Months supply up 1/10th of a month

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Maple leaf

The housing supply in the Twin Cities rose from 1.2 to 1.3 months. It is the same as it was in September of 2021. The last time we had a two-months supply of homes for sale was in 2020.  The supply of houses is slowly rising but the supply is still very low which is why prices are rising rather than falling.

It has been many years since we have seen a buyer’s market. During a buyer’s market, there is at least a six-month supply of houses for sale.

Supply is measured by how long it would take to sell all of the houses on the market if no more houses came on the market with buying activity remaining the same.

Homeowners who are concerned about being able to sell their houses should find something else to worry about.

Back during the housing market crash and the great recession, there was a 10 to 12-month supply at times.

 

Twin Cities Metro -days on market

The housing market has been in the news non-stop these last few months. Interest rates are up and in some parts of the country home sales are sluggish as the number of houses on the market goes up. Homeowners are no longer as interested in selling.

Locally the number of houses on the market is up slightly and the number of new listings is down slightly. The median number of days on the market for houses in the Twin Cities Metro area had jumped from 11 days to 12 days between June and August and from 13 days to 14 days in St. Paul during the same period. If we go all the way back to the before time in 2019 median days on market were 20 in St. Paul and 23 for the Metro area.

A decade ago we were seeing numbers in the 80s and 90s for median days on market . . just to add some context.

The real estate market is changing a bit, as it always does, but the demand for houses remains very high and the supply is still much lower than the demand. In the last few months, things have eased up a bit for buyers. There are even situations where sellers are willing to accept less than the asking price.

St. Paul homes are on average selling for more than the asking price. Multiple offers are common. It helps to understand the local market when buying or selling residential real estate.


It is unclear at this point if we are in a recession or heading into one. The unemployment rate is still hovering around 2% in the Metro area. Homeowners have more equity than ever and there isn’t any evidence at this point that home prices are going to go down.

Who we really are

When I look at pictures of Realtors in advertising I most often see pictures of young men and young women. They are dressed in suits and if there are more than two in the picture, there is a young man and a young woman with darker skin.

Who we really are is a group of the is 66% woman and typically around 56 years of age and probably white. You would never guess that there are more women Realtors than male Realtors.

Most real estate agents are independent contractors which means they control their own schedule and where they work ad even how many hours they work. Since women are also responsible for the majority of unpaid work being an independent contractor is a bonus.

In real estate sales positions there are no glass ceilings.  There is some age discrimination but it isn’t as bad on the job as it is in other aspects of life. Real estate sales positions have always attracted an older demographic because there are no benefits, like vacation pay or health insurance.

During times of high unemployment, we see an increase in the number of Realtors. Membership also increases during times when home sales are up as they have been during the last two years. Real estate companies are always “hiring”. Real estate agents should interview a few brokers and choose wisely.

 

realtor profile 2022
Realtor profile 2022

 

August brings changes to real estate forms

Every year changes are made to the Minnesota real estate forms that most Realtors use. For 2022 there is an addition to the purchase agreements:

“Discriminatory restrictive covenants (e.g. 312. provisions against conveyance of property to any person of a specified religious faith, creed, national origin, race, or 313. color) are illegal and unenforceable. An owner of real property may permanently remove such restrictive covenants 314. from the title by recording a statutory form in the office of the county recorder of any county where the property is located”

In 2020 I was a volunteer for the deed mapping project. I read Ramey County deeds and flagged those that have race-based restrictive covenants.

In some neighborhoods, developers put restrictions on deeds so that homes could only be sold to white people. Here is an example:

“ E. No persons of any race other than the Aryan race shall use or occupy any building or any lot, except that this covenant shall not prevent occupancy by domestic servants of a different race domiciled with an owner or tenant.” 

The restrictions were put in place during the first part of the 20th century and might be part of the reason why our neighborhoods are still segregated.

The deed restrictions or restrictive covenants can not be enforced but they still exist on some deeds and can now be legally removed. I like to point out that even though there isn’t a racially based deed restriction on the deed to my house I am relatively sure that the land that it sits on was stolen from the native people most likely Anishinabe.

Even though I did not personally take the land and it happened before I was born I have benefited from owning it.

Realtors played a role in helping to enforce discriminatory restrictive covenants as did the local and federal governments and banks. The National Association of Realtors did issue a formal apology a few years ago.

We can always count on change

The housing market is always changing but during good times, bad times, and the worst times people buy and sell houses.

Higher interest rates and higher home prices will start to have an impact on the housing market. Demand will likely stay high but houses may stay on the market longer and get fewer offers.  There is only about a month’s supply of houses on the market.

When the pandemic came and we were all told to stay home a buyer got laid off from her job in the hospitality industry and we had to put a house back on the market. It sold three days later for slightly more than the previous buyer had offered.

For a couple of days, I wondered if home values would go down. Values went up and rose during the pandemic as people started moving around.

When there was civil unrest in the Twin Cities home sales came to a screeching halt for a few days but then rebounded to a new high, partly due to low-interest rates.

I sold houses during the great recession and the housing market crash. I sold them when interest rates were over 7%. I sold them during buyer’s markets and seller’s markets.

If there is a recession this year or next houses will be bought and sold, rented, and rehabbed too.

Selling a house is a project that needs to be managed. The best strategies for managing it changes with the market.

I feel fortunate to have had experience with every type of housing market.  The housing market is kind of like Minnesota weather. We can count on change and variety.

 

From 2012 to 2022


We can call this throwback Thursday. In May of 2012 homes sold for an average of 166 thousand in St. Paul with a median sale price of $125,000. In May 0f 2022 the median sale price for a house in St. Paul was 286K and the average was 325K.

If you bought a house in 2012 it may have doubled in value or maybe not but you probably have a lot of equity. Mortgage interest rates were at 3.8% by the end of May 2012.

2012 was a good year with the recession and the housing market crash behind us and home prices starting to rise back to what they were in 2006 when median home prices were 200K and the average sale price was 238K.