There is growing evidence that a strong recovery is underway in many housing markets around the country, with “more homes selling faster at higher prices” in many metro areas, including the Minneapolis-St. Paul area. New detailed sales data were released today by the Minneapolis Area Association of Realtors for the month of November, and some of those data are summarized above. Here are some highlights of the November sales data that provide evidence of a housing boom in the Twin Cities:
1. Closed home sales during the month of November in the Twin Cities increased by 20% above last year, and by 46% above two years ago. On a year-to-date basis, the 45,070 homes sold so far this year is the highest for any January-November period since 2005.
2. The total sales volume for homes sold in November was $834 million, which was an increase of 37.2% above last year, and 47.6% above two years ago.
3. Pending home sales in November (3,587) were 12.6% higher than the same month last year, and 37.8% higher than November 2010.
4. The average marketing time for houses sold in November was 103 days, down from 139 days last year and 143 days in 2010, and was the shortest average marketing time for the month of November since 2006.
5. The median sales price in July was $173,000, a 16.9% increase over last year and a five-year high for the month of November. The median sales price increase in November was the largest year-over-year gain since January 2004 and the ninth straight month of year-over-year increases.
6. The average sale price as a percent of list price in the Minneapolis area was 94.3% in November, the highest percentage for a November since 2006, and above the 90.9% average for November 2011 and the 90% average in 2010.
7. The “months supply of inventory” in November was down to only 3.4 months, the lowest level in almost 8 years, since early 2005.
8. The inventory of Twin Cities homes for sale in November was only 13,860, the lowest inventory level since January 2003.
Bottom Line: By every relevant measure (double-digit increases in median sales price, closed sales, pending sales and sales volume; ongoing decreases in average marketing time and increases in the percent of list price received, etc.), the real estate market in the Minneapolis-St. Paul Area is experiencing a strong and robust recovery this year, and the robust housing market conditions there are reflected very closely in many other metro areas around the country this fall. At some point, even the housing recovery deniers and skeptics will have to admit that a housing recovery is underway in markets like the Twin Cities and elsewhere.
In fact, with the home inventory level in the Twin Cities currently at a nine-year low and the months supply of homes at a seven-year low, the biggest challenge for the Minneapolis-area real estate market is now a shortage of homes for sale relative to the increasing demand as rents rise and interest rates remain at historically low levels. With the tight supply of homes listed for sale and more buyers coming into the market, we can expect multiple offers and further increases in home prices going forward in the Minneapolis area. Continued increases in home prices will increase homeowners’ equity and eventually result in more homes being put on the market for sale, which will boost inventory levels and contribute to a sustainable cycle of recovery for the Twin Cities housing market.
Here’s how the Minneapolis Area Association of Realtors describes the real estate market in the Twin Cities based on the November sales report:
“This November, there was a lot to be thankful for. Home buyers were thankful for historically low mortgage rates and still-affordable prices. Sellers were thankful for increased sales, less competition and faster market times. Both parties can be thankful for the slow yet steady economic recovery. Challenges persist, to be sure, going into 2013, but there’s more reason for optimism than pessimism.”
Here’s a quote from an article in today’s StarTribune about the Minneapolis-area housing boom:
“Buyers and sellers are totally engaged; it feels like 2003 again,” said Todd Shipman of Lakes Sotheby’s International Realty. “And December is shaping up to be even better.”
Related: “Mortgage applications for home purchases reached a new high for the year for the third consecutive week, as 30-year mortgage rates sank to a new all-time low, the Mortgage Bankers Association reported Wednesday.”