Low inventory the new normal for a decade

Back when I first started selling residential real estate we were taught that a six-month supply of homes on the market is a balanced market.  A balanced market is one that doesn’t favor buyers or sellers.

We measure absorption rates, and supply by how many months it would take to sell all of the housing that is currently on the market, based on recent data on how many homes are sold each month. We can also call it supply and demand.

During the housing crash in the late 00’s we experienced a strong seller’s market. The supply of houses for sale as measured in months was often in the double digits.

Right now there is less than a two-month supply of homes for sale in the Twin Cities metro area. For most of the last decade, we have experienced a seller’s market. That isn’t going to change anytime soon.

With the high home prices and high mortgage interest rates, there is one bright spot. Rents are starting to level off and even go down. Now if we could just build some affordable housing life would be grand.

Limited housing hampers economic growth. Companies cannot attract workers if there isn’t enough housing or if it is too expensive.


chart shows housing supply
Housing supply in St. Paul for the last 10 years

We can usually predict just how long a specific house will take to sell based on recent data. It varies by city, neighborhood, and price.

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