Homebuyers in the Twin Cities metro area had more choices last month as homeowners supplied the biggest increase in new listings in almost three years, according to new data from the Minneapolis Area Association of REALTORS®
Key insights for August 2018 (compared to Aug. 2017)*
- New listings: +8% — The largest increase in almost three years!
- Median sales price: +6% ($268,000)
- Pending sales (signed purchase agreements): -3%
- Average days on market: -17% — 40 days
- Inventory of homes for sale: -8% — The smallest decrease in more than three years!
More homeowners are ready to sell their homes – a sign of market moderation
We haven’t put on our happy-dance shoes just yet, but In August, homeowners listed 7.6 percent more homes for sale than in August of last year. It was the largest year-over-year increase of new listings in almost three years.
The new listings will help take pressure off some buyers, especially those looking for homes priced above $250,000.
Pending sales were down 3 percent from last year, mostly because of falling home sales in the entry-level bracket. Home sales above $250,000 were up 7.8 percent.
The conundrum: Rising prices and home affordability
It stands to reason that with home prices rising faster than most families’ wages and mortgage rates increasing, homes would become more difficult to afford for some buyers, especially in the entry-level market.
Despite recent additions of new listings, inventory levels are not yet high enough to have a cooling effect on prices, which would help increase affordability for first-time buyers.
Aside from current homeowners listing their homes for sale, the other way homes can be added to the inventory stock is through new construction, which has seen limited growth in the single-family market.
In August, single-family building permits were up just 2 percent from last year, according to the Builders Association of the Twin Cities (BATC).
The BATC points to labor shortages, building regulations and fees for keeping homebuilding down and pricing out buyers from this inventory option.
Parade of Homes
While new construction tends to cater to the move-up and luxury markets, some builders are adding more affordable options. Green Path homes are energy-efficient homes, some of which are relatively affordable in mid-range price brackets.
Economic check up
- Minneapolis-St. Paul area unemployment rate: 2.6% (The best in the nation!)
- Average rates for 30-year conforming mortgage: 4.87%
- 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
While real estate agents and market experts are encouraged and hopeful that the market is beginning to shift towards a more harmonious balance, most do not expect to see an abrupt shift away from the low-inventory, high-demand conditions we’ve experienced the last few years, especially for first-time homebuyers.
Let’s get started
Can you trust a computer algorithm to determine the value of your home? To get a true idea of what your home could sell for, you need a home value estimate from a professional Realtor. Reach out to be connected with a market expert in your area.
Looking for more information about selling? Download the Ultimate Guide to Selling Your Home for tips and ideas from local professionals.
*Data courtesy NorthstarMLS for the 13-County Twin Cities metro area for August 2018