Spring market continues budding; buyers seeing more options

• Signed purchase agreements rose 7.8%; new listings up 4.0%
• The median sales price increased 2.8% to $366,000
• Market times fell 6.9% to 54 days; inventory up 8.4% to 6,879

(Apr. 15, 2024) – According to new data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, both buyer and seller activity rose in March. Inventory levels and prices were also higher.

Sellers, Buyers and Housing Supply
With warmer temperatures comes heightened home buyer and seller activity. Metro-wide, we’ve now seen five consecutive year-over-year increases in new listings and four consecutive increases in pending sales. During the first quarter (YTD), seller activity rose 17.9% while pending sales were up 9.4%. That’s allowed inventory levels to also rise—most recently up 8.4% to 6,879 active listings. While buyers can expect to see more listings in their searches, most areas and sub-markets still favor sellers. There is a good amount of pent-up activity from buyers and sellers that’s been accumulating from when rates jumped. The backlog is starting to be released as more consider making a move. In some ways, residents of the Twin Cities are adjusting to the higher rate environment, but low supply and rising prices combined with higher rates have held back too many from homeownership—particularly first-time buyers without the equity from their first home. Move-up buyers and those looking at pricier segments are less rate-sensitive and so activity is rising more quickly higher up on the price spectrum.

Prices, Market Times and Negotiations
Perhaps surprisingly, REALTORS® still report multiple offer situations in some markets and price points. If rates were to ease further toward 6.0%, that will continue. Listings spent 6.9% fewer days on market compared to last March. And sellers accepted offers at 98.8% of their asking price, up 0.2% from last year. “It’s clear that people are ready and eager to get deals done,” said Jamar Hardy, President of Minneapolis Area REALTORS®. “But even a few months of increases in available listings doesn’t mean the housing shortage is behind us. We’re still having to be persistent, strategic and creative when it comes to getting people into homes.”

Supply levels are too low for prices to fall but rates are too high for prices to rise much. The median home price in March was up 2.8% to $366,000 which amounts to $208 per finished square foot. During the month, sellers accepted offers on their listings after an average of 54 days (median of 24) compared to 58 days last March. Sellers are still in a relatively strong position, but some are having to make concessions by way of a price reduction, seller paid closing costs and other incentives.

“We’re in a unique place. The market remains tight even as we see it loosening a bit with more inventory and more buyers coming out to shop,” said Amy Peterson, President of the Saint Paul Area Association of REALTORS®. “A market like this is never monolithic. Every price point, segment and area are different—sometimes very different. That’s why it’s important to partner with an experienced real estate professional.”

Location & Property Type
Market activity always varies by area, price point and property type. Existing home sales rose faster than new home sales. Single family sales rose while condo and townhome sales declined. Sales over $500,000 rose at over five times the rate of sales under $500,000. Cities such as Robbinsdale, Columbia Heights and Corcoran saw among the largest sales gains while Forest Lake, Victoria and Delano all had notably weaker demand. For cities with at least five sales, the highest priced areas were Medina, Lake Elmo and Orono while the most affordable areas were Red Wing, Mora, Columbia Heights and Faribault.

March 2024 Housing Takeaways (compared to a year ago)

• Sellers listed 5,261 properties on the market, a 4.0% increase from last March
• Buyers signed 4,028 purchase agreements, up 7.8% (3,238 closed sales, down 0.9%)
• Inventory levels rose 8.4% to 6,879 units
• Month’s Supply of Inventory rose 20.0% to 1.8 months (4-6 months is balanced)
• The Median Sales Price was up 2.8% to $366,000
• Days on Market was down 6.9% to 54 days, on average (median of 24 days, down 11.1%)
• Changes in Pending Sales activity varied by market segment and price point
  • Single family sales rose 12.8%; condo sales were down 15.6%; townhouse sales decreased 1.2%
  • Traditional sales were up 8.0%; foreclosure sales fell 11.9% to 37; short sales rose 11.1% to 10
  • Previously owned sales increased 8.9%; new construction sales were up 2.3%
  • Sales under $500,000 rose 3.9%; sales over $500,000 increased 20.3%

  
  From The Skinny Blog.

Spring market blossoming early amid signs of turnaround

• The median sales price increased 4.5% to $357,700
• Signed purchase agreements rose 13.1%; new listings up 34.5%
• Market times fell 3.3% to 59 days; inventory up 13.3% to 6,665

(Mar. 18, 2024) – According to new data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, both buyer and seller activity rose in February. Homes also sold in less time and at higher prices.

Sellers, Buyers and Housing Supply
With four consecutive year-over-year increases in new listings and three consecutive year-over-year increases in pending sales, the market turnaround narrative is gaining traction. While inventory levels were up, potential buyers should understand that the market remains significantly undersupplied. In February, sellers listed 34.5% more homes on the market and buyers signed 13.1% more purchase agreements. Sellers unwilling to give up their favorable mortgage rate have withheld listings due to the “rate lock-in effect” but now there is a backlog and we’re seeing some of that activity being released. Buyers had also delayed their purchases until rates came down or until they had some earnings growth, were more able to save for a downpayment and saw more inventory that met their needs. While supply and demand normalize, buyer and seller activity won’t immediately return to previous highs. That will take time—but just how much depends on both market and economic factors. Since these seemingly strong gains are skewed by a low baseline period, it’s not that activity has surged recently as much as activity declined last year at this time due to the Federal Reserve’s inflation fight and rate hikes.

Inventory levels are on the rise in the metro, up 13.3% compared to last February. Those out shopping for homes during this spring market should expect both more listings from pent-up sellers but also more competition from pent-up buyers. In that sense, activity levels will be higher but the balance between supply and demand will remain tight. But if rates do fall further, that could induce even more demand which would cause a resurgence in multiple offer situations and homes selling for over list price. “Perhaps it’s still early to make the call, but it sure feels like we’ve reached a turning point,” said Jamar Hardy, President of Minneapolis Area REALTORS®. “Despite the market ramping up, buyers are still cautious and deliberate but also more optimistic.”

Prices, Market Times and Negotiations
Supply levels are too low for prices to fall but rates are too high for prices to rise much. The median sales price rose 4.5% to $357,700, which amounted to $203 per square foot. During the month, sellers accepted offers at 97.5% of list price after 59 days compared to 97.2% in 61 days last February. Sellers still enjoy pricing power and the upper hand in general but some are having to make concessions by way of price reductions, some seller paid closing costs and other tactics. “There is definitely some momentum heading into spring market,” said Amy Peterson, President of the Saint Paul Area Association of REALTORS®. “But turnarounds rarely happen overnight. Builders play a key role, lenders are being more innovative and consumers are persistent and more realistic.”

Location & Property Type
Market activity always varies by area, price point and property type. New home sales rose at over twice the rate of existing home sales. Single family sales rose at over twice the rate as townhomes. Sales over $500,000 rose at over three times the rate of sales under $500,000. Cities such as Shorewood, Forest Lake, Minnetrista and New Richmond saw among the largest sales gains while Crystal, Andover, Buffalo and Inver Grove Heights all had notably weaker demand. For cities with at least five sales, the highest priced areas were Medina, Orono, North Oaks and Lake Elmo while the most affordable areas were Red Wing, Zumbrota and Vadnais Heights.

February 2024 Housing Takeaways (compared to a year ago)

• Sellers listed 4,667 properties on the market, a 34.5% increase from last February
• Buyers signed 3,308 purchase agreements, up 13.1% (2,614 closed sales, up 11.2%)
• Inventory levels rose 13.3% to 6,665 units
• Month’s Supply of Inventory rose 28.6% to 1.8 months (4-6 months is balanced)
• The Median Sales Price was up 4.5% to $357,700
• Days on Market was down 3.3% to 59 days, on average (median of 38 days, down 13.6%)
• Changes in Pending Sales activity varied by market segment
  • Single family sales rose 16.8%; condo sales were up 5.4%; townhouse sales increased 7.0%
  • Traditional sales were up 12.8%; foreclosure sales rose 45.5% to 48; short sales were up 37.5% to 11
  • Previously owned sales increased 11.0%; new construction sales rose 26.6%
  • Sales under $500,000 were up 8.9%; sales over $500,000 increased 30.3%

  From The Skinny Blog.