The number of Houses in Minnesota entering the market in the Twin Cities peaked in 2006 and has been falling quickly since then. It appears the number of homes entering the market is beginning to level off as 2012 comes to a close.
With fewer homes entering the market there will be less competition among homeowners in the Twin Cities resulting in a shortage of Homes for Sale and rising Home Prices.
This is a newer stat I started to follow and unfortunately there isn’t very much data since the service that has this information has only been around for a short time.
In this chart we can see how much activity there was showing homes. In 2010 we had the Homebuyer Tax Credit, which inflated our numbers. I wish I could have a ten year window to see if present day numbers are similar. Otherwise, we can see current activity is just below the Tax Incentive Period.
Activity might be leveling off a little bit as we get into the remaining months of the year.
Home Sales & Housing Inventory
The number of Houses in Minnesota for sale in the Twin Cities (Housing Inventory) increased pretty quickly from 2005 to 2008 and since declined. However, Inventory was manipulated by the Homebuyer Tax Credit for a period of time, but resumed it’s natural decent since then and quite quickly since the start of 2011.
If Housing Inventory continues to fall this may result in fewer Home Sales, which isn’t necessarily a bad thing since fewer homes for sale will push Home Prices up.
Pending Home Sales and Closed Home Sales follow each other pretty closely in most cases. Closed Sales are usually a month or two behind Pending Home Sales due to the difference from date of acceptance and date of closing. Home Sales have been rising steadily since mid 2011 and still appear to be rising.
Houses in Minnesota
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Days on the Market
The number of Days on the Market for Houses in Minnesota in the Twin Cities reached a peak in 2008/2009 and again in 2011. Days on the Market really started to fall quickly at the start of 2012.
Our next chart clues us in to what Market Conditions are in the Twin Cities and who it favors.
- Buyer’s Market = More than 7 Months of Inventory
- Balanced Market = 5 – 7 Months of Inventory
- Seller’s Market = Less than 5 Months of Inventory
The Absorption Rate is trending down at 4.2 Months of Inventory, which is considered a Seller’s Market.
Expectations indicate this trend line is going to continue to decline and the market will get stronger for Sellers.
Median List Price and Median Sale Price typically follow similar patterns, so there isn’t much that it can tell us other than how close to List Price homes are selling for. Currently Homeowners are getting about 90% of their List Price.
So far the Median Sale Price in the Twin Cities for Houses in Minnesota has depreciated 6% since 2002, 24% since 2006 and has appreciated 11% since 2011.
With fewer Homes for Sale in the Twin Cities the Median Sale Price should continue to increase as Housing Inventory becomes a premium.