Thursday, April 7th, 2016
By Aubray Erhardt on Monday, April 4th, 2016

It’s no secret that we’re experiencing an inventory shortage. Consumers and real estate professionals are feeling the frustration of a low housing supply after submitting multiple offers without success. This trend is not unique to the Minneapolis and St. Paul area, according to Jonathan Smoke, Chief Economist for Realtor.com:

“The increase in sales is resulting in continued tighter-than-tight supply—measured by NAR to be four months in January… that metric measures the number of months it would take to sell the current inventory of available homes, at the current pace. Six to seven months’ worth of homes on the market is considered normal; four months is cray-cray.”

The present conditions have some professionals wondering what brought us to this point. In an article written by Steve Cook of Real Estate Economy Watch, he lists six reasons that explain what’s keeping owners from selling:

1. One in five homeowners with a mortgage still doesn’t have enough equity to sell.
2. Buyers who bought during the 2004-2006 boom are waiting to make a profit.
3. Inventory shortages are squeezing move-up buyers.
4. There are five million fewer homes to be sold.
5. New home construction was decimated by the housing crash and hasn’t yet recovered.
6. The Boomer timetable has been delayed.

Here are some ideas that might help sellers or real estate professionals adapt to changing conditions:

1. Know your market. Each area is unique and it’s important to stay informed so you can anticipate possible changes. Use MAAR’s market reports or InfoSparks to find the most recent numbers.
2. Be honest and up front. You can’t control the market but you may prevent some disappointment or unreasonable expectations by giving an accurate picture of the market on the front end.
3. Be Prepared to Act Fast. When entering into a multiple offer situation it’s important to have finances in order and be prepared to make quick decisions.
4. Focus on the positive. David Arbit, MAAR’s Director of Research and Economics recently reported that job and wage growth trends remain encouraging. The unemployment rate continues to decline and we’re steadily producing sufficient private jobs to absorb newcomers to the labor force. Wages are growing at their fastest pace in years—an encouraging sign that should offset declining affordability brought on by rising prices and interest rates. Locally, the latest Bureau of Labor Statistics figures show the Minneapolis-St. Paul-Bloomington metropolitan area had the second lowest unemployment rate of any major metro area at 3.1 percent compared to 4.9 percent nationally. Mortgage rates are still below 4.0 percent compared to a long-term average of about 8.0 percent. Rates actually went down after the Federal Reserve’s December hike, though marginally higher rates are expected this year.
5. Serve as a resource. At the end of the day, it is the client’s decision on whether or not they choose to sell. However, real estate professionals should provide the resources necessary to help their client make the most informed decision (market stats, financing, pricing, marketing, etc.).

Judy Shields, Minneapolis Area Association of REALTORS® (MAAR) President has shared her perspective on the situation:

“This spring market will be a telling one for a number of reasons. Many would-be buyers are waiting on sellers. Early indicators such as mortgage applications suggest demand is only likely to strengthen. The uncertainty comes on the supply side, but there’s a good chance we’ll see more inventory this year.”

As the spring season unfolds, we can prepare for the unexpected and work within the current market conditions. Low supply levels are likely to persist in the near term, but it’s important to note that buyers are still finding quality homes—perhaps with a bit of patience and persistence. Hang in there. It’s well worth it.

Sources:

6 Ways to Explain Low Inventory
DAILY REAL ESTATE NEWS | WEDNESDAY, MARCH 23, 2016

Where Have All the Sellers Gone?
REAL ESTATE ECONOMY WATCH | MARCH 17, 2016

From The Skinny Blog.

Posted in The Skinny |
Monday, April 4th, 2016

For Week Ending March 26, 2016

With spring comes the welcoming of another season: the annual springtime seller’s market. Low inventory levels nationwide are inching sales prices higher and dropping the number of days that homes are staying on the market. With interest rates remaining unexpectedly low, there is even more incentive for buyers to competitively bid on new listings.

In the Twin Cities region, for the week ending March 26:

  • New Listings decreased 15.9% to 1,488
  • Pending Sales increased 4.4% to 1,384
  • Inventory decreased 17.9% to 12,214

For the month of February:

  • Median Sales Price increased 3.5% to $207,000
  • Days on Market decreased 9.4% to 96
  • Percent of Original List Price Received increased 1.1% to 95.2%
  • Months Supply of Inventory decreased 25.0% to 2.4

All comparisons are to 2015

Click here for the full Weekly Market Activity Report. From The Skinny Blog.

Posted in Weekly Report |
Monday, March 28th, 2016

For Week Ending March 19, 2016

Heading into the spring buying season, consumers are, on average, earning higher incomes than in recent years, and there is greater trust in job security compared to last year. While these factors heighten confidence in the health of the housing market, home buyers – and especially first timers – would benefit from more inventory and slow price increases.

In the Twin Cities region, for the week ending March 19:

  • New Listings decreased 3.1% to 1,762
  • Pending Sales increased 6.0% to 1,288
  • Inventory decreased 17.8% to 11,959

For the month of February:

  • Median Sales Price increased 3.5% to $207,083
  • Days on Market decreased 9.4% to 96
  • Percent of Original List Price Received increased 1.1% to 95.2%
  • Months Supply of Inventory decreased 25.0% to 2.4

All comparisons are to 2015

Click here for the full Weekly Market Activity Report. From The Skinny Blog.

Posted in Weekly Report |
Monday, March 21st, 2016

Posted in Monthly Skinny Video |
Monday, March 21st, 2016

For Week Ending March 12, 2016

A fresh eagerness in the warming air combined with relatively affordable prices have buyers perusing and plucking homes like spring flowers, resulting in healthy sales activity. With gas prices remaining fairly low, consumers have full tanks to visit more homes. So fluff those decorative pillows and set out the cookies for your open houses: the buyers are coming and appear to be ready to bid.

In the Twin Cities region, for the week ending March 12:

  • New Listings increased 1.8% to 1,796
  • Pending Sales increased 22.8% to 1,262
  • Inventory decreased 17.6% to 11,704

For the month of February:

  • Median Sales Price increased 3.6% to $207,280
  • Days on Market decreased 9.4% to 96
  • Percent of Original List Price Received increased 1.1% to 95.2%
  • Months Supply of Inventory decreased 28.1% to 2.3

All comparisons are to 2015

Click here for the full Weekly Market Activity Report. From The Skinny Blog.

Posted in Weekly Report |

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