I have been writing about the shortage of housing for a couple of years. In the metro area, there isn’t a lot of new construction. A new luxury apartment building here and there and some large expensive homes and even a few affordable housing units.
At the same time, the population and the need for housing have grown.
A large number of current homeowners are not ready to sell. They are older and more likely to stay put than to move. The end result is that there are not very many homes available and that is driving prices up.
The real estate market in St. Paul continues to heat up. In April we saw an increase in the number of homes for sale and an increase in the number of offers made on homes for sale. Prices went up, and the number of days it takes to sell a house went down slightly.
The housing market favors sellers. Homes for sale get multiple offers and end up selling for more than the asking price. Overall in St. Paul the asking price was lower than the sale price for the second month in a row.
The data used to make the table was extracted from the NorthstarMLS which is deemed reliable but not guaranteed. The numbers were gently sorted in a spreadsheet. No numbers were harmed in the process.
I love numbers and am always happy to answer real estate questions.
Welcome to the month of May. Spring is just around the corner. Here are some numbers to kick off the month. The absorption rate for homes for sale is two months. It is actually closer to 1.8 months. That means that if buyers keep buying at the same rate it would take 1.8 months to buy all the houses that are for sale.
At the same time, the median sale price is rising but it is actually lower than it was a year ago, and surprisingly lower than it was last month. The real estate market has been stable and has favored sellers for the last few years.
I have more numbers and analysis of the real estate market on Monday.
The numbers used to make the graph are from the NorthstarMLS and were calculated using 53000 home sales. The data is deemed reliable but not guaranteed.
A couple of my data sources show that showings were lower in March of 2019 than they were in March of 2018. According to ShowingTime, they were down 9.2% in the midwest.
ShowingTime is the online appointment solution we use locally to schedule showings which are appointments to tour homes for sale.
In the Twin Cities homes on the market got an average of 6.8 showings in March as compared with 7.1 in March of 2018. One possible explanation could be that homes are selling so fast in the metro area that they are not on the market long enough to have many showings.
If I look at average days on the market in March of 2018 Vs. March of 2019, the numbers are 26 in 2018 Vs. 23 in 2019. Which means my theory has some merit.
Often with numbers, the cause and effect are not well established. A random metric is chosen and we are supposed to draw a conclusion.
There are more buyers than there are sellers. I think this trend will continue for the next several years. The trend impacts all of our metrics.
Here are a few charts from the report that I found particularly interesting:
Homeownership in Saint Paul has been declining since 2000. This trend accelerated during the housing crisis (Great Recession) when many single-family homes converted into rental properties due to the inability to sell them; many of these properties remain rentals today.
There was a time in around 2009 to 2011 when it was hard to give a house away. Corporations began buying up small houses and renting them out and renting out houses rather than selling it became a more popular option.
The rental population is most dense in the southern portion of the Highland Park neighborhood, as well as the Union Park, Frogtown/Capitol Heights and the Summit-University neighborhoods.
The proportion of owners is highest in Highland Park, the eastern portion of Como, the northern portion of Payne-Phalen, the Cherokee Park area on the West Side and the eastern portion of the Greater East Side.
We lost housing during the great recession it was torn down and often the land the house sat on was added to an adjacent homeowners lot.
It should also be noted that between 2008 and 2015, Minneapolis’ share of renter households grew from 49 percent to 53 percent, making renters the majority of households in the city.
Today I have some numbers for March home sales in St. Paul. It is starting to look like last year. The overall average sale price is higher for the city than the final asking price. We saw that happen last year in the spring and summer.
When the average asking price is lower than the average sale price that means that prices are going up rapidly. Often the highest home prices for the year hit in April. Current sale prices are 4% higher than they were last March.
Overall home sales were fairly low in March, mainly because there were not many houses on the market. There is a high demand for houses at the same time we have a low supply. This trend is likely to continue for several years.
The numbers used to make the table were extracted from the NorthstarMLS representing a high percentage of local home sales. The numbers were gently sorted in an MS Excel spreadsheet. I included all condos, townhouses, and houses sold in the city limits of St. Paul during the month of March 2019. Rental properties and multiple unit dwellings were not included.