What a year we have had so far. A global pandemic, civil unrest across the country triggered by the death of George Floyd here in South Minneapolis, an economic downturn and mass unemployment and yet the real estate market seems to be buzzing right along. But, is it really? We thought we would try to dig into the numbers and see what is truly going on.
On the surface things look great. The Twin Cities median home price is up, average days on the market is down and pending sales are up from this time last year! Interest rates are still historically low causing a boom in refinancing and for those that are buying in the median and upper price brackets, their employment seems to be un-impacted by all the turmoil.
On a more cautious note, one reason the above numbers have stayed high is because both buyers and sellers have dropped out of the market due to the pandemic. The supply and demand ratio has stayed the same or even tilted further in the sellers favor in the midst of an overall drop in volume of transactions. In April, May and June for instance, new listings were down 22.9%, 24.1% and 14.6% respectively over 2019. Pending sales on the other hand were down in April (-21.1%) and May (-14.9%), but increased over last year in June (+6.2%). The result ended up in a stronger sellers market than the previous year. We are seeing a slight shift in this, for the month of August inventory Twin Cities wide is up 1.3% over last year however, pending sales are up 19%.
As always, how the market is performing can be different area to area across the Twin Cities. Even though new listings in August were only up by 1.3% Twin Cities wide, in Southwest Minneapolis they were up by over 43%. Pending sales were only up by 10.8% over last year for the Southwest area.
So what does all this mean? In the end, most of these are just data points at a moment in time and what will truly show how the real estate market is responding to the pandemic and other factors are the long term trends. For right now, we can say it is still a strong sellers market with multiple offers common and properties selling often in days. If this fall follows past trends, we will see a steep drop in both inventory and pending sales over the next few months, however, with the shortened Spring market we may see a stronger shift in the buyers favor if sellers that delayed listing, list their property and cause inventory to increase.
Now, I know what you’re thinking, “Mark and Stacie, this all sounds good, I mean bad, I mean it depends”, and that is absolutely correct. If you are a seller, things are great, although it will slow down in the coming months. If you are a buyer, things are tough but it will improve in the coming months, “maybe” and interest rates are currently crazy low. If you are both buying and selling then it is mostly neutral, great on the sell and tough on the buy. As far as the long term trend, we're am excited to see what plays out. No matter what happens, we will be here to guide you!
If you are thinking of buying, selling or both in this crazy market or next Spring, or you are interested in updating what you have, give us a call! We always want to here what you are up to and truly enjoy being able to help you make sense of what's going on in your area and neighborhood.