The supply of homes for sale continued to fall in April, but Twin Cities homebuyers did not show signs of decreasing demand, according to new data from the Minneapolis Area Association of REALTORS®.
Although the number of pending and closed sales fell, it was due to the constraints of low inventory and not waning buyer interest. The market imbalance makes for happy sellers, who are receiving good offers and selling quickly, but some first-time homebuyers may get priced out of some areas if prices increase too sharply.
(All comparisons are year-over year)
- New listings: - 8.3%
- Number of homes for sale: - 19.8%
- Median sales price: + 6.3% to $245,500
- Pending sales: - 8.5%
- Average days on market: - 20.5%
Economic check up
- Minneapolis-St. Paul area unemployment rate: 3.8 percent
- Mortgage rates ticked up slightly to an average of 4.05 percent
- Wages and salaries are climbing the Twin Cities
Where are the listings?
Many areas around the Twin Cities metro are experiencing a strong sellers’ market, so why aren’t more homebuyers jumping in?
One reason is many homeowners who purchased at the height of the market before the Great Recession still can’t afford to move up. While only 7 percent of homeowners have true negative equity (they owe more on their home than it is worth), more than 20 percent don’t have enough equity to cover the costs of selling, moving and a down payment on a new home.
What percentage of homes in your area have “effective" negative equity? Find out using this interactive map from the Star Tribune.
What’s a homebuyer to do?
When inventory is low and demand is high, buyers can expect a lot of competition, especially in the starter home price bracket (homes priced below $250,000). Serious buyers will need to be prepared and move fast when they are interested in a home.