Twin Cities Real Estate Market Insight
Quality real estate data has never been more reliable. Fact is, many Realtors don't know how to find or use it. The Berg Larsen Group analyze market data carefully to help our buyers and sellers. Below are a series of charts, all derived utilizing NorthstarMLS data, that we reference regularly to keep the pulse of the Twin Cities market. This quarter: TWIN CITIES HOMES FOR SALE
Like politics, real estate is local, so it is important to consider the data on both the Macro (the Twin Cities region as a whole), and Micro (city and community) levels. When looking at the data and these charts, we are looking for correlations between the different metric categories: NEW LISTINGS, PENDING SALES, CLOSED SALES. Changes in one category can affect the others, and vice-versa.
For context on the Macro level, it might be helpful to understand the breakdown of sales in our Twin Cities region in any given year.
|Price Range||Rounded %|
|$1M - $1,999,999||.75%|
As an example of correlations on the Macro level (the Twin Cities region as a whole), there has been a drop in the number of New Listings coming to market in the "under $250,000" bracket. Yet there is still strong buyer activity in this range, so there is a corresponding drop in the number of Homes for Sale, and then also a drop in Pending Sales and Closed Sales.
These charts update monthly, be sure to revisit the page in the coming months, and years to see what trends you can spot. If you have questions or would like to learn how the market activity is affecting you and your neighborhood, utilize our insight by calling on our team at 612-925-8411.
In preparing this month’s market insight we’ve analyzed a three-year metric, as we normally do to follow trends accurately on an annual basis, not monthly. Currently, we’re noticing a downward trend in the numbers of homes for sale. In order to put this in context, we look back over a 10-year period, to January 2007. As the economy and the financial markets stabilized in 2011, the real estate market seemed to get its firm footing mid-2013. As it did so, more people started to feel confident about both buying and selling real estate. Yet, it took two years of growth in the numbers of homes for sale, late-2015, such that they would outpace the sales themselves, as more people put their homes on the market sensing that renewed strength.
RANGE: Under $250,000
The Numbers: What we see when looking back at inventory of homes for sale to the beginning of the recession, circa January 2009, to September 2017, is the number of homes for sale has plummeted. In that timeframe, there has been a 77% drop in the average number of homes for sale in a given month in the Twin Cities. That’s a staggering change from 11,357 to 2,655! The dramatic nature of the drop is reflected in the fact that the spread between the numbers of homes for sale has dropped so low that there are less than 700 homes that separate the market under $250,000 to homes between $500,000 to $999,999. At its peak, this spread was over 9,000 homes! A truly staggering change.
What That Means: The base price of homes are increasing throughout the Twin Cities. The increased scarcity of inventory makes it much more challenging for a first-time homebuyer who can only qualify for under $250,000. Inventory has dropped to a wretched 1.5 months, while a balanced market is six months. These drops correlate with a drop in the number of closed home sales in this range, which has, for the first time, dipped below those priced between $250,000 to $499,999.
RANGE: $250,000 to $499,999
The Numbers: the average numbers of homes for sale at the end of September 2017 sits at 4,181. This represents a 20% increase to May of 2013.
What That Means: As the median home price in the Twin Cities metro region has crossed the $250,000 threshold it has created additional inventory in the $250,000-$450,000 price range. One might expect that to increase the numbers of homes for sale, yet there continues to be a trending decrease. This is driven by a nearly fourfold increase in the numbers of closed sales since its low in 2011; to over 20,000 homes in the last 12 months. The increase in the numbers of buyers is increasing competition for available properties and is reducing inventory in this category to a staggering 2.6 months, a low going back more than 12 years. Buyers are waiting for sellers. Where are you sellers? Now is THE opportune time!
RANGE: $500,000 and $999,999
The Numbers: in a given month, the average number of homes for sale in 2017 has come down from a small wave. Markets saw a rise in 2015 to a peak in May 2016. Currently, the numbers of homes for sale have settled back to early 2015 levels. From the low in May of 2013, there has been a significant increase, 42%, in the numbers of homes for sale in September 2017 to 1,987.
What That Means: The increase in the numbers of homes for sale, while still significant, pale to the increase in the numbers of homes sold from the low point in 2011. The numbers of homes sold has increased three times over this. This demand, without an even more robust supply of new inventory, has driven the housing supply to a low of 6 months in this bracket, down from a high of 16 months in January 2010. This is good news for both buyers and sellers as a six-month inventory level is considered balanced. Riding out the 2017 Fall market, and heading into Spring of 2018, we expect this good news to entice sellers to put their homes on the market, as well as to spur buyers looking to make a move before values increase further.
RANGE: $1 Million Plus
The Numbers: What we see when looking back to the beginning of the recession is that the top end of the market’s inventory bottomed out in May/June 2013 with just 501 homes for sale, on average, that month. It came off a 10 year high from March 2009 with 871 homes for sale. This is a staggering 43% drop, with a spread of 370 properties. Since June of 2013 we have seen an increase to the current average of 668 homes for sale over $1,000,000. Closed sales are also on the rise, with a 240% increase in the number of closed sales since the low of 2010.
What That Means: it means that the million plus market is back! More buyers, more sellers, better price stability, all leading to the sense of normality. This is reflected in the housing supply numbers in this category, which has dropped from a high of 32 months in May 2010, to a new 10-year low in September 2017 of 13 months. What we are not seeing is the consequential rise in values. On the average, price per square foot has increased in the other segments of the market while the upper bracket has been hovering at the same level for a number of years. This helps illustrate that this is a healthy time in the upper bracket, but not a boom time.