Nita Morlock

Weekly Market Report

For Week Ending July 1, 2017

Nationally and locally, economic conditions affecting residential real estate have not changed much this year, which is good for market stability. The most recent jobs report was favorable, while unemployment and mortgage rates both remain satisfyingly reasonable. If there were more homes for sale, we might see a shift in prices. Although builder and seller confidence are high, we are not close to a trend change in that regard.

In the Twin Cities region, for the week ending July 1:

New Listings decreased 0.1% to 1,587
Pending Sales decreased 5.6% to 1,377
Inventory decreased 16.5% to 12,628

For the month of May:

Median Sales Price increased 5.5% to $250,000
Days on Market decreased 15.0% to 51
Percent of Original List Price Received increased 0.9% to 99.5%
Months Supply of Inventory decreased 17.2% to 2.4

All comparisons are to 2016

Click here for the full Weekly Market Activity Report. From The Skinny Blog.

Weekly Market Report

For Week Ending June 24, 2017

We are now beyond two years of year-over-year declines in inventory, and it doesn’t look like the situation is going to change anytime soon. However, buyer demand and home prices are still rising, and the number of distressed homes on the market has fallen. It would be great to see more starter homes on the docket for new construction during these next few busy building months to help those that are looking to enter the market.

In the Twin Cities region, for the week ending June 24:

New Listings increased 1.2% to 1,928
Pending Sales decreased 1.1% to 1,405
Inventory decreased 16.3% to 12,481

For the month of May:

Median Sales Price increased 5.5% to $250,000
Days on Market decreased 15.0% to 51
Percent of Original List Price Received increased 0.9% to 99.5%
Months Supply of Inventory decreased 17.2% to 2.4

All comparisons are to 2016

Click here for the full Weekly Market Activity Report. From The Skinny Blog.

Weekly Market Report

For Week Ending June 17, 2017

As Millennials get older and more established in their careers, more of them are
entering the housing market. Nationwide sales rose to the third-highest level since
the housing crisis a decade ago, while home prices also hit record highs. Although
increasing prices may push some out of the running for a home purchase, mortgage
rates remain low enough to lure potential buyers.

In the Twin Cities region, for the week ending June 17:

New Listings decreased 6.6% to 1,840
Pending Sales decreased 4.8% to 1,396
Inventory decreased 16.2% to 12,316

For the month of May:

Median Sales Price increased 5.5% to $250,000
Days on Market decreased 15.0% to 51
Percent of Original List Price Received increased 0.9% to 99.5%
Months Supply of Inventory decreased 17.2% to 2.4

All comparisons are to 2016

Click here for the full Weekly Market Activity Report. From The Skinny Blog.

Recent New Construction Activity by Price Point

By David Arbit on Friday, June 23rd, 2017

As the shortage of residential property listings persists, many observers are rightly examining recent new construction trends. We’d like to get in on that.

Using exclusively NorthstarMLS data, this analysis only looks at listings with a “year built” field of 2016 or later. However, the closed sales count only uses 2017YTD activity and inventory is always the most recent monthly snapshot, further limiting the pool of records and keeping the analysis as up-to-date as possible while still allowing for a reasonable sample size of records.

As of the end of May 2017, 25.3% of all active listings that were built in or after 2016 were listed between $400,000 and $500,000. 24.9% of all actives were listed between $300,000 and $400,000. In other words, about half of all recently-built active listings were priced between $300,000 and $500,000. About 33% were priced above $500,000; while the remaining 17% were listed under $300,000.

There are a few noteworthy trends here. There seem to be several threshold effects. First, active listing market share declines dramatically above $500,000 for relatively recent construction and then flattens out somewhat. The next notable decline comes above the $1.3M mark. That may reflect the tear-down activity happening around the metro–particularly within the urban cores and inner-ring suburbs. Even though most of the demand for new construction is well under $1M (more on that below), this could reflect the higher land, tear-down and (re)development costs associated with infill construction. There is also a significant decline above $2.5M, which could reflect a mix of risk aversion from developers and a fairly limited buyer pool.

Transitioning over to the demand side, the $300,000 to $400,000 bracket witnessed the largest share of newly-built home sales. Next up was the $400,000 to $500,000 range, followed by the $200,000 to $300,000 range. Once again, activity drops off above $500,000 and again over $600,000.

Interestingly, and in contrast to active listing share, the $800,000 to $1,000,000 range enjoyed more sales than the $700,000 to $800,000 range. Sales between $1,300,000 and $1,600,000 represented less than half the market share of those between $1,000,000 and $1,300,000. In other words, the “$1,000,000 plus crowd” may be willing to enter the low seven-figures but maybe not yet much beyond that.

The $800,000 to $1,000,000 range also captures listings that sellers and builders initially listed at $1,049,000 or $1,099,000 and had a price adjustment or an offer accepted under the $1,000,000 threshold. Even though a home may have been listed above the $1,000,000 mark, it may have sold for less.

That got us thinking: wouldn’t it be cool to look at the ratio of active versus sold market share by price point? Of course it would! So that’s what we did.

Unsurprisingly, for the most part, active market share tends to outweigh sold market share as you climb the price ladder. In other words, the higher the price point, the more likely you are to have more supply relative to demand. That’s why absorption rates and market times increase in the higher brackets. It’s also why the ratio of sold price to list price tends to be slightly lower. There simply isn’t the same market pressure or imbalance between supply and demand in the luxury brackets as there is in the affordable brackets.

As indicated, that theory is mostly supported by this analysis, with a few exceptions. First, the market share of active listings between $2,000,000 and $2,500,000 is about 5 times that of the sold market share in that range (0.54% versus 0.11%). Even though it’s a small sliver of both active and sold market share, it’s that ratio or relationship between the two shares that we’re after. Even the $3,000,000 and up range has a ratio of about 4.5.

Second, and perhaps surprisingly, the ratio of active to sold market share in the $2,500,000 to $3,000,000 range was only about 1.7, lower than all other ranges above $700,000 except $800,000 to $1,000,000. That means the active market share in that range is only about 60-70 percent higher than the sold market share in that range, which seems downright balanced compared to 4 to 5 times greater active versus sold market share in other upper brackets.

Third, and as expected, it’s difficult for builders to be profitable under the $300,000 price point, given rising construction costs, limited lot availability, the labor shortage and new impact fees. Also as expected, budget-conscious consumers facing limited inventory options are having to go farther out where newer construction is more common. The fact that sold market share is outpacing active market share in all ranges up to $400,000 speaks to the strong demand but insufficient building activity in these affordable and in-demand price points.

You see? Data can be educational AND fun! Infosparks and the many market reports on our website can help you impress your next client and increase your referrals and repeat business. Please use the data for good and never for evil!
From The Skinny Blog.

June Monthly Skinny Video

Housing Markets are heating up, prompting concerns of whether or not we are in a bubble. But, another 2008-style collapse is unlikely.

Weekly Market Report

For Week Ending June 10, 2017

New buyers wanting to make their first home purchase are finding that they would have to spend more of their monthly incomes in order to do so. Higher prices during the busiest months of the selling season are giving some buyers pause, which is partly due to low inventory and the slow-moving pace of new home construction. In addition, some would-be sellers are staying put instead of trying to find a replacement home in a competitive environment, which can further stall inventory growth.

In the Twin Cities region, for the week ending June 10:

New Listings increased 2.3% to 2,102
Pending Sales decreased at 1,442
Inventory decreased 16.1% to 12,107

For the month of May:

Median Sales Price increased 5.5% to $250,000
Days on Market decreased 15.0% to 51
Percent of Original List Price Received increased 0.9% to 99.5%
Months Supply of Inventory decreased 17.2% to 2.4

All comparisons are to 2016

Click here for the full Weekly Market Activity Report. From The Skinny Blog.

Inventory Low, Market Times Quick, Buyer and Seller Activity Steady

By David Arbit on Thursday, June 15th, 2017

Compared to May 2016, new listings in the Twin Cities inched up 0.7 percent while closed sales fell 1.1 percent. Given that there were 17.3 percent fewer homes on the market compared to last May, it’s clear that buyers remain motivated. Declining foreclosure and short sale activity can contribute to market-wide declines. For example, traditional new listings rose 2.5 percent while traditional closed sales rose 2.1 percent. Those shopping for homes have 11,615 properties from which to choose in the metro area, the highest figure so far this year but the lowest May inventory reading since 2003.

Prices continued to rise. The median sales price rose 5.5 percent from last year to $250,000. Nominal home prices have now risen for the last 63 consecutive months. Multiple offers on updated, turn-key properties are common in low inventory environments. Properties also tend to sell quickly and for close to or above list price. Homes went under contract 15.0 percent faster than last May. Half the homes on the market sold in less than 20 days. The average percent of original list price received at sale was 99.5 percent, 0.9 percent higher than last year. Similarly, the median percent of original list price received at sale was 100.0 percent, meaning half the sales closed for over list price. The metro area has just 2.3 months of housing supply—the lowest May reading since 2003. Generally, five to six months of supply is considered a balanced market where neither buyers nor sellers have a clear advantage.

“Not only does the traditional market now account for over 96.0 percent of sales,” said Cotty Lowry, Minneapolis Area Association of REALTORS® (MAAR) President, “but traditional new listings and sales continue to rise, despite the shortage of homes on the market.”

A thriving and diverse local economy has been conducive to housing recovery, as job growth is key to new household formations. The most recent national unemployment rate is 4.3 percent, though it’s 3.3 percent locally. The Minneapolis–St. Paul region has a resilient economy with a global reach, a talented workforce, top notch schools and a quality of life that’s enabled one of the highest homeownership rates in the country.

The average 30-year fixed mortgage rate has declined from 4.3 percent to 3.9 percent recently, still well below its long-term average of about 8.0 percent. Excluding any surprising data or events, the Federal Reserve is likely to increase their target federal funds rate at least once more this year. Wage and inventory growth are key to offsetting affordability declines brought on by higher rates and rising prices.

“It’s tempting to treat this market as one entity,” said Kath Hammerseng, MAAR President-Elect. “However, that won’t provide an accurate and detailed picture of what’s really happening. Different areas, market segments and price points all behave quite differently.”
From The Skinny Blog.

Weekly Market Report

For Week Ending June 3, 2017

Whether or not new listings or total sales are up or down in week-to-week measures, there are two universal truths in residential real estate across the country at the moment: the market is quite active, and, thus, overall inventory is still trending downward compared to last year. That will likely be the case for the entirety of 2017, especially at the pace that homes are coming off the market.

In the Twin Cities region, for the week ending June 3:

New Listings decreased 2.2% to 1,971
Pending Sales increased 2.4% to 1,306
Inventory decreased 16.0% to 11,870

For the month of April:

Median Sales Price increased 6.3% to $245,500
Days on Market decreased 20.5% to 58
Percent of Original List Price Received increased 1.2% to 99.2%
Months Supply of Inventory decreased 17.9% to 2.3

All comparisons are to 2016

Click here for the full Weekly Market Activity Report. From The Skinny Blog.

Weekly Market Report

For Week Ending May 27, 2017

The current situation for residential real estate is the ongoing situation for residential real estate. The market is active, and the trend lines are showing nothing out of a long-standing ordinary. There may not be as many homes for sale as one would like, and price increases are starting to make one look more closely at affordability, but real estate professionals are busy, and buyers and sellers are dancing in mutually beneficial transactional pairs.

In the Twin Cities region, for the week ending May 27:

New Listings decreased 2.7% to 1,689
Pending Sales decreased 13.9% to 1,439
Inventory decreased 17.0% to 11,850

For the month of April:

Median Sales Price increased 6.3% to $245,500
Days on Market decreased 20.5% to 58
Percent of Original List Price Received increased 1.2% to 99.2%
Months Supply of Inventory decreased 17.9% to 2.3

All comparisons are to 2016

Click here for the full Weekly Market Activity Report. From The Skinny Blog.

Weekly Market Report

For Week Ending May 20, 2017

Mortgage rates have fallen to their lowest levels so far this year but remain above where they were last year at this time. The market has proven to be ready for higher rates, as many homes continue to sell rapidly, often above the asking price. As long as there is ample supply, which is not a given in every market, 2017 should continue to be a great year for residential real estate.

In the Twin Cities region, for the week ending May 20:

New Listings decreased 6.5% to 2,059
Pending Sales decreased 10.1% to 1,498
Inventory decreased 17.0% to 11,671

For the month of April:

Median Sales Price increased 6.4% to $245,750
Days on Market decreased 20.5% to 58
Percent of Original List Price Received increased 1.2% to 99.2%
Months Supply of Inventory decreased 17.9% to 2.3

All comparisons are to 2016

Click here for the full Weekly Market Activity Report. From The Skinny Blog.