April 2021 real estate update… average sale price 103.4% of list price

2021-04-historical percent list price

As I scrolled through the data for April released by the Minneapolis Association of Realtors this week what struck me as different this month wasn’t the inventory or months supply that have been extremely low for a long time… but the average list-to-sale price which has really shot up. You can see in the chart above that average sale prices never came close to average list prices until 2018, then last year it was persistently hovering around 100%… then this year it really took off, now at 103.4%. This is the average, so keep in mind many sold for prices significantly higher than that. If you are buying this year, you should think of list price as a starting point not an end point.

This is a result of inventory and months supply of inventory that continue to fall because of intense competition. There simply are not enough homes for sale to fill the demand. Pending sales in new construction homes increased about double that of previously owned homes as buyers chose new construction as an option to avoid multiple bids and unknown prices.

2021-04-total-supply-type

This is in spite of an increase in new listings of 21.7% compared to last April. Pending sales increased even more, by 33.6%. New listings are not able to keep up.

2021-04-new-pending-closed

Average days on market dropped 34% compared to last year, to only 31 days. In reality, half of homes go under contract within 8 days of listing, the fastest time in over 14 years. Median sales prices have been steadily increasing, this month to the highest in recorded history, $337,000. What has been a sudden increase is the percent of list price received. I charted that month-to-month for 2021 rather than comparing it to previous years to show how dramatically it has shot up.

2021-04-DOM-percent-price2

Increases like this are not sustainable. New listings have been increasing in May. If they continue to rise, they may eventually catch up to demand but it will take awhile. Millennials are the largest generation in history, even larger than the Baby Boomers, and they are in buying mode. Let’s hope older generations decide the time is right to sell to increase supply. Demand will likely diminish somewhat when interest rates rise, but that doesn’t seem likely in the near future.

Months supply of homes for sale is low regardless of price range. It is amazing to me than that it is a seller’s market even at prices over $1,000,000. Condos have the biggest supply by type.

2021-04-supply by type1

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.

Click here for local reports on 350+ metro area communities

Sharlene Hensrud, RE/MAX Results – shensrud@homesmsp.com

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I love what I do! Highly insightful, analytical and creative, there is nothing I love more than helping you find the right solution for your real estate transition. My mission is to serve my clients with honesty and integrity, exceeding their expectations in service and support… and to help others by donating a portion of every transaction to Habitat for Humanity.

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