Sales up, price growth strong, market times fast, but new listings down and supply levels very low
(February 17, 2021) – According to new data from the Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, buyer activity in the 16-county Twin Cities metro continues to climb above 2020 levels. Closed sales rose 14.6 percent from last January and new signed purchase agreements were up 5.6 percent over last year. That marks the strongest January pending sales since 2005 and the highest closed sales figure since at least 2003.
Despite the unyielding commitment from buyers in 2020, there are not enough homes on the market—particularly in the affordable ranges—to satisfy the historic demand. Sellers listed 8.8 percent fewer homes than January 2020, further shrinking an already historically low inventory of available homes.
“Last year was incredibly strong and so far 2021 is keeping up the pace,” according to Todd Walker, President of Minneapolis Area REALTORS®. “Rates are as attractive as they’ve ever been and the demand is persistent, but the challenge is still the lack of supply.”
The number of homes for sale in January was down 42.6 percent compared to a year ago. That amounts to 0.9 months of supply, while a balanced market has 4-6 months of supply. This dynamic has given rise to four other trends: sellers are getting historically strong offers, homes are selling in record time, multiple offers and competitive bidding have become commonplace and home prices are rising quickly relative to incomes.
“There are many motivated buyers out there but not nearly enough homes for them on the market,” said Tracy Baglio, President of the Saint Paul Area Association of REALTORS®. “Proper pricing is still critical, but sellers are accepting offers that are at or very close to list price, occasionally above it in the first-time buyer segments.”
Pending sales were up 39.4 percent in Minneapolis and 14.0 percent in St. Paul, indicating buyer interest remains quite strong in the core cities. Perhaps surprisingly, condos saw the strongest sales growth followed by single family and then townhomes. New construction sales rose 12.2 percent compared to a 16.0 percent increase for previously owned homes. Sales of luxury properties ($1M+) have been rallying—up 75.0 percent from last January.
January 2021 by the numbers compared to a year ago
- Sellers listed 3,989 properties on the market, an 8.8 percent increase from last January
- Buyers signed 3,519 purchase agreements, up 5.6 percent (3,335 closed sales, up 14.6 percent)
- Inventory levels fell 42.6 percent to 4,823 units
- Months Supply of Inventory was down 47.1 percent to9 months (5-6 months is balanced)
- The Median Sales Price rose 11.5 percent to $301,000
- Days on Market decreased 37.3 percent to 42 days, on average (median of 22, down 50.0 percent)
- Changes in Sales activity varied by market segment
- Single family sales were up 16.3 percent; condo sales rose 18.3 percent; townhome sales increased 7.8 percent
- Traditional sales rose 16.2 percent; foreclosure sales were down 35.1 percent; short sales fell 44.4 percent
- Previously owned sales were up 16.0 percent; new construction sales climbed 12.2 percent
Seller activity rose a modest 0.1 percent from 2019 while closed sales were up 7.7 percent. That marks the highest sales figure since at least 2003 and the highest new listings count since 2016. Listing activity was constrained due to health concerns, remodeling activity, a lack of options and homeowners staying in their homes longer.
“Predictably, the result of record sales combined with ultra-low inventory meant rising prices and sellers accepting stronger offers in less time,” according to Tracy Baglio, President of the Saint Paul Area Association of REALTORS®.
Governor Walz’s shelter-in-place order paused market activity in April and May, which created pent-up demand that pushed the spring market into summer and the summer market into fall. Buyers were still more eager to purchase than sellers were to list, meaning multiple offers remained commonplace—particularly at the more affordable price points where the inventory shortage is even more pronounced.
“Despite several challenges, the Twin Cities housing market exceeded all expectations,” said Todd Walker, President of Minneapolis Area REALTORS®. “Inventory remained a hurdle, but homeowners have never had so much equity in their homes and buyers haven’t seen rates this low in 50 years, offsetting rising prices.”
The median sales price rose 8.9 percent to $305,000, a record high. On average, sellers obtained 99.8 percent of their list price—the highest since at least 2003. Homes sold quickly. Half the sales had accepted offers in under 18 days. Importantly, all areas, price points and property types are unique.
Signed contracts rose 10.0 percent in Minneapolis and 16.4 percent in St. Paul, suggesting core cities remain attractive. With prices slightly lower, market times higher and offers weaker, the condo market continues to lag other segments. Aided by favorable jumbo rates and a recovered stock market, sales of luxury properties ($1M+) have been soaring higher—up 25.4 percent from 2019.
One thing is clear: the housing market continues to outperform, despite several headwinds.
2020 by the numbers (compared to 2019)
• Sellers listed 76,348 properties on the market, a 0.1 percent increase from 2019
• Buyers closed on 64,479 properties, up 7.7 percent (65,770 pending sales, up 9.7 percent)
• The Median Sales Price rose 8.9 percent to $305,000
• Inventory levels fell 39.3 percent to 5,080 units
• Months Supply of Inventory was down 47.1 percent to 0.9 months (5-6 months is balanced)
• Days on Market decreased 12.2 percent to 43 days, on average (median of 18, down 21.7 percent)
• Changes in Sales activity varied by market segment
- Single family sales were up 10.8 percent; condo sales fell 10.6 percent; townhome sales increased 3.4 percent
- Traditional sales rose 8.4 percent; foreclosure sales were down 20.9 percent; short sales fell 25.9 percent
- Previously owned sales were up 7.3 percent; new construction sales climbed 14.1 percent