The “MGIC/MAAR Home Payment Report” is a quarterly overview of typical monthly payments on homes recently sold in the Twin Cities’ 50 most active real estate markets. Agents can download the report and forward it to prospects or include it in their own marketing pieces.
The report is produced through a partnership between MAAR and MGIC Corporation, one of the country’s leading private mortgage insurers. It combines home sale prices, property tax rates and interest rate data to give consumers a good feel for what their monthly home payment would be on lower-priced, mid-priced and higher-priced homes in 50 markets ranging from Andover to Woodbury.
“Educating consumers on housing affordability and the costs and benefits of owning versus renting is key to sound decision-making,” says David Arbit, MAAR director of research & economics. “We’re delighted to be working with MGIC to bring this useful new quarterly report to our members and the public.”
Since home prices for the Twin Cities metro have fully recovered and then some, it’s tempting (and even somewhat logical) to assume that monthly mortgage payments are also at all-time highs. That assumption would be entirely inaccurate. But it makes so much sense! If the median home price is at an all-time high, the monthly mortgage payment on that median priced home must therefore also be at an all-time high. Nope. Still false.
What this assumption fails to account for is of course mortgage or interest rates. The last time prices were this high, in 2006, the 30-year fixed mortgage rate was about 6.5 percent. In 2017, rates are averaging around 4.0 percent. That’s where this all-too-common assumption falls flat on its face.
The monthly payment on the median-priced home in 2006 was $1,715, but is only $1,498 in 2017, thanks to rates being 2.5 percentage points lower (6.5 vs 4.0). The median home price, however, has now reached $247,000 compared to $230,000 in 2006. So while affordability has declined since 2012, it still remains above 2004-2007 levels. In other words, despite prices being higher today than in 2006, monthly payments on purchased homes are still below where they were during the housing bubble.
If you don’t, here’s what could happen to you (and your office)!
October 1: Unpaid agents are suspended and a $25 late fee is assessed
November 1: Offices with unpaid MLS fees are suspended. This means your membership with MAAR will remain active, but no agents in your office will have MLS access.
December 1: Unpaid offices are terminated. Membership with MAAR and all services will be terminated for all agents in your office, including access to the MLS and Supra lockbox system. A $100 Broker MLS reinstatement fee and all past due amounts will be required to reactivate office MLS access. A $100 reinstatement fee may be applied to all agents in your office to reinstate membership.
We repeat, unpaid offices and agents will lose access to the MLS. Don’t let this become you!
Minneapolis, Minnesota (September 18, 2017) – The Twin Cities housing market continues to show signs of high demand and short supply. While June 2017 marked an all-time home sales record for the Twin Cities, closed sales showed a year-over-year decline for the second consecutive month. The number of sellers listing their homes increased slightly, but that wasn’t enough to counteract the inventory drop. New listings increased 0.7 percent from last year to 7,264, and closed sales dipped 1.4 percent. The number of homes for sale decreased 16.7 percent to 12,602. Factoring out foreclosures and short sales, traditional new listings rose 2.4 percent while traditional closed sales increased 0.9 percent.
With many consumers competing for limited homes, prices remained firm, a trend that should continue into the fall and winter months. The median sales price rose 6.8 percent from last year to $252,000—a new monthly record for August. Home prices have now risen for the last 66 consecutive months or 5.5 years. At 48 days on average, homes went under contract 14.3 percent faster than last August. Sellers who do list are averaging 98.5 percent of their original list price, 0.6 percent higher than August 2016. The metro area has just 2.5 months of housing supply. Generally, five to six months of supply is considered a balanced market where neither buyers nor sellers have a clear advantage.
“The shortage of homes for sale is still driving this market,” said Cotty Lowry, Minneapolis Area Association of REALTORS® (MAAR) President. “It’s been the story for years, and it continues to influence prices, sales, market times and other indicators. The graphic illustrates how listings and sales have converged, leaving very little product lingering on the market.”
The shortage is most acute for entry-level homes. Well-priced, turnkey, well-presented listings are most competitive. Market times and absorption rates are tightest for homes priced under $200,000. For example, homes between $150,000 and $190,000 had 1.4 months of supply. As you move up the price ladder, the market is less competitive and better supplied. Homes priced between $500,000 and $1,000,000 boast 6.0 months of supply, while homes over $1,000,000 have a plentiful 12.3 months of supply.
The most recent national unemployment rate is 4.4 percent, though it’s 3.3 percent locally—the fourth lowest unemployment rate of any major metro area. A thriving and diverse economy has been conducive to housing recovery, as job and wage growth are key to new household formations and therefore housing demand. The Minneapolis–St. Paul region has a resilient economy with a global reach, a talented workforce, top-notch schools, exposure to the growing technology and healthcare fields, 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 3.8 percent recently, still well below its long-term average of around 8.0 percent. Although at least one more rate hike was expected this year, the Fed is now focused on unwinding its large portfolio. Additional inventory is still needed in order to offset declining affordability brought on by higher prices and interest rates.
“We’re always impressed by how determined buyers are, despite the supply hurdle,” said Kath Hammerseng, MAAR President-Elect. “That said, prices are rising faster than incomes and builders are focusing on higher-end product further out while the demand is strongest for affordable product closer in.”
Questions? Contact David Arbit, MAAR’s Director of Research + Economics | firstname.lastname@example.org
As you have likely heard, last week a serious breach of the Equifax credit reporting agency was made public, that exposed names, social security numbers, birthdates, debt, court judgments, etc… of over 140 million Americans. This leak is much more serious than most other publicly known breaches because of the nature of the data, and has made it easier for online thieves to perform identity theft. Please click the link below for details about the breach and its aftermath…
Subscribe to an Identity Protection service. These services monitor activity on your banking and credit cards, and alert you to suspicious activity. Equifax is offering a free Identity Protection service to all Americans, regardless of if your data was included in the breach. Equifax initially included a disclaimer for those that sign up for the free service, that requires arbitration if there are any class action lawsuits, but has since excluded that language from this specific breach. Still, read the small print, and/or subscribe to another service.
Consider placing a “Credit Freeze” on your files with the major credit bureaus. The article above discusses this in a little more detail.
Enable Two-Factor Authentication on ALL online accounts – especially your business and personal email accounts. 2FA is “something you have and something you know”, and typically requires the user’s cell phone to gain access. This will make it much more difficult for a hacker to gain access to one of your online accounts, even if you accidentally provide your password to the scammer. Make sure to enable 2FA for online banking, Facebook, health care sites – basically everything! And why is protecting your mailbox so important? Your mailbox is a treasure trove of confidential information, and if someone obtained access to it they would then have the ability to send password reset requests to your online sites, including Cloud Apps, Online Banking, Facebook, etc…, and they could also use what they learn to attack people in your email circle.
Please pass this information on to your staff and loved ones.
If you haven’t yet, be sure to attend either the updated Pathways to Professionalism course or a Professionalism course to satisfy your Code of Ethics requirement for 2017/18. Please note, it has changed from a 4-year-cycle to a 2-year-cycle, and December 31, 2018 will be here before we know it!