Declining inventory has been a primary concern in the real estate market since 2015. The good news from December 2018 is that it closed out the year with inventory 4.5% over December 2017… not much, but indicating a new trend after 6 straight months of increasing inventory.
This marked the sixth month in a row where new listings were more than the previous year… enough to indicate a new trend.
But don’t panic… this doesn’t indicate the bottom is falling out of the market, but rather indicates a trend towards a more balanced market as lack of inventory begins to recede.
Closed sales were down 9.9% in December 2019 compared to last year, but pending sales were only down 3.3% indicating closed sales should rise again.
Median sales price continued to increase, with December 2018 4.0% over the previous year. Days on market continued to drop, but percent of list price received moved down, which seems to indicate less competition. Of course this is always the case in December, the real test will be what happens in 2019.
Months supply of inventory in December 2018 was 13.3% ahead of 2017, but was still only 1.7 months. Don’t worry, the seller’s market won’t go away soon. The market isn’t balanced until we have a 5-6 month supply.
Supply varies by property type, with townhouses in shortest supply and houses in highest supply. It also varies by price range, with less than a 2-month supply in prices below $350,000. It doesn’t become a buyer’s market until prices over $1,000,000.
The Fed has indicated the number of interest rate increases in 2019 will be halved, which should be good news for buyers. Housing inventory has been the driving force in the market the last few years, but affordability may take over in 2019.
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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Sharlene Hensrud, RE/MAX Results – shensrud@homesmsp.com
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