Here we are again. Twelve months ago the residential real estate market in the Twin Cities was charging out of a housing recession. Listing inventory was low, mortgage rates were near historic lows and buyer demand was insatiable. Fast forward 12 months to March 2014 and we find ourselves in a similar situation. At this point, most experts have dispelled the “double dip” recession theory and it’s safe to say that we are experiencing a real economic recovery. We’ve now seen 47 consecutive months of private job growth. This builds consumer confidence which affects purchases of all goods; from toothpaste to houses.
The median sales price increased 14.4% over last February to $183,044. That makes February 2014 the 24th straight month of year-over-year median price gains. Meanwhile, the listing inventory has shrunk to 11,975 properties available for sale. This equated to a 2.8 month’s supply, which typically puts the home seller in the stronger position. The increase in the median sales price and the lack of new listings is a product of the decrease in lender mediated (foreclosure & short sale) listings.
If last year was an indicator for what will happen this year, which is an accepted assumption, we should see an increase in new listing over the next few months to help ease some of the buyer demand. However, with such a disparity between supply and demand I predict a difficult climate for most buyers through spring and into the summer market. Rising prices should continue to motivate home owners to sell, but will the supply be able to keep up with demand? I wish I know the answer. Stay tuned.