It seems everyone one I encounter asks me how the real estate market is doing. My answer is we have a hot market… the only thing holding sales down is a shortage of homes for sale. I was at a seminar yesterday where a lender said her pipeline of pre-approved buyers is bursting…they are ready but can't find a home they want to buy, frustrated by the shortage of homes for sale.
New listings were down 7.2% in January compared to last year, but total homes for sale were down more than three times that… down 22.2% compared to last year. But even this amount is deceiving because so many of the ACTIVE listings are sold subject to contingencies such as inspection or review of association documents.
Take Minneapolis, for example… there are currently 737 ACTIVE listings… but 147 of those have accepted purchase agreements contingent upon an inspection. Only 73% of ACTIVE listings are truly available with no accepted contingent offers
Pending sales were stronger than closed sales, which is likely to hold true for a few more months as we move out of winter season. The majority of sales that closed in January likely had accepted offers that became pending sales in November or December.
Buyers are watching new listings like hawks for the right home to hit the market. This results in fairly quick sales for homes priced well and in good condition… while homes that are not as desirable linger on the market.
Perhaps the biggest indicator of our hot market is the months supply of inventory. At the current rate of pending sales, it would take only 2.1 months to deplete the current supply… that indicates a very strong seller's market. The market is considered balanced between buyer and seller when the supply is 5-6 months.
All of these factors, plus a diminishing share of foreclosed homes, results in a median sale price that continues to rise, and a sale price that is only 5% below list price even in January. Expect that to rise… last year list-to-sale price was about 97-98% for sales closed April-September.
Bottom line is, it's a hot market with homes selling quickly and for good prices. A difference from the pre-bubble boom is everyone is smarter.
Buyers are waiting for the right house at the right price, not just snatching up anything… appraisers are more cautious and are not just rubber stamping value… lenders are asking for more information and documentation than you may expect… and astute sellers are preparing their homes better than ever.
New listings have been rising in February… just what we need to propel 2016 to be a year with slightly more sales at slightly higher prices than last year.
The figures above are based on statistics for the combined 13-county Twin Cities metropolitan area released by the Minneapolis Area Association of Realtors.
Never forget that all real estate is local and what is happening in your neighborhood may be very different from the overall metro area.
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