The real estate market always slows down at the end of the year so a drop in new listings isn’t a surprise. What is a surprise is how much total inventory plummeted in December 2017. You can see from the chart below from the Minneapolis Area Association of Realtors that it appears to have been in free fall. December 2017 inventory was 27.5% below December 2016 inventory… and the lowest in the chart below going back to 2004.
Part of the problem is a shortage of new listings, which of course impacts total supply… which in turn causes home prices to continue to rise. If you think this sounds like a good time to be a seller you are correct… it’s time to get your home on the market ASAP and leap for joy!
Total sales remained fairly stable, buoyed by strong pending sales in the previous months. While December 2017 pending sales were down as expected compared to November, they were only 2% below December 2016… a lack of buyers isn’t the issue, it’s the supply of homes available for sale.
It is this shortage of supply paired with high demand that has kept 2017 monthly median sale price hovering above prior years for the whole year. December 2017’s median sale price of $248,500 was 10% over December 2016. This has also been causing days on market before sale to drop, at 61 days in December 2017.
Months supply of homes for sale is down to only 1.3 months, 31.6% below last December and the lowest on records going back to 2004. All of these factors are causing percent of list price to rise… at 97% in December, more like spring and summer market.
If you are wondering what months supply of inventory means, it is how long it would take for the current inventory to be completely sold if sales continued at the same rate and no new listings were added. The market is considered balanced between buyers and sellers when there is a 5-6 month supply. We are currently in an incredibly strong seller’s market.
When examined by price range, all home prices under $250,000 have less than a one-month supply, and prices $250k-$350k have only a 1.1 month supply. Prices $350k-$1M have a 2.1-3.5 month supply… still a strong seller’s market. Even though homes priced $1M+ are in a buyer’s market, it is a weak buyer’s market not far above balanced. Sales in this price range have shown the highest increase in sales, fueled by new construction.
The property type with the lowest supply is townhomes, with less than a 1-month supply available.
The figures above are based on statistics for the combined 16-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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