Here at MAAR, we fully understand what it means to have thousands of real estate professionals and countless home buyers and sellers rely on you for unbiased, accurate and timely information. A big part of who we are (and one of the top reasons why 8,000+ professionals are members of our association) is our market reporting environment and our commitment to data excellence and transparency.
Recently, it’s come to our attention that there has been some misinformation swirling around out there. Because of our commitment to research and accurate data—and to empowering consumers with the information they need to make data-driven decisions—we’d like to set the record straight. That way, real estate professionals, the media and the general public are all working with the same set of facts. We just can’t sit quietly in the face of unchecked and inaccurate housing information. A little bit of quality assurance work can save major headaches down the road. Too many families base their largest financial transaction on this sort of information.
There is a recent report circulating that states closed sales in June reached a record high. This is inaccurate. June 2016 closed sales today stand at 7,209 in Infosparks after late status change entries but officially stood at 7,094 in our published reports. Neither figure exceeded the 7,271 closed sales recorded in June 2004, though it was close.
Now we’ve set the record straight. To access our rich and reliable market reports or learn more about becoming an Infosparks subscriber, please visit mplsrealtor.com.
The June 2016 median sales price for residential properties has reached a new all-time high, eclipsing the previous June 2006 record of $238,000. This measure of home prices rose 5.3 percent from June 2015 to $242,000. Seller activity rose 0.5 percent since last June to 8,727 new listings. Sales activity was roughly even with last year. Closed sales increased a modest 0.2 percent while pending sales—the number of signed purchase agreements—fell 0.7 percent. Buyers signed 6,175 new contracts and closed on 7,094 homes. That’s the highest volume of closed sales for any month going back to June 2004, a 12-year high. Mostly due to inventory constraints, prospective sellers are concerned about their ability to secure their next property in the current environment. June offered little supply-side relief, as inventory levels fell 18.2 percent to 14,214 active properties. Despite the attempt, consistent inventory shortages haven’t slowed down buyers much, given closed sales at a 12-year high.
Low inventory has helped draw out stronger offers. The average percent of original list price received at sale was 98.7 percent in June, the highest figure for any month since May 2005. Low levels of for-sale housing also means the homes on the market tend to sell quickly. Cumulative days on market until sale fell 16.7 percent to 55 days. That’s the fastest market time for any month since the beginning of 2007. Months supply of inventory fell 23.7 percent to 2.9 months—the lowest June figure on record going back to the beginning of 2003. Generally, five to six months of supply is considered a balanced market. While the metro as a whole is favoring sellers, not all areas, segments or price points necessarily reflect that. Market conditions are encouraging some sellers but not enough to fuel the demand seen in recent months.
“Prices returning to 2006 levels is nothing to fear,” said Judy Shields, Minneapolis Area Association of REALTORS® (MAAR) President. “This market is grounded in good fundamentals: supply and demand, smarter lending standards, job and wage growth, population growth, healthier household finances and rising rents. In the lead-up to 2006, home prices were driven by irrational exuberance and lax lending standards.”
A healthy Twin Cities labor market has also been conducive to our housing recovery. The most recent national unemployment rate is 4.9 percent, though it’s 3.1 percent locally. The Minneapolis-St. Paul-Bloomington metropolitan area has the third lowest unemployment rate of any major metro area. The fact that lower-priced foreclosures and short sales comprise a shrinking share of sales activity also helps with the recovery. Traditional (non-lender-mediated) properties made up 95.0 percent of all closed sales—the highest level in almost 10 years.
For the time being, the risk of higher interest rates seems to have subsided after “Brexit” and in light of other global economic concerns. Locally, the 30-year fixed mortgage rate fell to 3.5 percent compared to a long-term average of about 8.0 percent. Rates are now at their lowest level in three years. Marginally higher rates were widely expected in 2016, but further rate hikes are unlikely for the duration of the year.
“It shouldn’t be all that surprising that we’re back to where we were ten years ago,” said Cotty Lowry, MAAR President-Elect. “The forces behind this recovery are far more sustainable than last time. Clearly the Twin Cities economy is booming, even though buyers are still eager for more listings.”
The Lyndale Neighborhood is part of the Powderhorn Community and not the Calhoun-Isle Community (or “Uptown” to some). The Powderhorn boundary juts out to the west of I-35W to incorporate Whittier and Lyndale (map). Whittier and Lyndale are typically thought of as part of “Lyn-Lake,” just in case the various official and unofficial geographies weren’t confusing enough.
In terms of the price per square foot of a traditional, single-family, previously owned home, Lyndale tracks very close to the city with a value of $156 per square foot compared to $155 for Minneapolis. Just across Lake Street to the north, similar Whittier properties are selling for $151 per square foot.
Absorption rates are noticeably tighter in Lyndale than in Minneapolis. There are currently 1.5 months supply of inventory in Lyndale compared to 2.2 months supply in the City of Minneapolis as a whole. That means that there is about 50.0 percent less supply relative to demand in Lyndale compared to the city.
Similarly, homes in Lyndale are taking a median of 20 cumulative days on market to go under contract. For comparison, sellers in Minneapolis are waiting a median of 28 cumulative days before accepting offers.
Lyndale sellers are accepting offers at a median of 98.7 percent of their original list price. That’s one of the highest figures compared to nearby peer neighborhoods. Whittier sellers are accepting 97.2 percent of their original list price, Lowry Hill East sellers are accepting 98.3 percent.
Examining listing activity, active counts or sales trends by price range can shed a lot of light on local market dynamics. In terms of seller activity, the $200,000 and up range used to be the lion’s share of the market from 2005-2008. Since mid-2013, the $200,000 and up price point has once again dominated new listing activity.