October 2018 absorption rates

yellow tree
Fall Color – River Center East Lobby

The real estate market recovered from 2008 and I think I am starting to recover too. I thought it might be interesting to compare current absorption rates with those of a decade ago. I used to publish absorption rates monthly.

Absorption rates are a calculation of how long it would take for all of the homes on the market to be bought, assuming home sales continue at the current rate and no more homes are listed.

The absorption rate also helps determine how long it might take to sell a home and if we are in a buyer’s market or a seller’s market. In a balanced market absorption rates are at about 6 months. More than six months is a seller’s market. Less than six months is a buyer’s market.

Here are the numbers for October 2008 – a strong buyer’s market

Anoka County 6.7 Months
Carver County 8.2 Months
Dakota County 7.1 Months
Hennepin County 6.8 Months
Ramsey County 6.4 Months
Scott County 8.4 Months
Washington County 7.8 Months

Here are the numbers for October 2018 – a Seller’s market 

Anoka County 1.7 Months
Carver County 2.6 Months
Dakota County 1.7 Months
Hennepin County 2.0 Months
Ramsey County 1.6 Months
Scott County 2.6 Months
Washington County 2.4 Months

If homeowners stop putting their houses on the market all of the houses that are on the market in St. Paul will be sold in 1.7 months.

Last month the homes that sold in St. Paul were on the market for an average of 35 days. In September of 2008, the average was 172.

September home sales and prices by neighborhood

Here is a look at September home sales by St. Paul neighborhood.  We are starting to see some of that fall like cooling and for the first time since April 2018, the average sale price in St. Paul is not higher than the average list price. The two numbers are close though. Sales and pending sales are down from August which is pretty normal.

Median home prices in St. Paul were $212,400 which is down about 10.5K from August 2018 median prices. Again the trend is seasonal.

The inventory of homes on the market is still very, very low and went down a bit from last month. We do have more homes on the market than what we had during what I hope was an all-time low in February. We had 278 homes on the market at the end of February 2018. The number of homes for sale is down slightly from last month.

Chart that shows home sales by nighborhood
Home sales by St. Paul neighborhood

Data used to make the above table was extracted from the NorthstarMLS and is deemed reliable but not guaranteed. We all know there are no guarantees in life.

If you would like more information just send me an email or call.

For more numbers like these . . . but different because they are not for September 2018 please see Local Market Conditions & home prices

 

Cumulative days on market by month

St. Paul – average cumulative days on market- sept 2017 to Sept 2018

These numbers are from the NorthstarMLS and are for all single-family units which include townhouses and condos sold in St. Paul over the past 12 months. The chat is intended to demonstrate the impact of season on real estate sales. I predict that average days on market will be higher in the third quarter of 2018 than it was in 2017 but not by much.

In 2008 during the housing market crash and great recession the average number of cumulative days on market in St. Paul was 146.

August home prices and sales by neighborhood

August went way too fast, and we are already into the double-digit dates of September. Home sales have started to slow in a kind of September way. Great news for those who want to buy a home this year.

The inventory of homes on the market is slowly creeping up but still very low by historical standards.

table with home prices
August 2018 Home sale numbers – St. Paul, MN

In the green shaded areas in the far right column are to highlight the fact that the average sale price was higher than the average asking price for the neighborhood and for the whole city on average.

We are also starting to see more price reductions. It will be interesting to see if September home sale prices in St. Paul are still higher than the asking prices.

The numbers used to create this report were exported from the NorthStar Mls, which is deemed reliable but not guaranteed.  Once exported the data is imported into MS excel where it is gently sorted but never stirred.

The data includes single family homes, townhouse, and condos, located within the city limits.

For more local real estate numbers please go to Local market conditions & home prices.

Always be wealthy

We can learn from history and we should but usually, we forget what happened in the past and we really don’t learn from it.

We all should have learned from the great recession and the housing market crash that it is best to be wealthy. The wealthy recovered from the recession but the poor did not. Large banks were bailed out but homeowners were not.

I feel fortunate that all we lost was one income and some savings. We still have our home and as soon as the local housing market turned around in 2012 I paid off the mortgage.

The worst year for us financially was 2011 and that was the year home prices and the number of home sales hit bottom.

The rest of my family wasn’t so fortunate. Some lost homes and others graduated from college during the recession and struggled to find work and pay back student loans.

Here is a snapshot of the last decade of the housing market in St. Paul. The only part of the chart that looks “normal” to me are the years 2012 and 2103. Maybe the rest of it is the new normal. I hope not because homes for sale are in short supply and are unaffordable for many.

chart, median prices and homes for sale
St. Paul housing market 2008-2018

There will be a buyers market again. Some predict it will start in 2020. The chart is a great illustration of our current market with supply going down and prices going up.