July 2018

Housing price bubble chatter has increased this summer, as market observers attempt to predict the next residential real estate shift. It is too early to predict a change from higher prices and lower inventory, but the common markers that caused the last housing cooldown are present.

Wages are up but not at the same pace as home prices, leading to the kind of affordability concerns that can cause fewer sales at lower prices. At the same time, demand is still outpacing what is available for sale in many markets.

• New Listings in the Twin Cities region increased 4.1 percent to 7,671.
• Pending Sales were up 0.4 percent to 5,894.
• Inventory levels fell 13.5 percent to 11,709 units.
• Prices continued to gain traction.
• The Median Sales Price increased 6.6 percent to $268,000.
• Days on Market was down 17.4 percent to 38 days.
• Sellers were encouraged as Months Supply of Homes for Sale was down 11.1 percent to 2.4 months.

Consumer spending on home goods and renovations are up, and more people are entering the workforce. Employed people spending money is good for the housing market. Meanwhile, GDP growth was 4.1% in the second quarter, the strongest showing since 2014.

Housing starts are down, but that is more reflective of low supply than anything else. With a growing economy, solid lending practices and the potential for improved inventory from new listing and building activity, market balance is more likely than a bubble.

Source: NorthstarMLS,  MINNEAPOLIS AREA ASSOCIATION OF REALTORS®

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If you are thinking about selling your home, seriously, get on it! Average days on the market are down a whopping 20.5 percent!

The employment landscape and wages have both improved over the last few years, allowing for more people to participate in the home-buying process. When the economy is in good working order, as it is now, it creates opportunities in residential real estate and right now is a potentially lucrative time to sell a home. Houses that show well and are priced correctly have been selling quickly, often at higher prices than asking.

If you are looking to buy, it is more important than ever to have your finances in order before you start looking at homes. Your dream home could slip right through your fingers before you even have a chance to make an offer.

Source: Minneapolis Area Association of Realtors®, Monthly Indicators Report. All data comes from NorthstarMLS. http://maar.stats.10kresearch.com/reports

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