Local Real Estate News
Even with temperatures cooling, the Twin Cities housing market remained in its summer swelter of a holding pattern for the week ending August 28. Signed purchase agreements topped off at 636, continuing a sub-700 trend that has gone on for 15 weeks in a row. Prior to that, we had 15 weeks in a row of 700 or more pending sales per week.
Think about that for a minute. There were more pending sales in the metro during the first full week of February than in the last full week of August. And last year at this time, we were consistently hitting 1,000 or more pendings throughout the summer.
All of this adjustment firmly points to the federal tax credit for first-time home buyers that was in full swing both at this time last year and during the winter and spring months of this year. We have returned to a world void of juicy government incentives.
The number of homes for sale has grown to 27,271, up 8.6 percent from the prior year. Increased supply plus declining demand has caused the Supply-Demand Ratio to grow 56 percent in one year's time. This boils down to greater opportunity for buyers and increased challenges for sellers. You're probably used to hearing that by now. We're certainly used to saying it.
The Twin Cities Housing market has seen some impressive highs and puzzling lows this year. Unfortunately, the lows have persisted through summer, despite low interest rates and a diverse and affordable housing stock.
Although New Listings are about where they were last year (near 1,600), Pending Sales remain as low as they've been all summer. The week ending August 14 bore just 631 signed purchase agreements, down 38.5 percent compared to last year. The three-month total for pendings is 8,018 compared to 13,830 last year, which is an even heftier decline of 42.0 percent.
Active Listings are up to 27,784, 8.1 percent more than last year. Growing inventory is not the result of too many homes coming on the market but rather a product of not enough homes going off the market. With Months Supply of Inventory now at 7.8, it still remains a buyer's market out there.
Where has the Twin Cities real estate market been and where is it heading? This monthly summary provides an overview of current trends and projections for future activity. Narrated by Mark Allen (Chief Executive Officer, Minneapolis Area Association of REALTORS®), audio recorded by Zach Foty and video produced by Chelsie Lopez.
The Twin Cities housing market has found itself in a bit of a holding pattern in recent months, and July is no exception. The $175,000 median sales price was a 2.3 percent increase over July 2009. Pending sales in July were down 37.6 percent compared to last year, which is certainly less than ideal but expected. Due to weakened buyer demand, inventory grew modestly to 27,249 active listings, an increase of 5.4 percent over last year.
Demand has stabilized and should slowly return in the coming months. We hope that it returns to the market before prices have a chance to respond to the growing inventory.
Traditional sellers enjoyed a 5.0 percent price increase to $222,500, foreclosure prices remained flat at $119,000 and short sales posted a 3.5 percent price gain to $147,000. The traditional and foreclosure submarkets had a significant decline in pending sales, while short sales actually had a small increase. There were 3,226 signed purchase agreements in July, a decrease of 1,948 contracts from last July. Seller activity also slowed, with 6,926 new properties coming onto the market.
All active listings experienced a minor spike. The supply-demand ratio increased 63.5 percent to 8.64, primarily due to declining demand and not a surplus of new product. This means that there are about 8.6 homes available per buyer for August.
Although the tax credit ended over three months ago, its negative externalities are finally beginning to pass. March and April enjoyed a big boost in sales performance at the cost of May, June, July, and most likely several additional months.
The economy is currently driving the housing market and not vice versa. The housing sector once generated corresponding construction, manufacturing and other jobs which in turn fueled economic growth. That hasn't been the case of late.
For the week ending July 31, New Listings in the Twin Cities region were down 4.3 percent from last year, with 1,566 new properties coming onto the market. Pending Sales were down 34.3 percent from a year ago, as 651 purchase agreements were signed.
Over the last three months, there have been 13.4 fewer new listings than there were during the same period a year ago and 38.7 percent fewer pendings. This means increasing inventory. There were 27,627 Active Listings for Sale as of August 9, up 6.6 percent from the same point in 2009.
The growth in inventory, combined with slowed sales demand, means that the number of homes available per buyer in August has jumped to 8.64, up dramatically from the mark of 5.28 seen a year ago.
Whether May or June or July, we're finding it difficult to report anything new to you for the warm weather months of 2010. Week-in and week-out, we're showing a recurring pattern of behavior in the Twin Cities housing market, and the week ending July 24 isn't much different. Pending Sales are at 628 for the week, down 37.8 percent compared to last year, and Active Listings for Sale are at 27,661, up 5.4 percent.
These percentage changes represent a bit of a holding pattern. In fact, we've been here since the expiration of the tax credit. There was a minor bump in Active Listings but it wasn't sufficient to convince us that we're heading toward another oversupply situation.
Days on Market and Months Supply of Inventory continue to indicate a favorable market for home buyers. But with interest rates remaining at historic lows, there appears to be no sense of urgency. We may see a minor kerfuffle in the market before the school year begins, but 1,000-plus pendings per week in August doesn't seem likely, let alone 800.
It’s been almost 3 months since the expiration of the federal home buyer tax credit and the market appears to have settled into something of a rhythm. With the dust settling, pending sales have become mostly fixed in the 500-to-600 per week range for the past 9 weeks.
While the dramatic drop from a year ago is certainly not positive, demand is at least holding relatively steady for the time being. The 626 purchase agreements signed for the week ending July 17 were 39.7 percent behind a year ago.For the same reporting week there were 1,618 new listings in the Twin Cities, down 10.0 percent from a year ago.
Inventory is rising due to slower demand. The 27,350 homes currently available for sale represent an increase of 4.8 percent from last year.
For the week ending July 10, the number of pending sales held steady with the week before but remained well behind last year's pace. The 545 signed agreements during the week represent a drop of 45.9 percent from last year at this time. That's the tenth consecutive week of year-over-year declines in buyer demand, a period that coincides with the loss of the federal tax credit for first-time home buyers.
The 1,542 new listings for the most recent reporting week are also down compared to last year but not to the extent of pendings, posting a decline of 17.4 percent from a year ago.
Inventory is up 4.4 percent from a year ago. Because the growing inventory is being greeted with slim buyer demand, the balance of buyers and sellers is shifting the market back in the buyer's favor. The July Supply-Demand Ratio of 7.44 means that there are 7.44 houses for each buyer this month, up 46.9 percent from the mark of 5.06 seen a year ago.
The post-tax credit malaise continues as the Twin Cities housing market comes to grips with the new normal. Pending Sales for the week ending June 26 were down 47.6 percent versus 2009 numbers from 1,121 a year ago to 587 now. New Listings are also down from a year ago, though not to the same extreme as Pending Sales, only dropping 6.5 percent from a year ago.
With demand weakening faster than new supply, the inventory of available homes is starting to grow. The current count of 27,526 homes is 3.2 percent higher than at this time last year.
The slight growth in total inventory is happening in the face of dropping demand, which means that the balance between buyers and sellers is shifting back in the buyer's favor. This is reflected in July's Supply Demand Ratio of 7.44, which was a ginormous 46.9 percent over last July and means that there are 7.44 homes available for each buyer during the month of July.
