If you have been paying attention to the Twin Cities residential real estate market, and you probably have if you’re reading this, then you have heard that we are in the midst of a buying frenzy. Because of favorable buying conditions and low listing inventory, buyers have had to throw caution and sometimes good judgment, aside in the pursuit of their home purchase. This is a good headline and the scenario is playing out in many areas and in some price ranges. However, many areas and most price ranges are not experiencing this sort of buying behavior. In fact, in the higher price ranges little has changed in the past few years. Don’t get me wrong, the real estate market in the Twin Cities is robust with prices reaching near or surpassing previous highs. At Fazendin we are experiencing one of the best years in our 51 year history. However, not all areas and price ranges are experiencing the sales uptick equally.
Here are a few statistics to illustrate the stark differences within the Twin Cities market. This comparison is between homes priced under $300,000 and homes priced over $1,000,000:
under $300,000 over $1,000,000
Homes for sale June 2015 9,667 698
Homes for sale June 2016 7,520 745
Days on Market (Median) 35 107
Month’s Supply of Listings 2.2 15.9
As you can see, while numbers of homes for sale have decreased significantly in the lower price range, the higher priced homes for sale have increased. Furthermore, the amount of time the higher priced homes sit on the market is drastically higher than homes priced less than $300,000.
I make this point because many consumers read news articles about homes selling in multiple offers, in short periods of time and for above list price and believe this applies to every home. While these things are happening more frequently now than in the past 10 years, it does not happen unless the home is priced appropriately and is in an area with high demand and low supply. Location is still the most influential aspect of a property’s value. Furthermore, regardless of the area the price must be appropriate to even receive an offer.
The residential real estate market is indeed active and healthy, but in many cases it’s still not a “seller’s market”. I think it is important for sellers to be well informed and have realistic expectations. Just today the Fed decided not to increase mortgage interest rates. We anticipate the strong market will continue throughout the year.