The January figures are in from Minneapolis Area Association of Realtors Weekly Real Estate Market Report for week ending February 4th 2012. The Pending Home Sales are at the highest level since 2005.
The trend continues for the weekly report of decreased new listings and increased pending sales bring us the continued lowered inventory.
• 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 we are approaching some astounding inventory figures. What strikes me from this report is the Month Supply of Inventory, we are down to 4.6 months supply of homes for sale. We are approaching Seller’s Market territory.
There is a dynamic that Robert Shiller points out that real estate markets tend to stay in motion in one direction for long periods of time without ups and downs like the stock market. We are seeing that here, these inventory levels would suggest we should be seeing price increases – but they have only slightly begun to materialize in the form of higher percentage of list price received. If this persists we will likely see the trend reverse to price increases. There are too many unknowns or “headwinds” yet to comfortably say this is the market recovery or just another bounce along the bottom. Time will tell, but I will enjoy this good news for what it is: we are going to have a great Spring Market.
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
Read Full Report from Minneapolis Area Association of Realtors
Above: Months Supply is at 4.6 month. It hasn’t been this low since 2004-2006. Under 4 month supply and we are in a Seller’s Market.
Above: Look at the Percentage price increase on the right hand side – the trend is beginning to head upwards slowly – suggesting that the prices are stabilizing. If you are a buyer you have probably been experiencing multiple offer situations in some areas of the Twin Cities and seeing homes beginning to go over list price. This is still spotty, but it is beginning to happen. This will pose a problem going forward with Appraisals, Appraiser will have a difficult time coming up with Comps to establish values. So a full reversal of the market trend will take time.
If you are a buyer: take a mental note of this chart. The Affordability Index, if rates nudge up and prices begin to stabilize and increase, the housing affordability index will go down. This may not last long… So don’t wait too long!