Each month the Minneapolis Association of Realtors publishes their Twin Cities Housing Supply Report to analyze the characteristics of homes for sale in the Twin Cities market and compare it to historical statistics. A lot has been made recently about how sales are up and inventory for homes is down but a lot of interesting information can be gained by looking at the details. So lets do just that…
This graph from the Housing Supply Report shows the number of pending sales on a rolling 12 month basis in the Twin Cities. Some good information from this -
- There are lots of real estate investors in the market right now and they are especially interested in lower priced properties that can be turned into rental units. In the past 12 months they snapped up those properties priced less than $120k at a very fast rate.
- As you move into properties priced between $150k-$1,000,000 we actually saw sales continue to decline. This explains why all the Twin Cities news media reports show that sales are up and yet prices are down. The houses that are selling are low end units and traditional sellers really still had sales declines throughout 2011
This report from the Housing Supply Report shows the number of active real estate listings in the Twin Cities by price range. Overall, the number of listings is down 27.9% but as you can see, that range is much more extreme as you move toward lower price points. A couple observations include -
- It’s definitely getting harder to find good homes in the lower price points. A lot of this is being driven by real estate investors who are snapping up low priced listings right now as the rental market is so strong. They are having increasingly more difficult times finding properties right now.
- As you get toward higher price points the inventory is much more balanced but there are fewer listings across the board which is positive for all sellers
The final graph I’ve chosen from the Twin Cities Housing Supply Report is this one which shows the Months Supply of Inventory by price point. The Months Supply of Inventory shows how many months it would take to sell all the current listings on the market based on the number of listings divided by the current sales rate. In other words, if no new $190-250k listings came on the market then it would take 4.8 months to sell all the current listings in that price point based on current sales levels.
A balanced real estate market in the Twin Cities is 5-6 Months Supply of Inventory so by this measure we can see that the supply of lower priced homes is way down and is causing some shortages.
- Although most pronounced at low prices, Supply is actually down across all price points
- While 9.8 months Supply for $500-1,000 and 17.7 months Supply for $1 Million + homes seems daunting, those numbers are actually about half of what they were just 2 years ago. At one point the Supply for $1M+ homes was over 36 months
Wrapping up Housing Supply Report
One of the most common questions a Realtor gets is “what’s happening with the current real estate market”? It has been very confusing in the local media when every other report seems to show positive and then negative news. Hopefully, by digging more deeply into the Housing Supply Report for the Twin Cities it’s easy to see that sales have been especially strong at lower price points (driven by investors). We can also see that most measures of inventory are still quite positive for even traditional sellers as the supply is down across the board which will certainly help everyone for now.
You can always get the latest Twin Cities market statistics and reports here.
For more information please contact me
Bill Wallace is a Realtor at RE/MAX Results in Apple Valley, MN with a focus on Dakota County and the Southern Twin Cities including – Apple Valley, Bloomington, Burnsville, Eagan, Farmington, Inver Grove Heights, Lakeville, Mendota Heights, Prior Lake, Richfield, Rosemount, Savage, Shakopee, South St. Paul and West St. Paul
