May 2020 is where we really felt the effects of the COVID-19 shutdown. Sales were actually higher than last year in March and April as pending sales from before the shutdown closed. But in May we saw a significant drop as a result of people sequestering at home for a couple months.
To put it in broader context, even though we have been complaining about a need for more new listings for many years, this year not surprisingly took a big 24.1% drop while the world was on COVID-19 hold.
Closed sales also took a big drop, at 22.4%, because there wasn’t much activity in March and April during the coronavirus stay-at-home period.
Where we are going to see the effect going forward is in closed sales, because pending sales were also down, 13.9%. Because closed sales usually lag behind about 6-8 weeks from pending sales, we will likely still be seeing the effects in June and possibly some in July.
Because of the overall shortage of inventory, days on the market before pending sale continued to fall and percent of list price received continued to rise.
Sale price continued to rise because of the laws of supply and demand, although median sales price increase in May 2020 was the lowest it has been all year, at 3.5% over May 2019.
Last month I had a listing that received 32 offers… this week I showed a home that received 30 offers… buyer demand is high!
Months supply of inventory takes into account both supply and demand, which is why I consider it one of the best indicators of the real estate market. The market is considered balanced when there is a 5-6 month supply of homes for sale.
May 2020 months supply dropped 20.0% below May 2019… to a 2 month supply. The months supply of houses and condos has been about equal for a long time, but condo supply increased in April… and May 2020 shows condo supply even higher. Are we seeing the effect of a desire for more space and more social distancing due to the coronavirus? Does this mean that Millennials are ready to move out of a city condo to a house in the suburbs?
Price ranges from $150k-$250k have the most competition and sell the quickest, but it is a seller’s market all the way up to $1M. Throughout the market, competition is fierce because of the inventory shortage.
The data in this post comes from statistics 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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