Nationally, 2017 started with the lowest supply of homes for sale since 1999. That is a 3.6 months supply, which means it would take 3.6 months to sell them all at the current rate of sales. The market is usually considered balanced with a 5-6 month supply… 3.6 months is a sellers market.
That is the national picture. Our Minneapolis-St. Paul market started the year with only a 1.6 months supply, the lowest I have ever seen. The actual number of homes for sale is 30% of the supply in 2007 and a 26.3% drop from last year, fueled by strong sales as both interest rates and rents rise. Many renters are buying as they find it cheaper to own a home as rents continue to rise.
As Baby Boomers downsize and first-time homebuyers leave apartments they are often in competition for the same homes. As a result, townhomes have the biggest shortage at 1.1 months… condos have a 1.4 months supply and houses 1.8. Price ranges below $350,000 all have a months supply of 1.3 or less… $350-$500 a 2.5 month supply, $500-$1M a 4.6 month supply and $1M+ an 11.7 month supply.
The months supply for all price ranges was down compared to last year, with the biggest drop in the price range below $120,000 followed by the $250,000-$350,000 price range dominated by move-up buyers.
What does this mean for you?
If you are a buyer…
Expect stiff competition for the homes that are available and be prepared to act quickly when you find a home you like. Don't expect to get a 'deal' on price… often the 'deal' in today's market is being able to buy without getting involved in multiple offers.
If you are a seller…
Be prepared to move quickly, especially if you are in high demand price ranges and locations. Have a Plan B in case you can't find your next home right away. If you have the resources, consider buying first so you aren't homeless. Don't think this means you don't have to prepare your home for sale… buyers are savvy. It is the homes that are priced right in great condition that sell quickly for the best prices.
Check local market reports on 350+ Twin Cities metro area communities to find out what is happening in your neck of the woods.