The Twin Cities real estate market continues to be driven by inventory… and the shortage continues. The red line on the chart above indicates this year’s supply, which is 17.3% below last year.
The real indicator, however, is supply in relation to demand… which is reflected in months supply of inventory (how many months it would take to sell all current inventory at current rate of sales). You can see how dramatically it is falling… which is also reflected in falling days on market before sale. May had 2.3 months supply of inventory, and an average 51 days on market… a strong seller’s market.
This brings fierce competition for homes as soon as they come on the market, which drives prices. Sellers received an average of 99.5% of list price, which in turn drove median sales price up to $250,000. The days of low-ball offers on new listings are long gone. These days you are lucky to buy without getting into multiple offers.
Some people worry that we may be getting into another bubble, but conditions are very different from 10 years ago. As you can see in the chart of days on market below from the Minneapolis Area Association of Realtors going back to 2007, days on market were dramatically higher than they are today. And today a buyer actually has to have a source of income to buy a home.
The supply-demand ratio does vary by price range and and property type. It should come as no surprise that typical first-time home buyer price ranges under $250,000 are in highest demand, but it is also still a seller’s market in the $350k-$500k price range. The $500k-$1M price range is a weak buyer’s market, with price ranges over $1M a strong buyer’s market.
People sometimes ask me if it is harder to sell townhomes than houses. As you can see in the chart by property type, the answer is no. Townhomes are in shortest supply, followed by condos. Part of this is being driven by down-sizing Baby Boomers selling their bigger houses which are in lower demand and buying townhomes and condos in high demand smaller sizes and lower price ranges. Baby Boomers often find themselves in competition with first-time homebuyers.
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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