The residential real estate statistics for June were just released, marking the halfway point in the year. Interestingly, heading into 2016 there were those that were overly optimistic about the year ahead, while others expressed pessimism and predicted a real estate slump. There were also a few that anticipated a year similar to the previous year. Halfway through 2016 it appears the more moderate prediction has occurred; statistically 2016 looks a heck of a lot like 2015, which is a good thing for everyone. 2015 was a spectacular year for the residential real estate in the Twin Cities. Note the following stats illustrating the similarities and differences from 2015 and 2016.
Key Metrics YTD 2015 YTD 2016 Variance
|New Listings||43,826||43,931||-0.2% (flat)|
|Median sales price||$218,000||$230,000*||+5.5%|
|Price per square foot||$125||$131||+5.5%|
|# of homes for sale||17,374||14,214||-18.2%|
|Month’s supply of
homes for sale
*There will be a lot of press exclaiming the median sale price has now eclipsed previous highs of 2006. However, please note this is referencing the median price in June 2016 ($242,000 ), not the year-to-date price that I find more informative ($230,000).
Many of the key metrics show a modest improvement over 2015 with a few exceptions. New listings were essentially flat, which is a bit surprising considering news of low inventory usually motivates people to list their home. Meanwhile, demand for housing has increased which has caused the housing supply to decline substantially. Year over year the month’s supply of homes fell 23.7% to 2.9 months. This is the lowest June figure we’ve seen since we started recording this metric in 2003!
I don’t anticipate this low inventory environment changing much for the rest of 2016. The majority of sellers have already listed their homes and there are no indications that buyer demand will subside. Most sellers strategically list homes for sale in the first half of the year. Historically, new listings peak in May and June before steadily declining through December. Buyers continue to be motivated by a healthy local economy and incredibly low mortgage interest rates.
It will be interesting to see how the remainder of 2016 plays out. It is safe to say we will remain in the low inventory quagmire for the foreseeable future, making it hard for many buyers as well as many sellers who need to secure a place to live prior to selling their current home. Lastly, the median sale price has increased at a healthy pace and at years end appreciation should be between 7%-9%. This is a tad bit above the long term average price increase but low enough to dispel the fear of another housing bubble.
In this dynamic market conditions can change quickly so stay tuned!