What struck me most in reviewing market stats for January 2017 was looking at historical charts of inventory and months supply of homes for sale. Both are the lowest they have been on records I find going back to 2004. But looking at the numbers on a monthly rather than annual basis over the last 3 years really shows how dramatically low they are. Last year was low... and this year is 25.4%-30.4% lower than last year! I marked the tiny bars in red on the charts below from the Minneapolis Area Association of Realtors!
There is currently only a 1.6 month total supply of homes for sale (market is considered balanced at a 5-6 month supply), but it is even more dramatic when you look at it by price range on the chart below. The price ranges most strongly impacted are those in the ranges typically sought by first time home buyers. All price ranges up to $350,000 have less than a 2-month supply... $350-$500k have only a 2.7 month supply... and even $500k-$1M have less than a 5-month supply, at 4.8 months. There is a dramatic jump in the $1M+ range, up to a 12-month supply. According to these numbers, it would take only about a month for all the homes currently for sale in the $120k-$250k price range to be sold if no new properties came on the market and sales continued at the same pace.
The good news is that new listings were higher in January 2017 than in January 2016, by 3.1%. Indications are that will continue... and it is impossible to over-emphasize how important that is to the health of the real estate market in 2017. The total number of homes for sale reflects how much homes are in demand... supply is down 25.4% in spite of the slight rise in new listings. If you are thinking of selling, the stars are aligned in your favor!
Pending sales (purchase agreement accepted and preparing to close) are up 4.3% over last year due to buyers snatching up those new listings, but closed sales are down 3.2%... not because of lack of buyers but because of lack of inventory at the end of last year.
All of these factors contributed to an average median sale price of $225,000 (up 5.8%) and an average 79 days on the market (down 7.1%) compared to last January. Don't expect to get a deal on price... average sale price was 95.9% of list price (up 0.9% from last year). Many properties sold for more than list price... often the real deal in this market is to buy without having to compete with multiple offers.
I feel like a broken record, but what I said last year still holds true this year...
Bottom line is, it's a hot market with homes selling quickly and for good prices. A difference from the pre-bubble boom is everyone is smarter.
Buyers are waiting for the right house at the right price, not just snatching up anything... appraisers are more cautious and are not just rubber stamping value... lenders are asking for more information and documentation than you may expect... and astute sellers are preparing their homes better than ever.
The figures above are based on statistics for the combined 13-county Twin Cities metropolitan area released by the Minneapolis Area Association of Realtors.
Never forget that all real estate is local and what is happening in your neighborhood may be very different from the overall metro area.
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