Record breaking new low

Graph by year homes for sale
Homes for sale in the Twin Cities

This isn’t the first time I have written about a record-breaking low number of homes listed for sale. In St Paul, there are only 243 homes on the market that do not have offers on them. The data in the graph comes from the Northstar MLS which is deemed reliable but not guaranteed. Buyer demand remains high and on average homes are selling quickly.

We are in a strong seller’s market. It isn’t a healthy market and has been out of balance for the last several years.

Ten years ago today!

This is a post from January 2nd, 2008. We have all learned much since then. Most of us never believed home prices would go down and that it would take a decade for them to go back up to what they were.

Sometimes I wish I could warn my past self of what is to come. I’ll have some December 2017 numbers later in the week.

10yearchart
The chart above is for sale prices of homes in the city of St. Paul over the past ten years.  The data is from the MLS which is deemed reliable but not guaranteed.   The table below shows the actual numbers.

The average home sale price in St. Paul for 2017 was $231,924, slightly above the average of 230,148 for 2006 which is when home prices peaked in St. Paul Minnesota.
Chart3
For more information about local real estate prices please see:

Local Market Conditions & home prices

Real estate and the new tax law

The new tax law rules which were signed into law last week has some important changes for homeowners. Mortgage interest will still be tax deductible but only on mortgages up to 750K.  Property and state taxes will see be deductible but only up to 10,000 dollars worth.

The standard deductions have been raised. Which means that fewer people will want to itemize and get the deductions because they will pay less in taxes by taking the standard deduction. The standard deduction for 2018 has almost doubled from 2017 to $12,200 for single filers and $24,400 for joint filers.

The deductibility of capital gains on the sale of a primary residence has been left in place. Taxpayers will still be able to exclude up to $500,000 (or $250,000 for single filers) from capital gains when they sell their primary home, as long as they’ve lived there for two of the past five years.

It is hard to tell at this point what kind of an impact any of this will have on the local real estate market where people generally do not need 750K mortgages. People with the combination or high property taxes and high state income taxes may want to look for some new tax deductions.

Right now home sales are strong and even record-breaking. Home values continue to climb as the number of homes on the market remains low. Homeownership rates are about 5% below the peak of 77.3% in 2002 and are climbing.

Graph

 

How many houses are on the market?

Thanks for asking. 317 is the number of houses and condos on the market in St. Paul that do not currently have offers on them.  317 might be a new low. If there were twice as many homes for sale that would still be low number, even for December.

There are also 58 homes that are for sale but are ‘Temporarily not available to show”.  Watch for them to come back on the market next week.

The shortage of homes for sale continues, which isn’t news anymore. The demand for houses remains strong and they sell quickly.

If you plan on selling your home this winter you don’t need to have it “pre-listed” to “build excitement”. There are plenty of home buyers excited about the idea of buying a home.

Some of the forecasts and predictions for 2018 suggest that the shortage of houses for sale will ease up a bit. Real estate is local, I’ll be watching the market closely for signs of change. The market has been steady and stable for the past three years but out of balance and in favor of sellers.

skating
Winter skating downtown St. Paul

November home sales by neighborhood

table - home sales by neighborhood
November home sales

In November the number of homes that got offers in St. Paul was higher than the number of new listings. It is normal for the number of homes on the market to fall in November and reach the lo for the year in December.

Right now about 25% of the homes included in the chart as being for sale have offers on them. On average November home sellers got close to their asking price. In some neighborhoods, they got more than the asking price.

The overall median sales price went up by about as much as it went down in October.

The housing market strongly favors sellers. Overpriced homes sell once they are priced fairly. Average market time is less than 40 days and less than 30 days after the last price reduction.

Home sellers often take their homes off the market in November and put them back on again after the new year. Houses that are on the market sell faster than those that are off the market.

The numbers used to make the chart, were extracted from the NorthstarMLS and are deemed reliable but not guaranteed.

If you would like to know how much your house might sell for, contact me for a free no obligation consultation.

For more local real estate numbers please see Local market conditions and home prices

Absorption rates current and past

I am not sure why but I thought it would be fun to compare current absorption rates of housing with absorption rates from 10 years ago. In case anyone has forgotten ten years ago the housing market crashed and caused the great recession. These numbers are from before the Obama administration and before local housing prices hit rock bottom.

Absorption rates calculate how long it would take to sell all of the houses on the market at the current rate of consumption. The number is important because it has to do with the supply of houses and the demand for them.

Back in 2007, it was hard to sell a house:

Papert_2 Anoka County –  12.5 Months

Carver County –  11.7 Months

Dakota  County  – 9.8 Months

Hennepin  County  – 9.3 Months

Ramsey County – 10.2 Months

Scott County – 13.2  Months

Washington – 10.9

 

Here is a look at absorption rates today for the 7 county metro area which is like the 13 county metro area except smaller:

Anoka County –   1.7  Months

Carver County –  2.6 Months

Dakota  County  – 1.7 Months

Hennepin  County  – 1.8 Months

Ramsey County – 1.5 Months

Scott County – 2.2 Months

Washington – 2.2 Months

An appropriate graphic for the current absorption rate might be a q-tip. The reason I posted this is because when it comes to the housing market and the economy nothing is forever and there are no guarantees. There are no guarantees in life or in real estate.

I wonder what 2018 will bring? I have heard at least one prediction that the shortage of houses on the market will start to ease up a bit. We shall see.