Interest rate hikes have surfaced a few question as to the future of our current housing boom, however, Realtors find Twin Cities market activity remains strong and steady.
New construction activity is containing to increase as the number of traditional home sales climbs closer to normal levels and job growth continues to occur and strengthen household income levels that help prospective Minneapolis real estate buyers gain a quality loan in order to buy a home.
25 out of 26 Months Recorded Gains In Pending Home Sales
in view of the 14.2% rise in pending home sales, homebuyers in the Twin Cities seem unfazed by recent mortgage rate increases. Having long rated high for home affordable, even with new dips, given the history of things, the Twin Cities housing market seems impervious to mortgage rates as they hover around 4.5%. Proving the strength of the housing recovery, 25 of the past 26 months posted year-over-year gains in pending sales, and the metric is currently as its highest level since June 2006. Prospective home buyers are on the alter for new home listings for a chance to view new homes as they come on the market. With slim inventory, prepared buyers are moving quickly before that new listing already has multiple bids on it.
Twin Cities Housing Sees Highest Median Home Sales Price In Years
New listings increased 20%, marking the second largest gain since March 2010. Buyers have 15,193 properties to choose from, a 17.2% drop from June 2012, but a 17.4% increase from January 2013. The metro’s median sales price rose 17.5% to $210,000 — the highest median sales price since December 2007.
Twin Cities Housing Market Has Become a Sellers Market
The Twin Cities housing market has shifted to a new composition of home sales. For years we saw most home sales came from Minnesota foreclosed properties and short sales. In 2011 the percentage was as high as 61.5% of all sales activity. In June 2013, these two distressed segments totaled just 21.7% of all sales. On the seller side, the percentage of all new listings that were distressed drop
"As a result of fewer distressed properties and more, higher-priced traditional properties selling, home prices have been enjoying quite the rally," said Andy Fazendin, president of the Minneapolis Area Association of Realtors.
"The spike in mortgage rate expectations this month seems to have had an impact on a number of the survey’s indicators and may increase housing activity in the near term by driving urgency to buy. Consumers may recognize that today’s still favorable mortgage rates and homeownership affordability levels will recede over time. Given rising home and rental price expectations and improving personal financial attitudes, more prospective homebuyers may be deciding that now is the time to get off the fence." ~ Doug Duncan, senior vice president and chief economist at Fannie Mae
Twin Cities Housing Market Has Become a Sellers Market
June's housing inventory count of 15,193 homes for sale in the Twin Cities was up over the approximate 14,500 real estate listings from the previous month of May, according to comments by Herb Tousley, director of real estate programs at the University of St. Thomas.
Rising prices are expected to get prospective home sellers off the sidelines, especially those whose mortgages were "under water" -- meaning they owe more than the house is worth. "But any big gain in inventory isn't going to happen overnight," Tousley consulted. "The trend is in the right direction. But it's a slower process than I think a lot of people would like to see." Looking more deeply at the June data, Tousley noted that traditional home sales -- those not involving foreclosures or "underwater" short sales -- saw prices go up about 8.7 percent. But the biggest jump in prices was among foreclosed homes, with prices up 17 percent, and short sale median prices up 14 percent. That's healthy for the market, he said, and reflects that the number of foreclosures overall has been trending downward in recent months.
Twin Cities Home Sales - July 11, 2013
MMAR's July 11, 2013 news release shows that traditional home sales tell the story of Twin Cities housing pushing past interest rate hikes and showing a return to a more normal market conditions.
Traditional home listings - up about 44.4 percent
Real estate seller activity - up 20 percent
Foreclosure new listing s- down 24.6 percent
Short sale new listings - down 51.7 percent
16 straight months of year-over-year price gains
Motley Fool Comments On Interest Rate Hikes Impact On Housing
The Motley Fool posted comment to explain the impact of interest rate hikes, that, "While low interest rates are often the catalyst for heavy refinancing activity, a major factor impacting purchase activity can often be less-quantitative: optimism". Home investment requires more that base assumptions. Some with a more skeptical approach mused that homes are not inherently attractive long-term investments. Housing investment advisors at Motley Fool state that, "human nature kicks when the expectation for prices to dramatically rises and consumers find themselves saying, 'I need to act now before prices go even higher!' or 'My house is going to double in value!' In order for the housing market to continue trending higher, a rosy outlook is essential".
Overall, prospective home buyers seem to keep a balanced outlook according to recent findings in Fannie Mae's June 2013 Monthly National Housing Survey of U.S. consumers. Among the homeowner surveyed, the average expectation of the home price appreciation for the coming year is an uptick of 3.8%. Even though we have watched home prices doubling above June 2012's expectation of 1.9% a year ago, the expectation for 3.8% appreciation is not a wild or unreasonable figure. "To put the 3.8% increase expectation into perspective, according to data provide by Yale professor and housing market guru Robert Shiller, the nominal compounded annual growth rate for U.S. home prices over the last 60 years has been 3.8%," sums up The Motley Fool.
"People are in a better and better equity position. It's the wealth effect. It just gives them more equity and more confidence to make that move." ~ Herb Tousley, director of real estate programs at the University of St. Thomas.
Twin Cities - One of the Healthier Housing Markets Nationally
Metro study published a May 2013 report titled Twin Cities Remains One of the Healthier Markets showing casing the Minneapolis metro housing statics against the backdrop of 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
Twin Cities Housing Market Gains
According to the Minneapolis Association of Area Realtors, the Twin Cities housing market report for the week ending July 6 showing the following gains:
New Listings increased 14.3% to 1,105 • Pending Sales increased 5.7% to 912
Inventory decreased 16.4% to 15,249For the month of June:
Median Sales Price increased 17.5% to $210,000
Days on Market decreased 34.5% to 74
Percent of Original List Price Received increased 2.5% to 97.5%
Months Supply of Inventory decreased 27.1% to 3.5
Download the CoreLogic's recent Home Price Report.
Download the Twin Cities Skinny on Minneapolis home price stability in spite of interest rate hikes.
Home Destination, a Minneapolis residential Realtor with RE/MAX Results, helps families searching for Twin Cities housing to find options in the midst of interest rate hikes. Call 612-396-7832 for your own highly personalized guide when buying a new home.
Jenna Thuening, a Minneapolis residential Realtor find that Twin Cities housing is resilient in spite of interest rate hikes.
Eden Prairie MN 55334
Jenna's home page: homedestination.com
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