In-person gatherings suspended through 12/31/20. Office hours: VIRTUAL (phone, email) 8-4:30 M-F, NO CONTACT (online purchase pick-up) Tuesdays 1:30-4:30 and Thursdays 9-12:30.

NEWS FROM NAR: Preparing for Possible Partial Shutdown of Federal Government

Programs important to real estate will be affected in the event of a partial federal government shutdown at midnight tonight if lawmakers fail to pass short-term budget legislation.  

NAR is in regular communication with congressional leaders and the White House and is working with other organizations to ensure lawmakers are aware of the importance of keeping programs critical to communities operating without interruption.

There are three areas of concern for your business: 1) the availability of federal flood insurance under the National Flood Insurance Program, 2) delays in processing of FHA-backed mortgages, and 3) slower response times by IRS offices for tax information needed for real estate transactions.

Flood insurance
NFIP’s authority to sell flood insurance policies expires at midnight tonight. Should the program lapse, NFIP will not be able to sell or renew policies. Existing NFIP policies will remain in effect until their expiration date. 
Details and helpful links.  

FHA programs
Under a shutdown, FHA will furlough non-essential employees. Delays are possible in loan processing and approval. Mortgages backed by secondary mortgage market companies Fannie Mae and Freddie Mac are not affected, nor are mortgages backed by the U.S. Department of Veterans Affairs. 

Tax information
To the extent taxpayer information from the IRS is needed, transactions can face delays as IRS offices, subject to furloughs of non-essential employees, take longer to reply to requests.

More on potentially impacted programs. 

*Information is derived from the National Association of REALTORS®

Long-awaited inventory gains finally arrive

For the first time since April 2015, there were more homes listed for sale in the Twin Cities metro than the same month the year prior. After years of strong buyer activity and weak seller activity, the tides seem to finally be shifting. Seller activity has been accelerating since the middle of this year. Meanwhile, the last four months all showed year-over-year decreases in pending sales. Unit sales volumes are still healthy, though there is some downward pressure brought on by tight inventory and rising prices and rates. The market is decelerating, but not yet contracting. Prices continue to rise, and homes are selling in less time. But absorption rates and the ratio of sold to list price are starting to ease. That’s good news for buyers, even though sellers still have strong negotiating power.

The number of active listings for sale has increased compared to the prior year. Buyers haven’t seen inventory gains in over 3.5 years. Months supply also ticked up to 2.1 months, suggesting the market is still tight but it is rebalancing and normalizing. After increasing in October and November, rates have settled back down around September levels. 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.

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

Sellers listed 3,992 properties on the market, a 12.6 percent increase from last November

Buyers closed on 4,629 homes, a 0.9 percent decrease

Inventory levels for November rose 2.3 percent compared to 2017 to 10,181 units

Months Supply of Inventory was increased 10.5 percent to 2.1 months

The Median Sales Price rose 8.2 percent to $265,150, a record high for November

Cumulative Days on Market declined 7.1 percent to 52 days, on average (median of 31)

Changes in Sales activity varied by market segment:

Single family sales fell 1.1 percent; condo sales jumped 18.7 percent; townhome sales declined 3.3 percent

Traditional sales rose 1.3 percent; foreclosure sales sank 44.1 percent; short sales fell 42.9 percent

Previously-owned sales were down 3.2 percent; new construction sales ramped up by 28.7 percent

Plymouth Council Votes Down Short-Term Rental Restrictions

On Tuesday, December 18 the Plymouth City Council met and considered adding “occurrence restrictions” on short-term rentals within the city limits. The proposed ordinance would have allowed only one occurrence of a short-term rental in a 30-day consecutive period, effectively limiting the frequency of short-term rentals. Minneapolis Area REALTORS® submitted a formal letter and testified before the Mayor, City Council, City Manager, and Community Development Director. REALTORS® fundamentally believe in private property rights, among those rights is the right to ‘let for rent’ real property.

Essentially, without the right to buy, sell, or ‘let for rent’ the value of real property ownership is significantly diminished. However, REALTORS® also understand and respect that cities need to ensure safety and order in the short-term rental market. REALTORS® oppose outright bans on short-term rentals. REALTORS® do not oppose some level of regulation on short-term rentals so longs as the ability to ‘let for rent’ real property with a minimally intrusive, nominally priced and permissive structure is preserved. REALTORS® pointed out it was the once per 30-day period that was most concerning.

The number of short-term rental occurrences does not necessarily correlate with negative or disruptive behavior at a given property. REALTORS® suggested the trigger for action against a landlord should be complaint-based and via the license suspension, revocation, process not via an arbitrary occurrence standard. A total of eight individuals testified against the proposal. Council members questioned the need for such an ordinance and pointed out the total number of concerns had been very low. The final vote was 6-1.

Heart of the Community Award Recipients

Minneapolis Area REALTORS® shines a light on a few of our members who have dedicated their time, talents and energy to serve in a volunteer leadership capacity in our communities. These REALTORS® are change agents. They recognized a critical need in our community and took action to address those needs. Some of these members have established are nonprofit organizations while others have committed countless volunteer hours to lend a hand to help shape a local program. These REALTORS® understand the value of community and service. MAR applauds their efforts and will make a $500 to the organization they serve as a volunteer on their behalf. A luncheon was held in October to honor the nominees and announce the recipients. VIEW PHOTOS
  • Katrina DeWit, Special Olympics of MN
  • Lynn Foulke, Safaris with a Heart
  • Blake Hanson, Mile in My Shoes
  • Mary Hollway, Alex’s Lemonade Stand Foundation
  • Wyn Ray, New Covenant Foundation

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”