Twin Cities months supply of inventory dropped to less than a month in December 2021… at 0.8 months, the lowest on record. Breaking it out by price range, property type and previously owned vs new construction is even more dramatic.
All price ranges under $1M are hovering around a 1-month supply or less, with the $250k-$350k the lowest at only half a month supply! Even price ranges over $1M aren’t doing much better, at 2.4 months… I remember when those prices had more than a 12-month supply.
When you break it down by houses vs townhouses vs condos, townhomes always used to be the lowest supply, with condo supply soaring above both houses and townhomes. In December houses and townhomes were the same, at 0.7 months with big drops of -30.0% and 22.2% compared to last year. But condos had the biggest drop, now down to a 1.6 month supply after a drop of 42.9% compared to 2020.
The supply of previously owned homes is dwarfed at only half a month, reflecting the highest level of existing home sales in 15 years. No wonder more and more homebuyers are turning to new construction, with the biggest supply at 3.3 months. Keep in mind this is still a low supply… the market is considered balanced when there is a 5-6 month supply.
I had clients go the custom home route and wait a full year to have it completed due to supply chain issues, but at least they got the home they wanted and had a good experience despite the delays. Amazing custom build experience with Thorson Homes!
A drop in activity is always expected in December, but with such a low supply of homes available it isn’t surprising. New listings dropped 18.5% compared to December 2020, pending sales dropped 12.4% and closed sales dropped 3.9%.
In spite of the drop in sales, inventory continued to drop with December 2021 below December 2020 by 24.9%. Days on the market dropped to 33 days, and median sales price continued to rise, to $331,000 and 7.8% ahead of last December.
The inventory shortage is what has been causing the competition to drive the prices up, and all but three months in 2021 had average sale prices over list price. The year 2021 both began and ended with average sale prices at 99.5% of list price.
But escalating prices due to these increases meant that the year ended with median sales prices higher than the beginning of the year even though they followed the usual downward arc.
I have been reading that nationally fewer buyers are waiving inspections and guaranteeing appraisals than were happening at the frenzied peak in 2021. Hopefully this is a sign we are moving towards a more healthy market in 2022.
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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