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

Between now and New Year’s Eve, many Sellers pull their house off the market because they don’t want to be disturbed during holiday activities.  At the same time, Buyers tend to take a break from house hunting as well.  For those Buyers and Sellers who are really serious, the holidays are no excuse to put things on hold.  The Buyers still out shopping have great negotiating options due to the slowing demand.  For Sellers, having your home in showing condition is very important, as is keeping an open mind if a low offer is submitted.  I’ve heard from agents in my office that Sellers are walking away from offers that are within $2000 of their bottom line on a $300,000 to $400,000 house.  Sellers should keep in mind that an offer turned down now may be the last offer they see for two months or more; until the market moves more towards spring.

Interest rates have slipped to as low as 5 3/8% in the last month and are currently hovering around 5 1/2%.  The slowdown in sales we’ve seen the last month has continued to accelerate but sales are still strong for homes priced aggressively.  Sellers that are intent on selling their home yet this year should consider a price reduction now to bring in buyers while they are still out in some strength.  Once Thanksgiving passes, the market really tapers off.

As can be seen on my home page, if a buyer visits this site and purchases and closes on a house yet this year I will provide them with a FREE 1 year home warranty!  Couple that with the strength in buying power due to the low interest rates and time of year and buyers have the potential to save thousands of dollars versus waiting till the spring!

While interest rates have stayed very consistent around 5 5/8% the sales activity has dramatically slowed.  While sales have slowed, about 3,000 new listings come on the market each week, leading us to a total of over 35,000 listings currently active on the Regional MLS system.  Sellers have to be aware of increasing market times and the need to consider price reductions.  Buyers haven’t had this much inventory to consider in years!

Interest rates in August and early September continued to hover below 6%…. currently as low as 5 5/8 on a 30 year fixed mortgage.  This decline and the “back to school season” lead to a stronger August than July.  Housing inventory continues to climb and is quickly becoming a buyer’s market.  From now until February, home sales progressively slow before the seasonal “Spring Market” begins in March.