FROM MASHVISOR BLOG:
House values in the Minneapolis metro area have risen by 13.6% in the last year alone. However, for investing in real estate, since there is a limited amount of homes in Minneapolis, purchasers are sometimes compelled to compete, leading to higher prices and faster sales, which benefit sellers. In other words, based on the previous month’s major housing market statistics, demand outnumbers supply, providing sellers a price bargaining edge over buyers. As a result, there are fewer available properties than engaged buyers in the market.
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Almost every industry is currently struggling with supply chain disruptions. This also applies to the current U.S. housing market, where buyer demand far exceeds housing supply.
Purchaser demand is very strong right now. The National Association of Realtors (NAR) just released their latest Existing Home Sales Report which reveals that sales surged in January. Existing home sales rose to a seasonally adjusted annual rate of 6.5 million – an increase of 6.7% from the prior month, with sales up in all regions. However, there’s one big challenge.
Inventory Is at an All-Time Low
Because purchaser demand is so high, the market is running out of available homes for sale. The above-mentioned report states that the current months’ supply of inventory of homes for sale has fallen to 1.6 months. This prompts Lawrence Yun, Chief Economist at NAR, to say: “The inventory of homes on the market remains woefully depleted, and in fact is currently at an all-time low.”
Earlier this month, realtor.com released their inventory data for January. It helps confirm this point. Here’s a graph comparing inventory levels for January over the last six years:
As the graph shows, new listings coming on the market have decreased over the last four years (shown in blue in the graph). The graph also reveals that carry-over inventory has plummeted in recent years. This is because listings are now sold so quickly, they don’t stay on the market long enough to carry over month-to-month (shown in green in the graph). In other words, homes are not staying on the market for months as they had prior to the pandemic. In the report mentioned above, NAR reveals that: “Seventy-nine percent of homes sold in January 2022 were on the market for less than a month.”
Odeta Kushi, Deputy Chief Economist at First American, explains it like this:
“A higher velocity of sales (lower [Days on Market]) helps to explain a housing market characterized by both higher sales & lower inventory. Many resale transactions are happening so quickly that they ‘flow’ in & then out of the ‘stock’ between the fixed monthly measurement of inventory.”
What Does This Mean for Sellers?
Anyone thinking of putting their home on the market shouldn’t wait. A seller will always negotiate the best deal when demand is high and supply is limited. That’s exactly the situation in the real estate market today.
Later this year, inventory (and by extension, your competition) will increase as many homeowners are waiting to put their homes on the market in the spring and early summer.
In addition, Len Kiefer, Deputy Chief Economist at Freddie Mac, says:
“Housing starts start off 2022 strong, just edging out 2021 for most in January since 2006.”
As these newly built homes are completed, they will also become competition for your house. This gives you a tremendous opportunity right now. Don’t wait for that increase in competition in your area. If you want to sell in 2022 and are ready to start the process, today is the day to list your house.
If you’re ready to sell, let’s connect to get your house on the market while today’s inventory situation is in your favor.
Yesterday, I completed a course called The History of Diversity in Home Ownership. This course, provided by SPAAR (St. Paul Area Association of Realtors) is part of the continuing education requirements for all Minnesota REALTORS®. While this kind of class is of critical importance to those of us working in real estate, it helped me learn some important things I would want to know and understand even if I wasn't a realtor.
As a member of the National Association of Realtors, I follow a code of ethics that ensures equal professional services to any person regardless of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity. This is an important commitment because it serves to counter the sad history of housing inequality so many have suffered in Minnesota and all across the country.
Housing inequalities are about much more than housing. Unfair housing practices have contributed to all sorts of other problems and subsequent inequalities in our communities and nation today. In other words, it's not just a problem of the past, it's something that has shaped our present reality, and gaining a better understanding of where we've been is essential for building better future for all.
Would you like to know more? A deeper knowledge about housing equality isn't just for realtors like me. Let me encourage you to learn more about it! A good starting point would be watching the TPT (Twin Cities Public Television) documentary, Jim Crow of the North. It's an eye-opener!
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"I felt like I could ask him all my newbie questions without fear of judgment."
"David was very honest and transparent about the buying process and helped me know what to expect every step of the way. I felt like I could ask him all my newbie questions without fear of judgment. He provided the information I needed to make a sound decision that aligned with my needs and values. The process moved fast, but Dave was always ready." ––Cecelia
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Sales by Price Range:
The number of homes sold in the $500,001 and above price range rose 45.2 percent to 14,205 homes. Homes sold in the $100,000 and Below price range were down 22.4 percent to 3,552 homes.
List Price Received:
Sellers received, on average, 100.9 percent of their original list price at sale, a year-over-year improvement of 2.3 percent. The 2021 housing market was once again strong both locally and nationally. Inventory shortages and high buyer demand continued to push home prices higher, with multiple offers on a limited number of homes the common theme in most market segments.
This year looks to continue the trends seen in the last 18 months, pushing home prices higher still. As mortgage rates are likely to continue to rise over the year as well, housing affordability will remain an important factor to watch.
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The 2022 real estate market is off to a heated start. The ongoing low supply of homes coupled with a high number of motivated buyers has created strong competition. The likelihood of rising interest rates this year is also pushing buyers to get out there before it gets even more competitive.
If you're thinking of buying or selling or both, the news reports and statistics might seem a little overwhelming, maybe even discouraging. But if you're looking to buy, TAKE HEART! There ARE houses to be bought and interest rates continue to be historically low. I would love to help you find a new home, and I'll do what it takes to help you negotiate a successful offer and purchase.
If you're looking to sell a property, you're quite likely to get top dollar for your home. With proper preparation and marketing, you're likely to have multiple offers. It's a great time to sell!
Beyond the nuts and bolts of the market, the bottom line is that housing is a fact of life. When you need to find a new home, you need to find a new home! When it's time to make a move, or sell a property, you the need trustworthy, competent, and caring support of a real estate professional. I would appreciate the opportunity to serve you.
Let's arrange a time to discuss your real estate needs!
PLEASE CHECK OUT THESE RECENT POSTS...
CLIENT COMMENTS & PICTURES
THINKING OF BUYING A TOWNHOUSE?
TV NEWS FEATURING MINNESOTA HOUSING MARKET
PREPARING TO BUY IN 2022
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In the last month, I've shown dozens of townhouses to clients looking for their next home. One of my clients will be closing on a new townhome next week! I've got a solid perspective on the current market: what's available, where it is, and how much you can expect to pay.
Maybe this is an option you've been considering. If so, you've probably got questions:
How does an HOA work? What do association fees cover? How does insurance work? How can I know the association is being managed well before I purchase a property? What are the pros and cons?
I would welcome the opportunity to meet with you and provide answers to your questions. More importantly, I'd like to know more about your plans and thoughts so I could help you find the BEST home to meet your needs.
Please give me a call or send an email!
IN THE MEANTIME, HERE ARE SOME BASICS TO SPARK YOUR THINKING...
What Is a Townhouse?
A townhouse is a unit within a multi-unit property. These are usually composed of several floors and may include a garage and a small yard.
Residents often share walls and a roof, and there also may be shared common areas like pools, dog-walking areas, and fitness centers.
You’ll pay a monthly fee to the homeowners association to cover the maintenance.
What Are the Benefits of Owning a Townhouse?
Townhouse residents may have access to amenities such as pools, gyms, and dog-walking areas. If the townhouse comes with a yard, you’ll own the land. Even better, the HOA might include landscaping and pest control.
What Are the Drawbacks?
Because you’re sharing walls and backyard space with other neighbors, there’s naturally less privacy compared to most single-family homes.
Townhouse residents typically must follow the rules set forth by the HOA (Homeowner's Association). For instance, you might need to get permission to do major renovations and follow guidelines about decorating the exterior, and you might not be able to have certain pets. These policies can vary a great deal from one association to the next, so you'll want to be sure you review them before finalizing your purchase.
What Type of Mortgage Financing Is Available?
You can use a conventional loan or government-backed mortgage to buy a townhouse, but your lender will have specific concerns and will need to evaluate the financial health of the homeowners association.
In today's market, having a good REALTOR® is more important than ever. When I serve my clients, I bring persistence, negotiation skills, research tools, and a knowledge of the market. This helps me get the best results for my clients whether they are buying, selling, or both. Let's set up a time to talk about your real estate needs and see if I can be of service to you!
STAR TRIBUNE - JANUARY 24
Twin Cities home sales at a 20-year high,
listings at a 20-year low
The residential real estate market was so tight in 2021
that the average sale price rose 11%.
Home sales in the Twin Cities last year reached a 20-year high despite a 20-year low in listings. Put together, the two extremes led to a double-digit increase in home prices.
Throughout 2021, buyers closed on 66,319 properties, a 2.7% increase over 2020, according to a year-end sales report from the Minneapolis Area Realtors (MAR) and the St. Paul Association of Realtors (SPAAR).
That marked the fourth year of annual sales gain for the housing market in the Twin Cities, defying the pressure on the region's broader economy from the pandemic.
At the same time sellers listed 75,536 properties, slightly fewer than in 2020. Comparing supply and demand figures, buyers were left with 26% fewer options than they had the year before.
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When buying or selling a home, it's important to understand the market and gain helpful insights to help you achieve the best results.