Historical Twin Cities Home Price Growth Rate: Not only did more homes sell last year, they were selling for more money.
January 23, 2014
Overall Minneapolis home prices are closer today to historical averages as home buyers expect a strong future as levels of historical home price increases. Minneapolis median home sales price increased 13.7% to $191,000 according to the Minneapolis Area Association of Realtors January 14, 2014 report. Economists have been saying that the housing market is healing; today many people are truly believing it because prices have been catching up with historical averages.
The Fannie May Housing Survey released January 4th says that younger Millennial home buyers are more educated, and earn higher incomes than prior mortgage borrowers. With a stronger home buyer pool, competition for the low number of Twin Cities real estate listings has prompted bidding wars which helped push home sales prices upwards.
The same survey covered December 2013 home prices in an article titled Housing Recovery Remains on Firm Footing as Americans’ Housing Sentiment Bounces Back, says, the share of individuals who believe that home prices will continue to climb in the next 12 months increased four percentage points to 49%, and those who say home prices will drop held an even pace at 9%. After home prices surpassed expectations for the first three quarters of 2013, Q4 saw 3.2%, meaning that the average 12-month home price change expectation increased vividly.
Twin Cities homeowners overall have remained optimistic and surprisingly rational and reasonable about home prices. In Fannie Mae's June 2013 Monthly National Housing Survey of U.S. consumers, the average anticipation of home equity increases and appreciation values in the upcoming 12 months was an increase of 3.8%. Doubling over June 2012's expectation of 1.9%, the expectation for 3.8% appreciation is a signal of consumer confidence.
To summarize the 3.8% increase expectations, data provided by Yale professor and housing market expert Robert Shiller, shows the nominal compounded annual growth rate for U.S. home prices over the last 60 years is 3.8%. Increased demand and the higher percentage of traditional home sales has helped push the median sale price upward.
Twin Cities Home Prices
Home prices have increased and homeowners are gladly embracing the news that they have higher home equity levels. Metro existing home sales for November 2013 were 4.9 million; the month of December was similar based on a seasonally adjusted averages, and January is showing continued momentum so far.
Home values in 2013 climbed 9% over 2012.
From December of 2012 to December of 2013, Twin Cities home prices year-over-year increase is 14.4%
For the month of December 2012, home prices stood at $190,000; for the month of December 2012 home prices were $168,000, a month-to-month increase of 13.1%
Percent of Original List Price Received increased 0.9% to 94.6%
Case-Shiller Home Price Index: Minneapolis, MN
A quick look at Case Shiller's YCharts of Twin Cities home prices shows a straight line upward. It lists the metro are home sales at a Year-Over-Year increase of 26.5% at a total of 61.213, which certainly confirms that Minneapolis homebuyers aren't shy about higher home prices. Buyers don't mind paying a higher price for a Minneapolis home when they have good reason to expect the value to increase in years to come.
Twin Cities Housing Market Health
Metrostudy's May 2013 report titled Twin Cities Remains One of the Healthier Markets indicated that the Minneapolis metro housing statics have come in repeated over national averages. "Despite slow recovery in new home starts over the past several years, the housing market has fundamentally improved more than most realize. It doesn’t feel like it and it won’t make the headlines, but things have been improving since 2009, and we are in a better place today and we will be in a better place tomorrow," said Ryan Jones, director of Metrostudy’s Twin Cities division. The Minneapolis real estate market continues to see well-qualified home buyers who are willing to step up to the plate are enjoying unaccustomed leverage.
Twin Cities Home Prices And the Overall State of Housing Recovery
The National Association of Home Builders (NAHB) First American Leading Markets Index (LMI) is a stalwart indicator of the overall state of the housing recovery. The percentage of housing markets reaching and obtaining new benchmarks of levels of economic and housing activity continues to advance at a slow and steady pace. The LMI contains 56 markets in which the index is at or above one, which means the last 12 months’ average of single-family housing permits, home prices and employment levels are at or above their last report date of normalcy. According to NAHB's Eye on the Economy: Positive Signs for 2014 January 22, 2014 report, "The national index for January remained at .86, meaning that the U.S. market is only 86% of the way back to normal as evaluated on the basis of prices, jobs and building".
The year 2014 is placing an on-going demand for Twin Cities home builders to ramp up home construction to raise inventory levels. The higher demand we saw in 2013 placed an upward pressure on building material prices, which in turn adds to the price of a home. Producer Price Index data (http://www.bls.gov/news.release/pdf/ppi.pdf) indicate that softwood lumber prices rose during the second half of the year, with OSB prices also rising but at a slower pace. Gypsum prices ended 2013 up 16.6% over 2012.
Twin Cities Home Prices Are Expected To Increase in 2014
CoreLogic Home Price Index released January 17th says Minneapolis has a Home Price Index (HPI) change of from the peak is -16.2. It lists the metro are home sales at a Year-Over-Year increase of 26.5% at a total of 61.213. We use Median Home Sales Price over the Average Home Sales Prices because a multi-million home can skew home prices. The historical average in home prices peaked in 2006 with no interest loans, low document home loans and adjustable home rates. That is way the actual home sales price was so high at that time. The Minneapolis - St Paul housing market is starting to crawl back up to the $200,000 benchmark for Median Sales Price. Federal Reserve efforts to keep interest rates low by its quantitative easing program has helped bolster home prices. We may see a shorter rate of home appreciation in 2014 as that tapers off.
Twin Cities Home Prices Are Expected To Increase in 2014
As of our January date, you still have opportunity to buy a Minneapolis home with 3.5% down using FHA and zero down with VA and USDA loans. If you are planning to purchase a home using a conventional mortgage programs, you should anticipate being required to have at least a 5% home down payment unless you are using a special first time homebuyer program. With mortgage rates and home prices expected to increase, if you are looking to buy a new home in the future, consider that now may be the ideal time to look. More homes typically are added to local real estate listings as we move past the holiday season; which makes it an ideal time to obtain your mortgage approval so you are ready to buy.
Twin Cities Home Prices Crawl To $200,000 Median Home Price Range
Looking at the most recent Median Sale Price instead of Average Sale Price because it an happen that luxury homes sales may skew the average home price. The Median Home Sales Price means the middle number of home sales in a given month. Historical averages in home prices are laid out well in the MAAR summary reports.
Adjustable rate mortgages moved some homeowners from paying a lower monthly payment to a jumped rate. Interest only loans and low document home loans contributed to the higher home prices in 2006, where the housing market hit its peak. We are starting to crawl back up over that %200,000 mark for Minneapolis Median Sales Price. The Federal Reserves kept interest rates low through the quantile reserve program. As that tapers in 2014, causing interest increases and the actual purchase price of a home to increase, we may see a slower pace in home price increases.
Download the Minneapolis Weekly Housing Market Report for week ending January 11, 2014
Download Fannie Mae's December 2013 Housing Survey Results Show Expectations in Home Prices.
Download Fannie Mae's January 2014 Housing Survey Results Show Expectations in Home Prices.
Download the CoreLogic's recent Home Price Report.
Download the Twin Cities Skinny July 2013 on Minneapolis home price stability in spite of interest rate hikes.
Home Destination, a Minneapolis residential Realtor helps Minneapolis home sellers list and market their home for sale. Call 612-396-7832 for your own highly personalized search to buy a new home.
"The Median Sales Price of closed home sales in 2013 rose 14.4 percent to $192,000, achieving a five-year high. A real estate wrap-up of home prices as we head into 2014: Minneapolis home prices are 16.5 percent below the 2006 peak and 28.0 percent higher than the 2011 valley we experienced." ~ Jenna Thuening, owner of Home Destination
Jenna Thuening, a Minneapolis residential Realtor reports that Minneapolis home prices are closer to historical averages.
Eden Prairie MN 55334
Jenna's home page: homedestination.com
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