It was a week full of intrigue if ever there was one. A positive jobs report gave way to bullish activity on Wall Street backed by heroics from the hometown team, as the Giants showcased their Manning(ham) magic. Meanwhile, dozens of state attorneys general brokered a deal that will likely include principal write-downs. In local housing news, buyers made more purchases while sellers listed fewer properties than during the same week in 2011. Other indicators have recently showcased key improvements elsewhere in the marketplace. The most notable trend is fewer active listings. Buyers in wait-and-see mode may find themselves with more competition for fewer properties come spring.
In the Twin Cities region, for the week ending February 4:
- New Listings decreased 6.7% to 1,236
- Pending Sales increased 35.8% to 888
- Inventory decreased 23.2% to 17,697
For the month of January:
- Median Sales Price decreased 3.4% to $140,000
- Days on Market decreased 8.4% to 142
- Percent of Original List Price Received increased 3.4% to 91.2%
- Months Supply of Inventory decreased 35.2% to 4.6
There were 3,149 purchase agreements signed in the 13-county Twin Cities metropolitan area during January, a 25.5 percent increase over last January. No doubt driven by a mix of record-low mortgage rates, affordable prices, strong negotiating leverage and unseasonably warm weather, that’s the highest January pending sales figure since 2005.
Sellers were less active, as new listings fell 9.0 percent from January 2011 to 5,112 properties. The number of homes for sale continued to drop, as well, down 28.1 percent from last year to 16,463 active listings – the lowest inventory reading for any month since 2003. Another important housing metric, months supply of inventory, remained at a six-year low of 4.6 months.
“If you look deeper into the strong sales figures, you can see which segments are leading the charge,” said Cari Linn, President of the Minneapolis Area Association of REALTORS®. “With inventory down, especially among foreclosures, and good purchase demand, buyers are finally looking harder at traditional properties.”
Traditional sales surged 28.7 percent, while foreclosure sales fell 2.9 percent and short sales increased 16.8 percent. For sellers, the landscape is shifting. For six consecutive months, sellers received progressively more of their asking price than they did the year prior. In January, sellers received an average of 91.2 percent of their original list price.
Sellers are also watching market times closely. The average number of days a listing spends on the market before closing was down 8.3 percent to 142 days—the fourth consecutive year-over-year decrease. But those looking to sell their properties should be aware of distressed market activity.
In January, 43.2 percent of all new listings were either foreclosure or short sales. Together these lender-mediated properties made up 55.3 percent of all closings. Homes in financial distress are exiting the marketplace faster than they are entering it, but they have still managed to prevent market-wide price appreciation. The median sales price was down a modest 3.4 percent from January 2011 to $140,000, marking the smallest decline since November 2010.
“Price declines are subsiding, partly thanks to changes on the supply-side of the equation. Rising home prices will still be the final phase of recovery,” said Andy Fazendin, MAAR President-Elect. “We firmly believe that what we’re seeing now is setting the stage for better times ahead.”
Whether motivated by the election cycle, a jump in employment, improving housing market metrics or the best start to a year for the S&P 500 since 1989, home buyers posted increased activity levels compared to last year. Consumers signed more purchase agreements but sellers entered into fewer listing contracts. Changes in supply-side metrics confirm this, suggesting that relatively less new product is entering the market compared to buyer demand. That’s helped other metrics return to more friendly territory. Whatever the reason, it’s good to see that vote of confidence.
In the Twin Cities region, for the week ending January 28:
- New Listings decreased 17.5% to 1,090
- Pending Sales increased 22.9% to 833
- Inventory decreased 23.5% to 17,762
For the month of December:
- Median Sales Price decreased 6.5% to $145,000
- Days on Market decreased 2.1% to 141
- Percent of Original List Price Received increased 1.7% to 90.6%
- Months Supply of Inventory decreased 33.3% to 4.8
As the first month of the year trots onward, so do home buyers. They posted increased activity levels compared to the same week in 2011. Seller activity slowed compared to last year, however. Inventory declines effectively positioned many local markets into a more balanced state – particularly toward the end of last year. Increased seller activity in the coming months could slow or even reverse that trend. Don’t fret. Not only is an increase in new listings perfectly normal for this time of year, but improved absorption rates and seller concessions could begin to stew into seller confidence.
In the Twin Cities region, for the week ending January 21:
- New Listings decreased 8.2% to 1,092
- Pending Sales increased 29.0% to 730
- Inventory decreased 23.2% to 17,822
For the month of December:
- Median Sales Price decreased 6.5% to $145,000
- Days on Market decreased 2.1% to 141
- Percent of Original List Price Received increased 1.7% to 90.6%
- Months Supply of Inventory decreased 33.7% to 4.7
Last week, the Mortgage Bankers Association reported that mortgage applications increased more than 23.0 percent from the week prior. The fine print stated that most of the increase was driven by refinancing activity, given record low rates. Residential construction data also provided glimmers of hope. By now, many have surely noticed that the supply-demand balance is changing. What some may not realize is that this is a leading indicator, while home prices are a lagging indicator. Price appreciation is the final phase of recovery. Excess supply is down–in some areas, it’s way down. Purchase demand in most areas strengthened throughout the second half of 2011. For sellers, it’s less scary out there. For buyers, it’s still a once-in-a-lifetime opportunity.
In the Twin Cities region, for the week ending January 14:
- New Listings decreased 5.2% to 1,216
- Pending Sales increased 28.4% to 728
- Inventory decreased 23.8% to 17,690
For the month of December:
- Median Sales Price decreased 6.5% to $145,000
- Days on Market decreased 2.5% to 140
- Percent of Original List Price Received increased 1.7% to 90.6%
- Months Supply of Inventory decreased 35.6% to 4.6