01 May Real Estate Market May 1st – Activity Report
Real Estate Market May 1st
Here is our Real Estate Market May 1st, 2020 real estate update. We have now entered our spring real estate market. And it is spring that none of us has seen before. We are currently in a shelter in place status until May 4th. The Governor will announce soon where we go from here.
We have coronavirus concerns for our country and the Twin Cities. And how does that impact real estate? Our industry is more one on one and not a business that has crowds or large groups. So, we are an “essential service” and we continue to do business in Minnesota regardless of shelter in place. Buyers are now driving separately to showings and sellers are sanitizing their homes before and after showings. Also, many meetings are happening with facetime with agents and lenders and their clients. Real estate closings have also changed. The buyers and sellers are in separate rooms. And only those essential to the transaction can attend. The title companies are also sanitizing before and after closings. We use virtual tours and lots of photos and that helps determine if buyers want to see the home. No more open houses.
This time of year, the buyer pool should be growing dramatically. While we have seen that starting to take place, the coronavirus is limiting that growth. Our inventory of homes has yet to experience our spring increase. Our first-time home buyer market is very active in most areas. That price range is $175,000 to $300,000 in Minneapolis, St. Paul and area suburbs. So, what does that mean to you? It means if you are buying now you will have an great interest rates and less competition then when our “in shelter’ expires. So, it is a good time to buy a home!
Facts are wonderful since they give us insight into analyzing the trends. Still, it is up to us to interpret them. Our current affordability Index is 148, compared to 146 last year at this time. So, the higher the number means greater affordability. Currently, our inventory of available homes is 9,025. In comparison, we had 10,250 in 2019. In other words, the inventory of homes for sale is down 12%. In contrast, in 2008 we had almost 36,000 homes for sale in the Twin Cities. Lastly, our pending sales, which is those sold but not closed, is 989. As opposed to 1,370 pending sales last year. As a result, we have 27.8% less pending sales than last year. So, sales are down, and inventory is slightly down from our last newsletter. Our monthly supply of home is at 1.8. Compared to 2.0 last year at this time.
We all benefit as sellers when values continue to raise. In so a median sales price increase 8% is a strong number. And $297,000 is the median sales price in the Twin Cities area. I have found a powerful market indicator is the comparison of our sales price to original list price. I’m pleased to say our average sale to list price is 99.2%. This compares to 98.6% last year. Equally important indicator of market strength is days on the market. Therefore, 61 average days on the market reflects a healthy real estate market.
Our current interest rates in the Twin Cities
Interest rates increase the affordability of your home purchase. Consequently, low interest rates are a real benefit to real estate market in Minnesota. In fact, mortgage companies love to provide mortgages to Minnesota. Because of our low delinquency and employment rates. But most importantly our low mortgage risk. Accordingly, we have some of the best mortgage rates in the United States in the Twin Cities. Our mortgage interest rates are lower from my last report. The rates are 2.75% for VA, 2.75% for FHA and 3% for conventional. Furthermore, those rates are for a mortgage with limited fees. Contact me if you want to talk to a lender with that program and rates.
My opinion of future real estate trends
We have seen many types of markets and trends in the last 30 years. But with the coronavirus concerns makes this an unusual market to predict. So, it is my opinion that we will have 2-3% appreciation in 2020. In addition, I predict the inventory of first-time homebuyer homes will not be insufficient to match demand. Also, the areas with an abundance of new construction will have longer marketing times for existing homes. Finally, interest rates will continue to be historically low for at least until the November election.
Your House and neighborhood real estate market
We find that each price range and neighborhood have its own specific trends and facts. In so, if you are interested in knowing the specifics for your home…just call Jeff.