Most statistics allude to a busy and robust spring market. While this is true, we are still challenged by a shortage of listing supply in many areas of the Twin Cities. Having recently completed the 1st quarter now is a good time to take a look at where we are, year to date (YTD), compared to 2015:
YTD 2015 YTD 2016 +/-
New listings 18,048 17,955 -0.5%
Pending Sales 11,913 12,821 +7.6%
Days on Market 103 88 -14.6%
Median Sales Price $204,250 $216,000 +5.8%
Month’s Supply of 3.3 2.5 -24.3%
Homes for sale
As you can see, new listing numbers are slightly off from 2015. This stat indicates listings entering the market. While most buyers and real estate agents would prefer a larger increase in new listings, the 2016 amount of new listings is not necessarily bad news. However, because of buyer demand the supply is falling short. Pending sales, which signifies listings exiting the market, have increased 7.6%. These two statistics (New Listings & Pending Sales) support a continuation of the low inventory climate we have experienced in the past few years.
This ongoing listing shortage in negative for potential buyers because they have fewer choices and increased competition. For sellers, it could be a positive because in theory a lack of supply increases prices. Indeed it has, by 5.8%. While I must point out that these statistics are general in nature and does not apply to every area of the Twin Cities, the median sales price increase is healthy and sustainable. For most potential sellers, the sale price is the most relevant statistic. If you are curious about the median sales price in your neighborhood please contact your Fazendin agent.
Lastly, the pesky month’s supply continues to perplex. One would assume we would see an increase in new listings as the public becomes more aware of increasing prices and listing shortages. This has not been the case. In fact, many sellers are reluctant to list their home because of the inventory shortage. Many would be sellers lack confidence they will find a home to move to!
The solution is more new listings and I am optimistic we will have an increase in listing during May and June of 2016. However, I anticipate a listing shortage throughout the summer because of the vigorous buyer demand. Can new listings keep up with buyer demand? Probably not. It might get slightly better for buyers, but the supply/demand balance will take time to find equilibrium and I don’t expect that to happen in 2016.
In summary, conditions are mostly good for buyers with the exception of the number of choices. Sellers have many things to be optimistic about, but wonder where to move when their home sells.