If you ask around with home buyers, Realtors, Loan officers and read real estate industry publications, you’ll hear the same, consistent concern; low housing inventory. Low inventory has been consistent in many markets throughout the country, however we know one thing that is even more consistent in real estate; ALL REAL ESTATE IS LOCAL. And on that note, our local Minneapolis/St. Paul housing market is also currently consistent with most national metropolitan real estate markets with regard to inventory; the amount of available homes for sale is not sufficient for the amount of active buyers.
This creates quite the conundrum for buyers, Realtors and lenders. Buyers are experiencing much frustration, both in having to wait exceptional amounts of time for the right home to come on the market, and yet when it does, most buyers are competing with multiple buyers and multiple offers. Oftentimes when the right home for you hits the market, it’s also the right home for many other buyers who’ve been experiencing the same difficulty you have been, and thus the multiple offer scenario (oftentimes as many as 25 – or more – offers per home) becomes overwhelming, and frustrating. Your exciting dream of buying the right home becomes almost like a game of chance, when your offer is submitted, in competition with others. This is also very difficult for the Realtor. And this is why we suggest teaming with a very good and hard-working professional. You’ll need every tool in your arsenal, to make your home purchase successful.
Millennials are the largest living population in the United States, and have become a big player in the housing market. According to a Zillow group report, millennials made up 42 percent of home buyers in 2016 – more than any other generation.
Unsurprisingly, we are seeing mortgage companies vying for the millennial market. Recently, lenders started offering ‘reward points’ to attract the young generation. However, advisors would still recommend looking for the mortgage with the best rates and closing costs instead of basing a major financial decision on reward points.
Follow this link to see the April 2016 Housing Update for the Minneapolis/St. Paul area, from MAAR (Minneapolis Area Association of Realtors) – called ‘The Skinny.’ https://www.wmtitle.com/blog/
Summarized; our local market remains strong, with inventory levels low, good buying activity, housing prices increasing, and mortgage rates remaining @ 3.6% on average.
The salient points;
– The number of homes for sale are @ 15%-20% lower than one year ago (April 2016 to April 2015).
– Pending sales (homes that have sold, but not yet closed) have risen by 1.6%, for a total of 6,373 when comparing April 2016 with April 2015.
– Closed sales are up by 6.1% (for a total of 5,128) when comparing April 2016 with April 2015.
– The median sales price increased by 7.7%, to $231,500.
– Our market has 2.6 months of inventory/supply, which is down 27.8% from this same time (April), last year.
– The percentage of list price received at sale is up 1%, to 98% – this is phenomenal.
– Mortgage rates remain @ 3.6% – which is historically low. This is causing lenders to be slightly backlogged with files.
Generally speaking, the local housing market outlook is very good.
Link to ‘The Skinny’ video: https://youtu.be/7CEaZ9aPMS0
Interesting. We’re really in a seller’s market again. The news nationally is that the housing market is seeing some difficulty with low inventory. **Reminder; all real estate is local. Thus, local stats and analysis are necessary for our Minneapolis/St. Paul metro market.
Summarized, the analysis is; A) We have a very low inventory. We’re at just over 2 months of housing inventory. This means we’re in a seller’s market, and that there are more buyer’s than homes available. A balanced market (between buyer’s and seller’s, is defined as roughly 5-6 months of inventory/supply. B) This low inventory has slowed down the number of sales, thus overall sales transactions are down – YTD – by @ 20%. C) This low inventory, which creates the seller’s market with more buyer’s than homes available has caused housing prices to increase, by over 5% so far, YTD. Some prime areas in our local market have seen significantly larger increases in pricing, YTD. Again, supply and demand. D) I’ll add: I’m hearing from bother lenders and realtors, about lender’s appraisal issues again (coming in low – it’s been a couple/few years since the last outbreak of this plague: And I call it a plague this time, as I’m not terribly worried about the fundamentals of current home value increases – my only concern is for the mid and long term with respect to what an increase in interest rates above 5.5/6.0% will do).
The takeaway for Sellers, or people considering selling their home: Get your home on the market. The timing is optimal. The takeaway for Buyers: Be prepared to get into multiple offer scenarios. Be comfortable with this notion. Follow the lead of your Realtor in how best to navigate this process, and also when you’re reaching the upper limit on fair market value for your prospective home. Have your lender’s pre-approval letter ready, and don’t ‘sleep on it’ overnight, or over the weekend, if you think it’s the right home. Aggressively move on it right away. It will most likely be gone when you awake in the morning.