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More sellers may finally be jumping into the market at a time when buyers are facing the challenges of low inventory. Since 2013, new listing activity has been subdued relative to buyer activity and hasn’t surpassed 9,000 new listings per month since 2010. Excluding 2010, we haven’t had this many new listings for any month since May 2008. Increasing seller activity and tapering demand are consistent with a marketplace that’s starting to loosen up just a bit. That said, buyers shopping this spring and summer will still face stiff competition. Being successful in this market takes commitment, decisiveness and persistence—traits not necessarily typical of every buyer. In fact, May marked the sixth consecutive month of year-over-year declines in closed sales, likely reflecting the lack of homes for sale and not weakness in the economy. Strong demand combined with low supply means sellers yielded an average of 100.2 percent of their list price in May, a record high for any month and the first time this indicator has exceeded 100.0 percent. The shortage is especially noticeable at the entry-level prices, where multiple offers and homes selling for over list price have become increasingly common. Homes continue to sell quickly and for close to or above list price in this tight market, but nearly 12,000 buyers and sellers managed to transact real property last month.

May 2018 by the Numbers (compared to a year ago)

  • Sellers listed 9,164 properties on the market, a 2.9 percent increase
  • Buyers closed on 5,739 homes, a 11.3 percent decrease
  • Inventory levels for May fell 17.8 percent compared to 2017 to 10,403 units
  • Months Supply of Inventory was down 16.0 percent to 2.1 months
  • The Median Sales Price rose 8.4 percent to $271,000, a record high
  • Cumulative Days on Market declined 9.6 percent to 47 days, on average (median of 17)
  • Changes in Sales activity varied by market segment
    • Single family sales sank 12.3 percent; condo sales fell 3.5 percent; townhome sales declined 7.5 percent
    • Traditional sales fell 9.7 percent; foreclosure sales sank 38.1 percent; short sales plummeted 59.7 percent
    • Previously-owned sales fell 12.4 percent; new construction sales rose 11.1 percent

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Have you ever wondered to yourself what the home price trendline would look like compared to a hypothetical trendline that starts at the same price in 1990 but increased at a steady and predictable 4% annual growth? Well you’re in luck, because that’s exactly the sort of in-depth market insights that we serve up on a regular basis.

As you can see, recorded average sales prices were well above their trend from 1997 through 2008. The gravity or weight behind the long-term average has an inescapable pull. Some call this return to the average a “reversion to the mean.” There will always be short-term market fluctuations, but the overall long-term direction and growth of the market is upward at around 4-5% per year (before inflation). When we use the 4% figure, prices are only slightly above trend. If we were to use the 5% figure, prices would appear drastically undervalued relative to their long-term average.

The truth, as always, is somewhere in the middle.

*(Note that 2018 data is year-to-date up through April)

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The “MGIC/MAAR Home Payment Report” is a quarterly overview of typical monthly payments on homes recently sold in the Twin Cities’ 50 most active real estate markets. Agents can download the report and forward it to prospects or include it in their own marketing pieces.

The report is produced through a partnership between MAAR and MGIC Corporation, one of the country’s leading private mortgage insurers. It combines home sale prices, property tax rates and interest rate data to give consumers a good feel for what their monthly home payment would be on lower-priced, mid-priced and higher-priced homes in 50 markets ranging from Andover to Woodbury.

“Educating consumers on housing affordability and the costs and benefits of owning versus renting is key to sound decision-making,” says David Arbit, MAAR director of research & economics. “We’re delighted to be working with MGIC to bring this useful new quarterly report to our members and the public.”

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Housing demand is strong and supply is low. That’s been the story for a few years. But there is some early evidence that things could be starting to loosen up. That said, buyers shopping this spring will still face stiff competition. The lack of inventory combined with rising prices is encouraging some sellers to stay put; however, the move up market offers a bit more inventory. This combined with historically low interest rates creates a perfect opportunity for homeowners looking to move up.

In April, sellers listed 7.2 percent fewer homes on the market—the sixth consecutive month of declines compared to a year ago. Largely due to the shortage, closed sales declined 5.2 percent compared to the prior year. For-sale housing inventory was 25.1 percent lower than April 2017. This shortage, which is particularly acute at the entry-level prices, has created a competitive environment where multiple offers and homes selling for over list price have become more common. Sellers are often receiving strong offers close to their original list price quickly, which can sometimes frustrate home buyers.

New construction closed sales rose 13.2 percent compared to last April. Although single family homes made up about 73.0 percent of all sales, townhomes and condos have seen stronger demand lately. Similarly, previously-owned homes made up about 90.0 percent of sales, but new construction showed a much stronger increase in pending and closed purchase activity. The average time on market is still 53 days, reminding sellers that they still need to stage and price their homes well. 

April 2018 by the Numbers (compared to a year ago)
• Sellers listed 7,321 properties on the market, a 7.2 percent decrease
• Buyers closed on 4,635 homes, a 5.2 percent decrease
• Inventory levels for April fell 25.1 percent compared to 2017 to 8,958 units
• Months Supply of Inventory was down 25.0 percent to 1.8 months
• The Median Sales Price rose 8.6 percent to $266,000, a record high for April
• Cumulative Days on Market declined 10.2 percent to 53 days, on average (median of 18)
• Changes in Sales activity varied by market segment

  • Single family sales declined 6.4 percent; condo sales rose 3.0 percent; townhome sales rose 1.0 percent
  • Traditional sales fell 2.8 percent; foreclosure sales decreased 43.3 percent; short sales fell 20.0 percent
  • Previously-owned sales fell 5.6 percent; new construction sales rose 13.2 percent
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From colder-than-average temperatures to a record-breaking snow storm, this spring has been anything but normal. While those searching for homes have seen more options since January or February, they’re still seeing fewer options compared to last year. That’s capped sales activity—particularly at the entry-level prices—and the lack of inventory combined with rising prices is encouraging some sellers to hold onto their properties.

In March, sellers listed 17.5 percent fewer homes on the market—the fifth consecutive month of declines compared to a year ago. Largely due to the shortage, closed sales declined 10.3 percent compared to the year prior. For-sale housing inventory was 26.1 percent lower than March 2017, the largest decline in over a year. This shortage has created a competitive environment where multiple offers and homes selling for over list price have become more common.

Sellers are receiving strong offers close to their original list price quickly, which can sometimes frustrate home buyers. New construction closed sales rose 13.1 percent compared to last March. Although single family homes made up about 74.0 percent of all sales, townhomes have enjoyed more resilient demand lately. Similarly, previously-owned homes made up about 89.0 percent of sales but new construction showed a much stronger increase in pending and closed purchase activity.

“We’re seeing some early evidence that the seller’s market could be starting to shift toward a balanced market,” said Kath Hammerseng, President of the Minneapolis Area Association of REALTORS® (MAAR), “When it comes to the long-term health of the housing market, that’s very much a good thing.”

March 2018 by the Numbers (compared to a year ago)

  • Sellers listed 6,737 properties on the market, a 17.5 percent decrease
  • Buyers closed on 3,978 homes, a 10.3 percent decrease
  • Inventory levels for March fell 26.1 percent compared to 2017 to 8,289 units
  • Months Supply of Inventory was down 22.7 percent to 1.7 months
  • The Median Sales Price rose 9.8 percent to $258,000, a record high for March
  • Cumulative Days on Market declined 21.9 percent to 57 days, on average (median of 22)
  • Changes in Sales activity varied by market segment:
    • Single family sales fell 9.8 percent; condo sales declined 10.0 percent; townhome sales shrank 9.6 percent
    • Traditional sales fell 7.5 percent; foreclosure sales decreased 39.3 percent; short sales fell 47.3 percent
    • Previously-owned sales fell 11.4 percent; new construction sales rose 13.1 percent

“Prices continue to rise while market times remain brisk,” said Todd Urbanski, President-Elect of MAAR. “This spring market is shaping to be more buyer-friendly than last year, it’s still a great time to get properties listed.”

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Congratulations to our 2018 Scholarship Recipients.

Ken Colston and Lyndon Smith received the Jean Leake Emerging Markets Scholarship and Susan Jackson was awarded the Ann Brockhouse Future Leader Scholarship. Recipients will meet with Minnesota legislators, walk the halls of the Capitol while attending the National Association of REALTORS® Legislative Meetings and Trade Expo in Washington D.C . held in May. 

Read more on the scholarship program and consider applying for the 2019 scholarship program by December 1. 

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The “MGIC/MAAR Home Payment Report” is a quarterly overview of typical monthly payments on homes recently sold in the Twin Cities’ 50 most active real estate markets. Agents can download the report and forward it to prospects or include it in their own marketing pieces.

The report is produced through a partnership between MAAR and MGIC Corporation, one of the country’s leading private mortgage insurers. It combines home sale prices, property tax rates and interest rate data to give consumers a good feel for what their monthly home payment would be on lower-priced, mid-priced and higher-priced homes in 50 markets ranging from Andover to Woodbury.

“Educating consumers on housing affordability and the costs and benefits of owning versus renting is key to sound decision-making,” says David Arbit, MAAR director of research & economics. “We’re delighted to be working with MGIC to bring this useful new quarterly report to our members and the public.”

 
 
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Comprehensive Planning Process Catches Increased Attention

The city of Minneapolis is in the process of completing its ‘Minneapolis 2040’ draft Comprehensive Plan. The plan will shape how the city will grow and change. The draft covers topics such as housing, job access, the design of new buildings and how we use our streets. While comprehensive plans do always attempt to engage the public, they are not generally controversial or create too much buzz; however, that is not case this year in Minneapolis.

A proposal inside the draft comprehensive plan stirred strong feelings. The Star Tribune broke the story on March 7th, Minneapolis leaders consider allowing fourplexes citywide to relieve housing shortage.  The proposal is whether or not to allow more density on residential lots, allowing fourplexes no taller than 2.5 stories be allowed on all residential lots. The proposal was received positivity by members of a grassroots organization in Minneapolis called Neighbors For More Neighbors, while other individuals and groups sought to down play the idea of fourplexes on every residential lot. Mayor Frey was asked about the proposal by Mary McGuire on WCCO CBS news hour television interview and he had this to say,

“Right now, you are able to knock down a small single family dwelling home and build up a mansion,” the mayor said Sunday. “I think right now is the time to have the conversation, we shouldn’t be drop-kicking a significant item before we have talked about it.”

The mayors comment regarding ‘drop-kicking’ was a reaction to strong reactions against the proposal. The takeaway is it will remain in the plan for now, so that it can be discussed. The Minneapolis Area Association of REALTORS® Government Affairs Committee will continue to follow this issue and discuss it in committee meetings. Public input is being sought through July 22, 2018 as part of the regular Comprehensive Planning Process.

To learn more about the plan, sign-up for updates, or to comment on the plan click here: https://minneapolis2040.com/

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The big story of 2017 was threefold: the median sales price reached an all-time high; closed sales reached a 12-year high; and inventory levels reached a 15-year low. Sales nearly broke their all-time record, but fell just short of their all-time 2004 high. In February 2018, new listings posted a year-over-year decline for a fourth consecutive month. Mostly due to the supply shortage, closed sales were lower compared to the year prior for a third consecutive month. For-sale housing supply (inventory) was 23.0 percent lower than February 2017. This shortage has created a competitive environment where multiple offers have become commonplace. Sellers are receiving strong offers close to their original list price in record time, which can sometimes frustrate home buyers. New construction closed sales rose 15.7 percent compared to last February. Although single-family homes made up about 73.0 percent of all sales, condos and townhomes showed the strongest increase in closed sales. Similarly, previously-owned homes made up about 88.7 percent of sales but new construction showed a much stronger increase in pending and closed purchase activity.

February 2018 by the Numbers

  • Sellers listed 5,072 properties on the market, an 8.0 percent decrease from February 2017
  • Buyers closed on 2,635 homes, a 6.0 percent decrease from 2017
  • Inventory levels for February fell 23.0 percent compared to 2017 to 7,537 units, near a 15-year low
  • Months Supply of Inventory was down 21.1 percent to 1.5 months, also near a 15-year low
  • The Median Sales Price rose 12.7 percent to $250,000, a record high for February
  • Cumulative Days on Market declined 15.9 percent to 69 days, on average (median of 38)—a 12-year low
  • Changes in sales activity varied by market segment o Single-family sales fell 8.3 percent; condo sales rose 1.9 percent; townhome sales rose 6.3 percent
    • Traditional sales fell 1.3 percent; foreclosure sales fell 43.3 percent; short sales fell 39.6 percent
    • Previously-owned sales fell 6.3 percent; new construction sales rose 15.7 percent

 

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Excerpt:

“The 50th anniversary of the Fair Housing Act represents an opportunity to remind ourselves not only of the importance of the law in shaping the real estate landscape today, but also to look back on what the situation was like before it was enacted, when the process of buying or renting a home was decidedly unfair for millions of Americans.” 

You Can’t Live Here: The Enduring Impacts of Restrictive Covenants

There is no America without diversity flyer

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