for June 2018*
- New listings: -1.2%
- Median sales price: +5.7% — $272,000
- Pending sales (signed purchase agreements): -2%
- Average days on market: -15% — 41 days
- Inventory of homes for sale: -16%
Home sale prices continue to rise
Last month, home sellers received an average of 100.3 percent of their original list price for a median price of $272,000, which means buyers are paying full price or slightly more in many cases.
While buyer competition is driving strong offers, sellers must still be judicious in their home pricing; 17 percent of listed homes in the Twin Cities had a price adjustment last month.
And, of course, prices vary around our market based on many factors.
LISTEN: Buying your first home in a sellers’ market (via MPR)
Where are all the listings?
Many buyers wonder, with home prices strong and conditions favorable to sellers, why aren’t more homeowners listing their homes for sale?
There are many factors that contribute to inventory constraints, but one reason is that 20 percent of single family homes are being rented—double what is was 10 years ago, according to a report from the Star Tribune. And with rent prices increasing, many landlords don’t plan on giving up a steady source of income.
Other factors that might lead homeowners to stay put include reluctance to face rising prices and competition to find a new home once their current property sells. Additionally, some homeowners want to keep the lower interest rates on mortgages taken out when rates were at their very lowest.
Condo sales are a bright spot
Single-family homes make up the lion’s share of property sales in the Twin Cities, followed by townhomes and then condos. Sales of condos were the sole property type that saw year-over-year pending sales increase.
- Single family homes: -7.1%
- Townhouses: -14%
- Condos: +8%
Economic check up
- Minneapolis-St. Paul area unemployment rate: 2.3% (Tied as the best in the nation)
- Average rates for 30-year conforming mortgage: 4.625%
- A new study suggests it’s easier to get a mortgage in 2018.
- A strong local economy with good job growth is a positive indicator for the future of homeownership.
- Long term price trends show home sales prices have returned to where they would be if home prices had appreciated 4 percent each year since 1990. Average annual appreciation rates of 3-4 percent are considered moderate and healthy.
The long and the short of it
Many homes in the Twin Cities are selling quickly and with strong offers. Sellers who list while inventory is low have a good chance of attracting buyer attention.
If you’re ready to find out what your home might be worth, reach out to be connected with a market expert in your area. You can also download the Ultimate Guide to Selling Your Home for insider secrets and tips.
*Data courtesy NorthstarMLS for the 13-County Twin Cities metro area for June 2018