While home sales are still extremely brisk, the inventory for sale has climbed 30% since February, which is leading to longer market times and more competition for price, marketing and condition by sellers. Interest rates have started to creep up as well, however they are still about the same as they were last year at this time.
The Minneapolis/St. Paul housing market is still going strong. Housing inventory is continuing to grow but at the same time, we are near-record levels for closed sales. Locally, this year’s interest rates, sales, and appreciation are still tracking much higher than anybody expected. While most houses take 1-2 months to sell, I listed a house for sale and received two offers in five days! The house was priced well, was completely cleaned and decluttered, and I took beautiful pictures to show off its condition.
Aaron Dickinson named “2005 Super Real Estate Agent” by Minneapolis.St.Paul Magazine and Twin Cities Business Monthly. Up to 108,000 members of the Twin Cities (including home buyers & sellers, mortgage & title companies, and other real estate agents) have the opportunity to submit nominations, which are then screened against the Department of Commerce database, and then reviewed by a panel of real estate experts and final winners are chosen. In 2005, just over 800 agents, or less than 5% of the agents in Minnesota, were selected as “2005 Super Real Estate Agents!”
With the dramatic weather change we saw with the Memorial Day weekend, I would not be surprised if the housing market warmed up a little more. The average number of days a house is on the market has dropped from 70 days to 60 days in the last month. Interest rates have also fallen, with recent quotes on a 30-year fixed rate mortgage down to 5.5%. This is within about .25% of record lows that we saw in 2003. The lower interest rates have baffled even Federal Reserve Chairman Alan Greenspan and while there’s some debate about when they will go back up, everyone agrees that mortgage interest rates will go up and could rise dramatically once they start.
For more data on the current housing market, please see the Minneapolis Area Association of Realtors Weekly Activity Report. For more current information, or for information specific to your area, feel free to call me anytime at 612-251-5599.
CNN/Money Magazine have posted a couple excellent articles about house price appreciation over the last 5 years and Greenspan’s comments on why there is not a national housing bubble. Even though Minneapolis/St. Paul has seen a 60%+ price increase in the last 5 years, we are actually about average. Some markets on the west coast, the north east, and Florida have seen over 100% price increases in the last 5 years. Prices may level out or even drop slightly in our area but it looks highly unlikely that we will see a dramatic or prolonged decrease in house prices.
May is starting out cold and dark, but that’s just the weather. The Twin Cities housing market paints a much warmer and brighter picture for all of us. While the number of homes currently for sale continues to increase, sales are rising as well. We currently have over 24,000 listings active in the Twin Cities metro area alone and the average market time is 70 days. In one neighborhood in Blaine, there were four homes for sale within 2 blocks of each other and were priced within $10,000 of each other. All were of similar size, condition and age. In this situation, interior condition, cleanliness, and staging are very important, as is price. In this type of situation, there is likely to be significant pressure on the sales price of these homes due to the large amount of competition. Mortgage rates dipped again slightly in April due to financial market data pointing to a cooler economy. As long as inflation remains and job growth remain low, the stock market will continue to struggle and that will in turn encourage interest rates to remain lower as well.
While the current number of homes on the market does provide buyers with many options, that does not necessarily mean that they can offer sellers “low-ball” offers and expect them to be accepted. While there is some bargaining room, especially in areas with lots of inventory, many sellers are remaining firm and receiving their asking price or close to it.
With the month of April comes Daylight Savings Time, April Showers (to give us those May Flowers), more sunshine (and more allergies) and lots of warmth. As with most Aprils, this one is also showing the housing market start to really pick up some steam. March home sales were strong, even though interest rates started to creep up and the economic forecasts were not very encouraging. As has been predicted for quite some time, interest rates on 30-year fixed as well as ARM products did move significantly higher. A recent quote on a 30-year fixed was at 6.15% and a 3/1 ARM was at 5.5%. By the end of the year, many bankers and economists are expecting the 30-year fixed rate to be between 6.5% and 6.75%. While that may seem high, an interest rate under 7% is still exceptionally low in historical perspective. This year still looks to be on track with last year in terms of number of sales, but I believe that appreciation will be lower, somewhere in the 4-6% range, and that the number of days a house is on the market will increase to 80+ days during the Fall and beyond.
The Minneapolis/St. Paul housing market is starting to improve. Showings and offers have been rising steadily…. but so has the number of homes for sale. While January did show some good signs, the number of homes that received an acceptable offer and are waiting to close (called Pendings) is down about 5% from last year. While it is way too early in the year to determine trends, most agents believe that 2005 will be marked by less house price appreciation, slowly rising interest rates, and homes that take longer to sell due to increased inventory. This is by no means a bad scenario…. in fact, 2005 is shaping up to be more like a “typical” year that we haven’t seen around here since the mid 1990’s.
Happy New Year! The last couple weeks of 2004 were very quiet in the real estate market. Buyers, Sellers and REALTORS alike spent time with friends and family and consequently very few transactions took place. On January 3rd I walked into the office and saw many lively and refreshed faces… and a lot of positive energy. REALTORS see a good year ahead and are ready to get moving. According to projections by the Minneapolis Area Association of REALTORS, January will mark a dramatic decrease in the number of homes for sale versus sales. This suggests that demand is increasing faster than supply, which should help support prices and reduce days on market for houses currently for sale. Please click on the link below to view.
Supply-Demand Ratio – Click here to View
Aaron Dickinson