Spring has officially arrived in the Twin Cities! Daylight savings kicked in last week and the weather forecast is for continued “warm” weather for the foreseeable future. The residential real estate market has also come out of hibernation, last month the median sales price was $202,000. That’s a 10.4% increase over February 2014, marking the largest price gain in the past year.
Listing activity was up significantly; 23.2% more properties were listed in February ’15 than February ’14. However, even though we experienced a significant increase in properties for sale last month, the supply of homes for sale remained flat because buyer demand continues to escalate. On March 1st there were 12,700 properties for sale in the Twin Cities, compared to 12,959 at the same time last year. This equates to a 3 month supply of listings (if current demand remains static), which is identical to last year’s figure.
So what does this mean? On the buyer side I think it indicates the market has a voracious appetite for new listings because of massive buyer demand. Buyers are out in force, motivated by low interest rates and an increased confidence in the real estate market. Mortgage interest rates ticked up slightly last week which seems to have motivated buyers even more. To me that seems counter-intuitive, but a slight increase in mortgage rates increases the belief that rates are on the rise. Buyers contemplating a move feel they had better act sooner than later for fear of rates going even higher.
The shortage of listings puts home sellers in a nice position. Homes that are marketed effectively, in good condition and priced appropriately are selling quickly and often in multiple offers. If the spring market plays out the way it did last year, and we believe it will, we will see a steady increase in new listings through June. Fortunately that is exactly what the market needs.
In summary, the Twin Cities residential real estate market is strong. Buyer demand is currently outpacing supply, but that is typical this time of year and should change in the coming months. A robust spring market has begun which should lead to further price increases, making sellers happy. Meanwhile, an influx of fresh listing will enable buyers a better opportunity to find the home they are seeking while mortgage interest rates remain low.
Thanks for reading and stay tuned!