Getting meaningful housing market news

Infographic from National Association of Realtors

Before I even launch into this I need to mention that real estate is local. There are always nationwide trends and they are important but base your decisions about buying or selling real estate mostly on the local numbers and market conditions.

Housing is in the news a lot lately and I think it is at least partly because during the last recession the housing market crashed. The pain is still fresh for many and they may be worried about the value of their real estate.

Fear not the value of your real estate in St. Paul and Minneapolis continues to rise.

I am seeing news about how nationally June pending home sales were up 16.6% from May pending home sales. (NAR)

I believe that activity slowed during the lockdowns and what we are seeing in those pending sales is activity from March and April postponed until May.

There will be fewer home sales in the metro area this year than there were last year.  Fewer homes for sale each year is part of a 7-year trend. Locally the pandemic has strengthened that trend.

Without the pandemic, I had predicted that the trend would continue until about 2025. Right now making predictions five years into the future is just silly. The future has been changed but will remain open in spite of COVID-19.

There is news about how the housing market is recovering. That implies that something bad happened that we needed to recover from. I don’t see it except for the fact that there are fewer homes on the market and they are more expensive than ever. We definitely have not recovered from that.

It is hard to determine what the long term effect of the pandemic will be on housing or even the full impact in 2020. I am not the first to say that we don’t have a similar event we can compare the pandemic to.

It is a good sign that after home sales fell during the “stay at home order” they rebounded again. I will need a few more months’ data before I am convinced that it is time for the happy dance.

Here are some recent statistics for the Twin Cities from the Minneapolis Area Association of Realtors:

In the Twin Cities region, for the week ending July 18:

• New Listings decreased 9.1% to 1,753

• Pending Sales increased 10.2% to 1,541

• Inventory decreased 27.2% to 9,339

For the month of June 2020:

• Median Sales Price increased by 5.2% to $304,995

• Days on Market increased by 2.4% to 42

• Percent of Original List Price Received decreased 0.4% to 99.6%

• Months Supply of Homes For Sale decreased by 29.6% to 1.9

If you would like to sell your house or a house this year it is still an excellent year for selling houses quickly and for top dollar.

I’ll have July home sales numbers for St. Paul next week.

Home prices still rising

At the beginning of the shut down caused by the pandemic, there were many who assumed home prices would go down. Even though we are now technically in a recession and with double-digit unemployment numbers home prices are still rising.

Part of the reason for this is even before the pandemic there was a shortage of homes for sale. I have written this like a zillion times but housing prices are being driven by supply and demand.

I remember the great recession and the crash of the housing market like it was last week. Those of us who sell real estate were strongly encouraged to be optimistic about the market no matter what.

It was horrible the way banks resold houses to people for way less than the people they were taken away from paid for them.

The people that bought the houses had smaller mortgage payments than the previous owners. Those previous owners may have been able to afford those lower payments.

It is hard to predict what will happen next in the housing market. All we can do is try to keep up with the news. optimism about the market isn’t going to make it better or worse. Right now we are in the seventh year of a seller’s market that keeps getting stronger as the demand continues to outpace supply.

graph of home sale prices
The median home sales price in the Twin Cities Metro area – median home sale price is up 5.6% in a rolling we month average

The data used to make the graph is from the NorthstarMLS and is deemed reliable but is not guaranteed.

If you had bought that house 10 years ago . . .

Sometimes it is fun to look back and so today in honor of throwback Thursday I am going to publish some home sales prices by neighborhood from 2010.

chart of home sale prices
Home sales in St. Paul for June 2010

2010 was a special kind of year. Home sales and home prices ticked up a little because there were some tax incentives for home buyers and sellers. Once those incentives went away we reached what I call the bottom of the housing market crash.

Locally home prices hit a low in 2009 and then went up a little in 2010 and then hit a new low in 2011.

This recession is different and the biggest impact it is having on the housing market right now is that far fewer homeowners want to sell and a lot of people want to buy.

If you bought a house in 2010 you probably have a great deal of equity unless you took the equity out and spent it.

Yup, I have been doing this for a long time, almost 20 years. Something to consider when you hire a REALTOR.

 

30% fewer homes on the market in the metro area

If you are looking to buy a home right now you might be noticing that the number of homes for sale is particularly low for July. Last July there are about 10,094 homes on the market in the 7 county metro area. This July there are 7,042 about 30% fewer.

Real estate is seasonal. The dips on the chart are the winter and the peaks are in the summer. We are in a peak month right now.

There is a 1.7. month supply of homes for sale right now. Affordable houses are particularly scarce as the lack of supply continues to drive prices up.

June home prices by neighborhood

In June everything went up. The number of homes on the market, new listing, home sales, prices all went up from the May 2020 numbers.

Even the average number of days on the market went up from 22 to 24 days. I attribute the increase to the civil unrest at the beginning of the month that halted activity in parts of the city for several days.

The number of New listing was 12% lower than June 2019 and as a result the number of home sales in St. Paul were down by more than 11% as compared with last year. Median home prices are up by more than 5% from last June.

If you plan on selling your home it won’t take long and if you plan to buy you will pay top dollar as you compete with other home buyers.

This market isn’t sustainable during a recession but I don’t think prices will go down anytime soon because even if there were half as many homebuyers there still would not be enough of a supply to meet the demand.

home sale chart
June home sales by St. Paul NEighborhood

The numbers used to make the chart are from the NorthstarMLS which are deemed reliable but not guaranteed. There are few guarantees in life.

Year over year decline in number of homes for sale

The number of homes on the market continues to decline in the metro area and beyond. These numbers were just published by the Saint Paul Area Association of Realtors. We have even fewer homes for sale this year than we had last year. Fewer homeowners are selling while the number of people who want to buy remains high.

The silver lining for homeowners is that prices are strong because the demand is strong and the supply is week. I have been closely watching the number of homes for sale in St. Paul and that number remains at historic lows for June. Homes are selling quickly in St. Paul with median days on the market of 13 and an average of 26. On average home, sellers are getting more than the asking price.

 

metro area homes for sale chart
Homes listed for sale by week