As the most active part of buying season draws to a close there seems to be a sentiment, in the media mostly, that the local housing market is in decline because sales are stalling. While it makes for a good headline, there is little proof to support this belief. In fact, what we are experiencing is the combination of the seasonal slowing of sales, as we approach winter, along with extremely low listing inventory. I can understand the confusion, we are in uncharted waters this year because listing inventory has never been as low heading into the fourth quarter.
Here’s how I see it; the lowest supply/highest demand price range is under $250,000. As the supply of these homes has depleted, it’s no wonder sales have declined. I see this as a blip due to timing. I have no doubt that the same buyers who were unable to secure a home this year will be looking again next spring. In addition, they will have more options next year which will increase their chances of closing on a home.
At this point of the year the listing inventory is mostly unappealing to buyers, many of the homes currently listed are not new to the market and have been “picked over”. Most, but not all, current listings under $250,000 are not selling because they are priced incorrectly, are in a condition unsuitable to the buying public or both. Meanwhile, conditions are improving in the higher priced homes. Below is a relevant quote from the Minneapolis Association of Realtors:
“Sometimes market-wide figures mask important segment-specific realities and other indicators that buyers and sellers should be aware of. For example, closed sales only fell for homes under $250,000. Sales increased for homes priced between $250,000 and $500,000, $500,000 and $1,000,000 and for properties over $1,000,000. Market times and the ratio of sales price to list price both improved for each of the above four price ranges.”
The real estate market in the Twin Cities remains strong. Barring a catastrophic event, the stage is set for a healthy local real estate market for the foreseeable future. I can say that with confidence because the fundamentals are in place: Interest rates remain low (30-year fixed around 4%), local unemployment levels are low (3.4%) and buyer demand remains robust and unsatisfied.
Fall is a transitional time in the residential real estate market. Expect to see an increase in price corrections as highly motivated sellers make a last attempt to sell before the Holiday season arrives. Concurrently, there will still be new listings, but they will be fewer with each passing week as potential sellers look to 2018 as a better time to list.
In these times I emphasize the importance of seeking counsel of your realtor, as markets differs greatly based on price, location and timing. Real estate is very local and our local market is in great shape.