2016 was an interesting year for the world at large and the real estate landscape was not excluded. The Minneapolis/St. Paul metro area added on another year of marked recovery which made up nearly all ground lost in the Great Recession for many metrics, according to new data released by the Minneapolis Area Association of REALTORS®.
The market hit many milestones last year. Here are just a few:
- Buyers closed on nearly 60,000 homes, the highest since 2005
- The median sales price reached an all-time high of $232,000
- Inventory of homes for sale fell to a 14-year low
- Average days on market fell to 64 days, a 10-year low
Break it down – see how market segments performed in 2016 compared with 2015
- Condo sales rose 10 percent; townhome sales rose 10 percent; single family home sales rose 5.1 percent
- New construction sales rose 15 percent; previously owned sales rose 5.7 percent
- Traditional home sales rose 10 percent, foreclosures fell 25 percent and short sales fell 31 percent
Low inventory could dampen growth
- Extremely low inventory levels have created a supply-side crunch that could start to squeeze out some buyers as prices continue to rise
- New inventory will be critical to balancing the market and maintaining affordability for the broadest swath of buyers
Luckily, price increases mean than many homeowners are now out from being underwater on their mortgages and are now in a position to make a move. When priced correctly, most sellers are receiving their full list price, or very close to it.
Luxury market update
Homes priced above $500,000 experience a different dynamic than the rest of the housing market. Sellers in this price range can expect a longer time on the market and less frenzied buyer competition.
- In December, the average days on market was 141, down 5.4 percent from last year
- The number of sales was up nearly 5 percent, while new listings were up just 1.7 percent
- The months’ supply of luxury homes for sale was 5.3 in December—the lowest it’s been in at least 10 years. A falling absorption rate can indicate improving conditions for sellers.
Economic check up
- The Minneapolis-St. Paul area unemployment rate is 3.0 percent, among the best in the nation
- Mortgage rates have fallen slightly for the last few weeks following a steady rise through the last quarter of 2016. Rates should continue to climb, but experts don’t believe the hikes will be drastic
- Incomes in the U.S. are finally starting to rise, which should help to bring new buyers to the market, especially first-time homebuyers