Ten years ago homes were hard to sell

When I look at the marketing materials some real estate agents put out there you would think they are magicians the way they sell houses. When selling houses in a seller’s market just about any kind of marketing works better than it did during the buyer’s market.  Here is something I wrote in June of 2009:

Brickhouse“I found 107 homes listed on the MLS that have been on the market for more than 500 days.  That is a long time even in today’s market.

Of the 1768 homes that have sold this year in St. Paul the average cumulative days on market was 137.

Townhomes and condos take about 90 days longer to sell on average than single family homes and most of the homes that have been on the market more than 500 days are townhouses or condos.

Buyers look at how long a home has been on the market.  Sometimes the information is used to determine how much to offer for the home and in other cases, they get cold feet and make no offer because the home has been on the market for so long.

When I look at these listings I check to see if there have been any price reductions.  If I see a home that has been on the market for a long time, like over a year and the price has never changed I assume that the sellers are not very motivated and wonder if they are open to negotiation.”

 

Ten years later in some price ranges if a home is on the market for more than three weeks without any offers it is almost always overpriced. The demand for homes is higher than the supply especially in price ranges below $450,000.

Back in June of 2009, there were 1770 or so  houses on the market in St. Paul, today there are less than 550. It was a very different housing market.

Local Housing Data

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.

Here is some data from the Met Council:

Metro housing data
Data from the Met Council

Most of the growth is in Minneapolis and St. Paul. The math is simple in that the population is growing faster than the supply of housing.

I think the situation will ease up a bit in the next decade unless we people start moving out of the area or we start building affordable housing.

 

April home sales by neighborhood

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.

table of home sales
April 2019 Home sales St. Paul, Minnesota

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.

Find more numbers:  Local market conditions and home prices.

 

Supply and demand snap shot

 

Chart st. paul real estate
Absorption rates and median home sale prices

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. 

 

Showings were down in March

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.

If you are interested in selling your house, please contact us for a free consultation. 

St. Paul has more renters than owner occupants

Before the great recession and the housing market crash there were more homeowner-occupants in St. Paul than there were renters. Today 51.3% of St. Paul residents rent. In

The City of St. Paul did a housing study: Housing Conditions and Trends Inventory, Needs Assessment, and Implementation Strategy that is packed with information about St. Paul housing. Did you know that the median age of housing in St. Paul is 69 years? It is a good thing that I know my way around old houses.

Here are a few charts from the report that I found particularly interesting:

Renters and owner occupants

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.

 

Rents

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.