As expected, Minneapolis-St. Paul real estate data released this week show sales for November were stronger than last year at this time by a whopping 67%, reflecting the expected end of the first-time homebuyer tax credit. Pending sales continued to decline…September pending sales were up 61.2% compared to last year, October sales were up 34.4%, and November sales were up only 10.2%. I would expect December sales to take a precipitous drop, bringing sales closer to more normal winter holiday levels.
It will be interesting to see how the extension and expansion of the homebuyer tax credit affects our normal winter swoon. It may take a month or two for the effect to kick in, as buyers and sellers again readjust to new rules and we get through the holiday season. Possible changes to FHA financing could also have an effect if additional cash requirements are enacted. If you are thinking about buying using FHA financing, it could be wise to act sooner rather than later.
New listings continue to follow seasonal trends, with November numbers only 7.4% below last year. The new buyer tax credit for people also selling the home where they have lived at least five years could result in more new listings in the coming months.
Total inventory continues to lag behind previous years, although the townhouse-condo supply increased a bit this month compared to last year. The months supply of inventory has dropped to 5.7 months, the lowest it has been since April 2006. Traditional homes have 7.6 months supply, foreclosures have 1.4 months and short sales have 12.8 months. It will be interesting to see if the new Home Affordable Foreclosure Alternatives Program offering financial incentives and simplifying the short sale process will have a positive effect on short sales.
Although home sales continue to be strongest in the lower price ranges, we are starting to see a shift upward. The percentage change in sales the last 12 months declined in price ranges below $150,000…and increased in all price ranges above $150,000 compared to last month. Months supply of current inventory also declined in all price ranges above $150,000, while the months supply held steady in the bottom two price ranges.
Median price has been continuing to hover on the plateau where it landed in June. The November median sale price was only 2.9% below last year, the lowest year-over-year price decline in over two years. Some of this may be attributed to the slight shift we are seeing to increased sales in higher price categories.
Months supply of inventory by property type continues to drop in all three categories. Both houses and townhomes fall within the range of a 5-6 month supply, which is considered to be balanced between buyer and seller. Their months supply is also coming back together after a couple years of separation, indicating healthy supply and demand for both houses and townhouses.
Unfortunately, averages don't tell the whole story. As we already noted above there are big differences in supply and demand by price range. Lower price ranges are now a seller's market while higher price ranges continue to be a buyer's market.
If you are a move up buyer, this could be a great opportunity to sell in the seller's market and buy in a buyer's market. If you are selling the home you have owned for at least 5 years you may also be eligible for a $6,500 tax credit…making this a 'perfect storm' of opportunity!
The figures above are based on statistics for the combined 13-county Twin Cities metropolitan area released by the Minneapolis Area Association of Realtors. Click here for links to local reports for 125 metro area communities.
Sharlene Hensrud, RE/MAX Results - Email – Minneapolis – St. Paul Real Estate Market Information
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