Though we are not back to our 2005 highs, we certainly have seen the market recover very nicely in 2013. Home sales and prices rose modestly, while foreclosures and days on market dwindled down. The market even enjoyed many multiple offer situations this year, which places an exclamation point on the markets upward trend line.
The 3 most notable developments in 2013 were lower supply of listings, strong buyer demand and rising prices. The supply of listings reached an 11-year low, but this did not deter the number of sales which rose 8.8% in 2013 despite the shortage of listings. Interestingly, new listings were up 9.4% in 2013 compared to the previous year. Even with this significant increase, our market is sitting with lower inventory to start this year compared to last. This goes to show the strong demand that was in place in 2013.
The median sales price rose an astounding 14.4% (from $167,900 in 2012 to $192,000 in 2013). That figure needs to be taken with a grain of salt because one of the aspects that produced a higher median sales price was the decline in short sales and foreclosures and, in turn, an increase in traditional sales. Traditional sales typically sell for a higher price. In addition to that, our market is still in recovery mode and higher appreciation levels are to be expected in such an environment. If there is one thing I learned after the housing bubble burst in 2006-2007 it is that double digit appreciation levels are not sustainable. While we enjoyed the large increase in the median sales price in 2013, we are hoping for more modest increases in the future.
By all measurable, 2013 was a robust recovery year for the Twin Cities residential real estate market.
By all indicators 2014 should be another healthy year for our market. Demand remains high as buyers try to capitalize on the mortgage interest rates before they inevitably rise. The inventory levels being low to start out the year will definitely play a large role on the markets outcome for 2014. It will be very interesting to see if the increased prices will motivate home owners to list at a level that will meet buyer demand.