Log in to submit payment for Membership Dues by December 1
Accepting 2020 Committee Applications Apply now!, November 1 - 25, 2019
collapse
View Event

Supply tight but flattening, prices still rising, sales fluctuating

As sentiments regarding the direction of housing markets have changed, it’s worth remembering two key facts. First, all housing is local—what’s happening in San Francisco, Seattle and Denver is not reflective of the Minneapolis-St. Paul market. Second, the housing market faces fewer risks than in the mid-2000s. After years of strong buyer activity and weak seller activity, the tides seem to finally be shifting. Five of the last six months showed increases in new listings; while five of the last six months also had decreases in pending sales. It’s worth noting there’s a significant difference between deceleration and contraction. The market is decelerating, but not yet contracting. Prices continue to rise, homes are selling in less time and sellers are yielding a higher share of their list price.

Excluding September 2018, October had the smallest decline in active listings since May 2015, and those long-awaited inventory gains could arrive as early as next year. Months supply was stable at 2.4 months, suggesting a tight market but also a flattening out pattern. Rising rates could impact some budget-conscious buyers. The lack of supply is especially noticeable at the entry-level prices, where multiple offers and homes selling for over list price are commonplace. The move-up and upper-bracket segments are less competitive and—for the most part—much better supplied. Inventory could double while sales remain stable and we’d still have less than 5 months of supply.

October 2018 by the Numbers (compared to a year ago)

Sellers listed 6,011 properties on the market, a 9.2 percent increase
Buyers closed on 5,235 homes, a 3.4 percent increase from last October
Inventory levels for October fell 2.2 percent compared to 2017 to 11,719 units
Months Supply of Inventory was flat at 2.4 months
– The Median Sales Price rose 8.6 percent to $265,000, a record high for September
– Cumulative Days on Market declined 7.7 percent to 48 days, on average (median of 28)
– Changes in Sales activity varied by market segment:

Single family sales rose 4.4 percent; condo sales jumped 10.6 percent; townhome sales were flat
Traditional sales rose 5.2 percent; foreclosure sales sank 41.2 percent; short sales rose 4.5 percent
Previously-owned sales were up 3.7 percent; new construction sales increased 12.3 percent

More Early Signs of Shifting Market Tides

After years of strong buyer activity and weak seller activity, the market tides seem to finally be shifting back toward balance. Strong demand and weak supply have created an environment that favors sellers. But if anything can be called a constant in the market—it’s change. Four of the last five months showed increases in new listings; while four of the last five months also had decreases in pending sales.

While the market hasn’t quite transformed, the dynamics are shifting and the market is transitioning. September saw the smallest decline in active listings since May 2015, and those long-awaited inventory gains could still happen this year. Months supply was down just 3.8 percent to 2.5 months. Today’s buyers still face plenty of competition over limited supply. However, a recent uptick in rates could further impact some budget-conscious buyers. Locking in at current levels would be advantageous in a rising rate environment.

Sellers yielded an average of 98.4 percent of their original list price and 99.7 percent of their current list price, partly illustrating that the shortage still looms. The lack of supply is especially noticeable at the entry-level prices, where multiple offers and homes selling for over list price have become commonplace. The move-up and upper-bracket segments are less competitive and—for the most part—much better supplied. It’s noteworthy that inventory levels could double while sales remain stable and we’d still have less than 5 months of supply.

September 2018 by the Numbers (compared to a year ago)

Sellers listed 6,857 properties on the market, a 5.9 percent increase
Buyers closed on 5,087 homes, a 5.8 percent decrease from last September
Inventory levels for September fell 4.4 percent compared to 2017 to 12,570 units
Months Supply of Inventory was down 3.8 percent to 2.5 months
• The Median Sales Price rose 6.1 percent to $262,000, a record high for September
• Cumulative Days on Market declined 16.0 percent to 42 days, on average (median of 24)
• Changes in Sales activity varied by market segment

Single family sales fell 6.3 percent; condo sales declined 1.1 percent; townhome sales rose 0.4 percent
Traditional sales fell 4.0 percent; foreclosure sales sank 41.1 percent; short sales dropped 25.0 percent
Previously-owned sales were down 5.9 percent; new construction sales increased 11.5 percent

Gung-Ho Sellers Post Largest Increase in Nearly Three Years

More sellers are feeling optimistic about listing their homes just as humidity, cabin weekends and food-on-a-stick give way to rakes, school buses and sweater vests. Compared to last August, Twin Cities sellers listed 7.6 percent more homes on the market. That was the largest increase since late-2015. Although buyers signed 2.9 percent fewer contracts than last year, they did manage to close on slightly more deals. Three of the last four months had increases in new listings; three of the last four months had decreases in pending sales. This trend of rising seller activity and moderating buyer activity suggests we could be approaching those long-awaited inventory gains. Sure enough, the 7.8 percent decline was the smallest decrease in inventory in over three years. Months supply was down just 3.8 percent to 2.5 months.

That said, today’s buyers still face plenty of competition over limited supply. Sellers yielded an average of 99.2 percent of their original list price and 100.1 percent of their current list price, illustrating how drastically undersupplied markets tend to favor sellers. The shortage is especially noticeable at the entry-level prices, where multiple offers and homes selling for over list price have become commonplace. The move-up and upper-bracket segments are less competitive and—for the most part—much better supplied. The market remains relatively tight, but there are some early signs that things could be loosening up for buyers.

August 2018 by the Numbers (compared to a year ago)
• Sellers listed 7,814 properties on the market, a 7.6 percent increase
• Buyers closed on 6,629 homes, a 0.2 percent increase from last August
• Inventory levels for August fell 7.8 percent compared to 2017 to 12,243 units
• Months Supply of Inventory was down 3.8 percent to 2.5 months
• The Median Sales Price rose 6.3 percent to $268,000, a record high for August
• Cumulative Days on Market declined 16.7 percent to 40 days, on average (median of 21)
• Changes in Sales activity varied by market segment

o Single family sales fell 0.8 percent; condo sales rose 15.3 percent; townhome sales increased 1.1 percent
o Traditional sales rose 1.5 percent; foreclosure sales sank 35.4 percent; short sales dropped 31.3 percent
o Previously-owned sales were down 0.5 percent; new construction sales increased 20.9 percent

Southeast Minnesota REALTORS® MLS merges with NorthstarMLS

It’s official. Yesterday, Southeast Minnesota REALTORS (SEMR) signed papers to merge its MLS operations with NorthstarMLS, and our president, Kath Hammerseng was there with pen in hand. All SEMR members—approximately 1,000—will use NorthstarMLS as their primary MLS. The conversion of all SEMR members and their listings from their current MLS to NorthstarMLS is targeted to be completed mid-November.


(LEFT TO RIGHT): JOHN MOSEY (NORTHSTARMLS PRESIDENT/CEO), MAN HUYNH (SPAAR PRESIDENT), JAY JEWSON (SEMR PRESIDENT) AND KATH HAMMERSENG (MAAR PRESIDENT)

“This is great for members and brokers because we can better serve our clients when our information is more consistent and accessible,” said President Kath Hammerseng. “And, it eliminates the necessity to pay for more than one MLS service.”

According to NorthstarMLS, benefits include:

Agents and appraisers (and their clients) will have access to all listings in our combined region, including offers of cooperation and compensation.

Brokers, agents and appraisers belonging to two Associations to access both SEMR and NorthstarMLS listings will now be able to access all listings through a single Association membership, saving costs and eliminating double listing input into two systems.

New MLS data fields and enhanced existing fields to accommodate greater Minnesota needs and benefiting all NorthstarMLS users.

Greater cooperation between brokers and agents across the State, directly benefiting buyers and sellers.

A positive example to all Associations in the State of how well greater collaboration between MLS’s benefits all brokers and agents, whether through participation in the Regional, or simply operating from a common data platform.

SEMR members will benefit from the latest innovations and technologies including Infosparks, Remine, TLC, TrustFunds, MyFloodStatus, etc. —tools that help drive productivity and profitability.

SEMR has been approved as a shareholder by current shareholders—Minneapolis Area REALTORS® and Saint Paul Area Association of REALTORS®. As a shareholder, SEMR will have a seat on our Board of Directors.

We look forward to SEMR being part of the NorthStarMLS community and better serve Minnesota.

Click here to read more and see photos on NorthstarMLS.

 

Maps, Maps and More Maps

 

 

 

 

 

 

 

 

 

 

 

 

Here at MAAR, we’re always coming up with new ways to convey information to our members, the media and the public. In our research department, we’ve been working on creating a series of maps that help us visualize and better understand our regional housing market. For too long, we’ve relied on tables, bar charts and trendlines to communicate complex information. But housing is inherently spatial while data tables and trend lines are not. That geographical element is one of many factors driving market dynamics, albeit an important one.

So why don’t we visualize spatial information in a spatial context? Well, we do now! We’ve plotted many different market indicators on a map. You’ll want to use the legend to understand what the map is conveying and the what the various colors on the map represent. The time frame is 2018YTD (through the end of June) and all percent change figures are year-over-year from the same period in 2017. Each map has three extents: the entire 16-county region, a zoomed-in view featuring most of the 7-county metro area and of course a neighborhood map showing granular, local trends in both Minneapolis and St. Paul proper. We hope to update these annually or bi-annually to start with, though we’d eventually like to produce them more frequently.

It’s time we put our MLS data on the map! Please enjoy these maps responsibly. 

Chg-in-NL_H1-2018

Chg-in-Inv_H1-2018

Chg-in-CS_H1-2018

CDOM_H1-2018

PPSF_H1-2018

PPSF-Nbhds_H1-2018

POLPRAS_H1-2018

MSP_H1-2018

MSI_H1-2018

Under250K-MktShr_H1-2018

Over500K-MktShr_H1-2018

NC-MktShr_H1-2018

ToCo-MktShr_H1-2018

For questions, comments and media inquiries, please contact David Arbit (952-988-3150)

*Trivia Bonus:  the art and science of map-making is called “Cartography”

Sales Flatten while Sellers Capitalize on Price Gains

New listings increased this July compared to last year, which could hint at a flurry of sellers looking to take advantage of this strong market. July marked the second increase in seller activity since November 2017. Meanwhile, buyer activity flattened out after seven months of year-over-year declines. This trend of rising seller activity and moderating buyer activity could mean more inventory coming down the pipeline. Increasing seller activity combined with a cool-down in demand is consistent with a loosening marketplace. That said, buyers shopping this summer and fall will still face stiff competition. Cooling buyer activity is likely a reflection of the shortage of homes for sale. Sellers yielded an average of 99.8 percent of their original list price and 100.6 percent of their current list price, illustrating how undersupplied markets tend to favor those with something to sell. The shortage is especially noticeable at the entry-level prices, where multiple offers and homes selling for over list price have become increasingly common. The move-up and upper-bracket segments are less competitive and better supplied. The market remains relatively tight, but there are some early signs that things could be loosening up to provide relief to buyers.

July 2018 by the Numbers (compared to a year ago)

  • Sellers listed 7,671 properties on the market, a 4.1 percent increase
  • Buyers closed on 6,242 homes, almost dead-even with last July
  • Inventory levels for July fell 13.5 percent compared to 2017 to 11,709 units
  • Months Supply of Inventory was down 11.1 percent to 2.4 months
  • The Median Sales Price rose 6.6 percent to $268,000, a record high for July
  • Cumulative Days on Market declined 17.4 percent to 38 days, on average (median of 18)
  • Changes in Sales activity varied by market segment
    • Single family sales fell 1.8 percent; condo sales rose 13.4 percent; townhome sales increased 5.2 percent
    • Traditional sales rose 1.2 percent; foreclosure sales sank 39.3 percent; short sales dropped 23.3 percent
    • Previously-owned sales were even with last year; new construction sales increased 14.0 percent

Govt. Affairs Committee Submits Public Comment on Draft Mpls. 2040 Plan

Minneapolis Area REALTORS® is pleased to share our official public comment letter regarding the Draft Minneapolis 2040 Comprehensive Plan. “I am particularly proud of our committee’s foresight and our organization’s due diligence with respect to our process in arriving at our prepared response,” said Eric Myers, Director of Government Affairs, Minneapolis Areas Association of REALTORS®. “A big thank you to our Chair, Subcommittee Chair, those who attended the city’s presentation and all the members who have been so attentive to this issue throughout this process. Thank you,” said Shae Hanson, 2018 Government Affairs Chair, Minneapolis Area Association of REALTORS®.

 

The Draft Minneapolis 2040 Plan was immediately shared with members. MAAR hosted Heather Worthington, Director of Long Range Planning-Minneapolis CPED, on June 8th. MAAR submitted the draft version to the National Association of REALTORS® for detailed policy analysis by Robinson & Cole (“R&C”) a Boston, MA based law firm, who returned expert recommendations. The analysis was shared with the members of the MAAR Government Affairs Committee. What results, is our 4 page comment letter which was officially submitted to the city on Friday, July 20th.

Our focus was on (4) main areas: 1) Lack of Meaningful “Action-Steps” Implementation Detail; 2) Three Legally Required Elements are Missing; 3) Further Study on Density Needed 4) More Carefully Examine Benefits and Potential Negative Impacts of Rezoning. Each of these topics are expounded upon in great detail in the letter. The density (“four-plex”) issue has thus far been the most contentious in the press and the public sphere. Please note MAAR’s GA committee comments on density is “Further Study on Density is Needed.” This does not suggest REALTORS® are FOR or AGAINST the concepts of density, upzoning, or ‘four-plexes,’ but simply suggests the city study the issue further.  

If you have any questions regarding our process or the content of the comments, please reach out to Eric Myers, Government Affairs Director at ericm@mplsrealtor.com or Fran Davis, Minneapolis Area REALTORS® Subcommittee Chair.

Please refer any press requests regarding the REALTORS® comments to Erin Milburn, Senior Director of Communications.

Sellers: flat. Buyers: down. Prices: up.

Seller activity was relatively flat in June while buyers pulled back somewhat. For the first time since 2010, new listings surpassed 9,000 in May of this year. That’s encouraging, even though June seller activity was down slightly compared to last year. Increasing or steady seller activity combined with a cool down in demand is consistent with a loosening marketplace. That said, buyers shopping this spring and summer will still face stiff competition. While sellers are receiving full-price-or-better offers in record time, listings still need to show well and be priced properly. June marked the seventh consecutive month of year-over-year declines in closed sales, likely reflecting the shortage of homes for sale.

Strong demand and low supply means sellers yielded an average of 100.3 percent of their list price in June, a record high for any month since at least the beginning of 2003. The shortage is especially noticeable at the entry-level prices, where multiple offers and homes selling for over list price have become increasingly common. The move-up and upper-bracket segments are less competitive and better supplied. Yes, the housing market is tight out there—sometimes frustratingly so. But over 54,000 Twin Cities buyers and sellers have managed to successfully transact real property so far this year.

June 2018 by the Numbers (compared to a year ago)

  • Sellers listed 8,730 properties on the market, a 1.2 percent decrease
  • Buyers closed on 7,063 homes, a 8.1 percent decrease
  • Inventory levels for June fell 15.9 percent compared to 2017 to 11,374 units
  • Months Supply of Inventory was down 14.8 percent to 2.3 months
  • The Median Sales Price rose 5.7 percent to $271,900, a record high
  • Cumulative Days on Market declined 14.6 percent to 41 days, on average (median of 16)
  • Changes in Sales activity varied by market segment
    • Single family sales sank 7.1 percent; condo sales rose 8.4 percent; townhome sales declined 13.7 percent
    • Traditional sales fell 6.6 percent; foreclosure sales sank 39.3 percent; short sales dropped 39.0 percent
    • Previously-owned sales fell 7.4 percent; new construction sales decreased 4.3 percent

Good news for sellers may finally be luring them into the market

More sellers may finally be jumping into the market at a time when buyers are facing the challenges of low inventory. Since 2013, new listing activity has been subdued relative to buyer activity and hasn’t surpassed 9,000 new listings per month since 2010. Excluding 2010, we haven’t had this many new listings for any month since May 2008. Increasing seller activity and tapering demand are consistent with a marketplace that’s starting to loosen up just a bit. That said, buyers shopping this spring and summer will still face stiff competition. Being successful in this market takes commitment, decisiveness and persistence—traits not necessarily typical of every buyer. In fact, May marked the sixth consecutive month of year-over-year declines in closed sales, likely reflecting the lack of homes for sale and not weakness in the economy. Strong demand combined with low supply means sellers yielded an average of 100.2 percent of their list price in May, a record high for any month and the first time this indicator has exceeded 100.0 percent. The shortage is especially noticeable at the entry-level prices, where multiple offers and homes selling for over list price have become increasingly common. Homes continue to sell quickly and for close to or above list price in this tight market, but nearly 12,000 buyers and sellers managed to transact real property last month.

May 2018 by the Numbers (compared to a year ago)

  • Sellers listed 9,164 properties on the market, a 2.9 percent increase
  • Buyers closed on 5,739 homes, a 11.3 percent decrease
  • Inventory levels for May fell 17.8 percent compared to 2017 to 10,403 units
  • Months Supply of Inventory was down 16.0 percent to 2.1 months
  • The Median Sales Price rose 8.4 percent to $271,000, a record high
  • Cumulative Days on Market declined 9.6 percent to 47 days, on average (median of 17)
  • Changes in Sales activity varied by market segment
    • Single family sales sank 12.3 percent; condo sales fell 3.5 percent; townhome sales declined 7.5 percent
    • Traditional sales fell 9.7 percent; foreclosure sales sank 38.1 percent; short sales plummeted 59.7 percent
    • Previously-owned sales fell 12.4 percent; new construction sales rose 11.1 percent

Long-Term Price Trend

Have you ever wondered to yourself what the home price trendline would look like compared to a hypothetical trendline that starts at the same price in 1990 but increased at a steady and predictable 4% annual growth? Well you’re in luck, because that’s exactly the sort of in-depth market insights that we serve up on a regular basis.

As you can see, recorded average sales prices were well above their trend from 1997 through 2008. The gravity or weight behind the long-term average has an inescapable pull. Some call this return to the average a “reversion to the mean.” There will always be short-term market fluctuations, but the overall long-term direction and growth of the market is upward at around 4-5% per year (before inflation). When we use the 4% figure, prices are only slightly above trend. If we were to use the 5% figure, prices would appear drastically undervalued relative to their long-term average.

The truth, as always, is somewhere in the middle.

 

*(Note that 2018 data is year-to-date up through April)