December 2021 real estate update… months supply of inventory drops to all-time low

2021-12-historical months supply-r

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.

2021-12-supply by price range

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.

2021-12-supply by type-construction2

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%.

2021-12-new-pending-closed

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.

2021-12-total-DOM-price

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.

2021-12-percent list price received

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.

2021-12-median sale price

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.

Click here for local reports on 350+ metro area communities

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

RELATED POSTS

Written By

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.

Related Posts

Powervent water heaters: beware of 2-inch vents

🖨 Print Article A powervent water heater uses a fan to get the exhaust gases out of the home. They’re great because there’s almost zero possibility of backdrafting, a common...

Weekly real estate market update 2/7/25… activity is on the rise, could a fixer-upper be for you?

🖨 Print Article New listings and multiple offers are on the rise in tandem. I can attest to that, as we reviewed 12 amazing offers on one of my new...

Subscribe to Our Newsletter for Market Updates & Mid-Century Modern Listings

Our weekly HomesMSP Update includes current local market information and a curated list of mid-century modern properties for sale, plus posts from an inspector, a lender, a stager, info about neighborhoods, life in the Twin Cities… even recipes!

This field is hidden when viewing the form

Blog Categories

Archives

Sharon and John Hensrud

About Us

The HomesMSP Team is committed to meeting you where you are and listening… really listening to understand you so we can use our extensive knowledge of the market and local neighborhoods to give you personalized service.