As the summer of 2018 progresses into fall there is a sense within the real estate community that a shift is afoot. New listings are on an increase while sales activity has cooled slightly; this is a shift from the past few years. Meanwhile, the median sale price has increased and inventory of homes for sale has diminished. This is in line with what we have been experiencing. These statistics have left many confused and wondering what is going on in the Twin Cities real estate market. It’s hard to predict the extent on this shift and what effect, if any, it will have on our market but it’s important to pay attention to the market dynamics.
First off, while new listings are down 4.4% year to date, they increased 4.1% compared to last July. This is only the second time since November 2017 that seller activity has outpaced the previous year. Pending and closed sales have remained tepid compared to 2017, lagging -4.9% and -5.6% respectively. What this means in the short term is seller activity has increased while buyer activity has decreased, a dynamic we have not experienced since early 2013 and a welcome change for buyers.
While increased seller activity is a welcome change, other dynamics have remained consistent – namely price increases and lack of listing inventory. In July the median sales price increased 6.6% over July 2017, year to date the median sale price is $265,000, an increase of 8.2%. The current number of homes for sale in the Twin Cities is 11,709, this is a -13.5% decrease from July 2017. Both statistics (median sale price and listing inventory) favor sellers.
It’s too early to interpret the meaning of these subtle changes in market dynamics. It could be the market taking a pause after a feverish spring market or it could signal a shift toward a more balanced market. I don’t expect buyers to have too much relief as far as competition for attractive properties, particularly those in the more modest price ranges. Then again, if the trend continues buyers will have more options and less competition. With prices continuing to increase it is still an advantageous time for sellers.
I expect buyer demand to remain consistently strong despite increased home prices. A strong local economy, high employment numbers, and attractive mortgage rates make the market appealing to buyers and I do not see that changing in the short term. Todd Urbanski, President-Elect of Minneapolis Area REALTORS®, and Fazendin REALTOR®/Director of Agent Development summed it up nicely:
The inventory shortage has been the most frustrating element for buyers. Patient buyers who remain attentive will not only lock in desirable rates but will see some appealing listings and a more maneuverable market as we move into fall.
Andy Fazendin – Owner/Broker