Local Market Conditions & home prices

2021 was a great year for home sales in fact more homes sold in 2021 than in any year since 2005. That means that there were fewer home sales in 2020 and there will be fewer home sales in 2022.

At this point, I am not sure what the latest numbers mean. Houses are selling quickly and on average they are selling for more than the asking price. Here is part of a report about home sales in Ransey county compared with last year. The only number I find at all concerning is the fact that there are fewer homes going on the market but home sales are projected to be lower in 2022 than they were in 2021 and if fewer homes are listed fewer will be sold.

 

 

After posting some home sales statistics for September I thought I would take a quick look at the housing supply. During a seller’s market, there is less than a six-month supply of houses on the market.  Supply measures the absorption rate.

Right now there is a 1.6 month supply of houses on the market in the Twin Cities Metro area and a 1.5 month supply of houses on the market in St. Paul, which is higher than the 1.0 month supply we saw the last spring and slightly higher than last October’s absorption rate.

In other words, the metro area is experiencing a strong seller’s market this fall.

In many ways, these numbers are typical for this time of year. The number of home sales and the number of new listings are down slightly. Overall prices have gone up and days on market have gone down slightly. It still takes less than a month to sell a house which is good news for home sellers.

Buyers made offers on most of these houses in August so we are not seeing the impact of the latest interest rate increases. This past week I have been noticing a higher than normal number of price decreases. It is possible that we will see the effects of higher interest rates in next month’s data.

The local real estate market is still a strong seller’s market.  Overall St. Paul homeowners got slightly more than the asking price for their house.

 

Pricing a house correctly isn’t s easy as we make it look. We look at three comparable houses that are nearby the subject property and that ideally have sold in the last six months to a year. If the homeowners calls in February about putting a house on the market in May we need to adjust the price upward from the previous May.

We can usually predict that prices will be higher during the spring home sales season than they are during the holidays. The Spring of 2023 may be an exception because of the higher mortgage interest rates. We have to watch the market and see what kind of an impact those rates will have on home sale prices.

As long as the demand remains high and as long as people have jobs the impact will be low.

Lately, I have noticed that there are many in the industry who are using and reporting on July and August home sale data. Old data that is national has been a trend in the industry. It is best to use fresh local data for proper pricing.

 

This just in from Minneapolis Area Realtors (MAR) a local Realtors association they do a fine job of collecting and publishing local market data from the week of September 19, 2022:

• Median sales price was up just 5.6 percent to $369,750, the smallest gain since June 2020
• Buyer activity pulled back as pending sales fell 23.8 percent
• Homes took 26 days to sell, 18.2 percent longer than the 22 days last August

Apparently in some parts of the country prices are falling but real estate is local and affected by the local economy.

“The median home price in the Twin Cities reached $369,750 but the year-over-year growth rate is slowing. While prices are not falling, they’re not rising as quickly as they were. The 5.6 percent price growth in August is below the roughly 8.0 to 16.0 percent gains seen over the last two years. The deceleration in price growth likely reflects the pullback in demand caused by higher interest rates and economic uncertainty. Closed sales were down 20.3 percent in August compared to last year. Buyers also still face low inventory and limited options, although there’s evidence that’s changing.” (MAR)

Nationally and locally the number of homes on the market is rising even though there have been fewer new listings. In our local market demand is high and we are experiencing a sellers market.