It’s that time of year again. As summer fades into fall, students go back to school, summer vacations end and the real estate market tends to slow down a bit. Typically, this slowdown in late August/early September is followed by an upswing in sales through October before we begin the slow market decline that lasts until we welcome a new year. That being said, this is not a “typical” year in the residential real estate market.
Many of the dynamics I have written about in the past months are still in play. Inventory remains low, but is on the rise, distressed listing and sales are subsiding and giving way to a much larger percentage of traditional listings and sales and mortgage interest rates remain at historically low levels. These factors have influenced the market in favor of sellers and enabled many sellers to sell their homes quicker and for higher prices, many times in multiple offers. Below are some stats to illustrate these dynamics:
• Number of homes sold is on the rise: Over the last 3 month we are 14% above the number of homes sold in June, July and August of last year.
• Listing inventory is increasing: In August, new listings rose 16.5% to 6,951, marking the fifth consecutive year-over-year increase in seller activity. There are currently 15,773 properties for sale in the Twin Cities area, which is 9.9% less than August 2012 but 21.2 percent more than in January 2013.
• Traditional listings and sales are back: While closed sales were up 8.9% overall, traditional buyer activity was up 34.7%. Foreclosure sales and short sales (distressed properties) were down 34.5 and 43.5%, respectively. Similarly, new listings were up 16.5% overall, but traditional seller activity rocketed 42.1% higher. Foreclosure new listings fell 31.4% and short sale new listings fell 46%. This has influenced the median sales price because traditional sales typically sell for higher prices than distressed property sales.
• Home values have increased: Two years ago the median sales price was $155,000. As of Sept. 1, 2013 the median sales price is $208,000. That’s a 34% increase over 2 years ago.
• Mortgage rates are rising: After years of extremely low interest rates, we are seeing an increase in rates. The 30 year fixed rate mortgage is now at about 4 ½%. We expect rates to rise, but by historical standards they are still very low.
We anticipate that the real estate market will have a more active fall than usual. Due to the lack of inventory throughout 2013, there are more buyers than usual still looking. Rising mortgage interest rates have increased buyer demand and increased listing inventory has given buyers more choices than earlier in the year. As always, we will experience a much slower market between Thanksgiving and New Year’s, but we think the market will be unusually active until then.
Thank you for reading. Stay tuned.
*All statistics are derived from the Regional Multiple Listing Service (RMLS)