Confused? Keep reading.
It has become abundantly clear that the residential housing market is in recovery both locally and nationally. As a result, we are seeing statistics that clearly demonstrate how much we have recovered in a relatively short time period. One indicator of this, which I have blogged about in the past, is the “product mix”. One symptom of an ailing housing market is an increased percentage of distressed property sales (short sales and foreclosures) vs. traditional listings. These types of sales typically account for less than 10% of transactions during a normal market. We have not had a “normal” market for several years. The Twin Cities housing market was very ill as recently as February 2011when 61.5% of sales were distressed properties. Since then we have taken our medicine and in May 2013 distressed properties made up just 26.9% of all sales. Furthermore, Last month the percentage of distressed listings entering the market fell to 18.6%, the lowest level since September 2007!
For many buyers finding a home is the challenge these days due to a shortage of listings. Finally, last month we saw a significant increase in new listing. New listings were up 26.2% over May 2012; even better, traditional new listings were up a whopping 49.9%! This will help with the listing shortage, but I do not believe it will alleviate it. The buyer demand is simply too great at this time and I do not anticipate new listings to satisfy that demand in the next few months.
I have been in the residential real estate industry for 13 years and I have never experienced a market that seems good for both buyers and sellers, but that is my observation. Many sellers are benefiting from the intense shortage of listings and selling their homes quickly and near or over list price. Meanwhile, buyers are benefitting from the low mortgage interest rates and decreased prices. For many buyers, it is certainly frustrating dealing with the low inventory and multiple offers, but when they do secure a home they benefit from the interest rates and prices. It is a rare time indeed and most likely fleeting. Interest rates have increased over the past 3 weeks and prices are certainly increasing. Both buyers and sellers seem to be aware of this which is why we are enjoying a very robust real estate market in the Twin Cities.