All indications point to another robust real estate market throughout 2018. While new listings and inventory levels have declined compared to 2017, new construction has increased to help reduce the shortage of choices for buyers. Mortgage rates have crept up this year, but this has had a negligible effect on buyer demand.
As has been the case for several years, buyers shopping in the spring & summer markets will face stiff competition. This is acuter at the more modest price levels where it is normal to see quick sales where the seller receives multiple offers, some of which exceed the list price. Because of the listing shortage, prices have increased. The year-to-date increase in the median sale price in the Twin Cities Region was nearly 10 percent as of May 1!
Through April 2018 there have been 10.6 percent fewer homes listed in the past year resulting in a 25 percent decrease in homes for sale. This is a dramatic decline considering we were in extremely low supply 12 months ago. Why is that? It could be a number of things, but I have a suspicion it may be weather related. Consider that there was ice on our lakes through early May this year. Many potential homeowners wait until their yards are green, trees are filled in and the landscape is just right before listing their properties. Only time will tell, but I have noticed an uptick in listings since winter finally ended.
Fortunately, new construction is on an upward trend. Closed sales for new construction increased 13.2 percent over April 2017. As the housing market and general economy remain strong, it is expected that new construction will continue to grow in market share of closed sales. Currently, new construction sales make up around 10 percent of the Twin Cities housing market.
All eyes are on the Fed these days, watching to see if the anticipated increases in interest rates will come to fruition. So far this year they have increased interest rates once in March by .25%. It is anticipated that there will be 2-3 more increases of the same amount in 2018. It is doubtful this will have a noticeable impact on housing sales. Stay tuned!
Andy Fazendin – Owner/Broker