Move-Up Home Buyers Across the Twin Cities top Housing Estimates and Signal Strong Consumer Confidence
by Jeannie Hill on behalf of Home Destination: June 2, 2014
Twin Cities home prices are climbing back and empowering sellers to benefit from positive equity and dip into the Minneapolis housing market as desired.
For a quick overview of the positive signals in the Twin Cities housing market as we near summer months: new home sales are on the rise, the percentage of late home payments is declining, and residential investor activity is picking up once again. All three sectors of Minneapolis - St. Paul housing data segments signal that the metro real estate market is on the mend, according to Minneapolis Area Association of Realtors stats. Fresh housing reports signal that the Twin Cities market for new homes and home remodeling is heating up with warmer temperatures. The Twin Cities Builders Association reports monthly residential building permits, a new report shows further signs of life in Twin Cities residential construction.
7 POSITIVE SIGNALS IN THE TWIN CITIES HOUSING MARKET SPRING 2014
May Twin Cities Housing Stats - Number of Homes for Sale
The Twin Cities spring housing market showed positive increases in the number of homes listed for sale. For the week ending May 24th, Twin Cities new home listings increased 3.9% to 1,870. Twin Cities housing inventory increased 5.6% to 15,957.
In April of 2013, 14,213 real estate listings were available for Twin Cities home buyers to choose from. In April of 2014, the number of homes for sale increased to 14,429. This is a 3.25 percent uptick showing improvement over the number of homes available in April 2013.
“This is a healthy development as a continued increase in the number of (Twin Cities) homes for sale will lead to a better balance between the supply of homes for sale and the demand in the market,” said Herb Tousley, director of real estate programs at the University of St. Thomas.
April Twin Cities Housing Market - Home Price Gain Flush Out New Sellers
Spring 2014 is also seeing 26 straight months of year-over-year home price gains. For prospective Minneapolis real estate sellers, new gains in home equity make it possible to sell thier existing home and transfer thier home equity, thus becoming move-up home buyers.
May Twin Cities Housing Market - Home Affordability
Mortgage rates have decreased to the lowest rates seen in the last seven months making it more affordable to buy a home. The 30-year-fixed rate is hovering around 4.2 percent and the 15 year rate has ducked under 3.5 percent. New federal housing instructions for Fannie Mae and Freddie Mac are to concentrate on granting credit within the reach of a greater number of homeowners. This change in course signals the Federal Reserve concerns that the housing sector is too sluggish national and needs a boost into a stronger pace. They are also concerned that first-time home buyers will be unable enter the housing market due to the pressures of student debt. Under close scrutiny, revised housing expert predictions say that in order to sustain the economic recovery interest rates may not increase as much this year as was originally expected. “Originally, rates were expected to increase to around 5 percent by year end,” Tousley said. “However, if the recovery begins to falter during the year, rates may not increase by quite that much.”
May Twin Cities Housing Market - Home Closed Sales Down
Another positive signal is that the number of closed home sales was down compared to a year ago. On closer examination, the decline can be largely attributed to lower numbers in Twin Cities distressed property sales as traditional home sales were up slightly compared to the number of foreclosed homes on the market a year ago. Let's compare: April 2013's percentage of distressed sales was 31.5 percent; this April it was at 21.1 percent. That reflects a drop of 26.8 percent from March 2014.
May Twin Cities Housing Market - New Home Construction
One telling signal that the housing market is continuing on the road to healthy is when home builders of new homes are selling more houses than lending institutes do.
During April of 2014, levels of single-family home permits reported by Keystone Report increased significantly over both the March and April 2013 numbers. In April, single-family home permits jumped 37.5 percent. “This verifies our expectation that the spring construction season will see a flurry of new construction activity as home builders seek to make up for time lost due to harsh weather conditions in January and February,” said Tousley. Another view of the numbers says that the year to date number of single-family home permits is only up .65 percent compared to the same time in 2013. UST housing experts anticipate an increase in permitted single family homes to improve as the construction's prime months of activity peaks in summer months ahead.
April Twin Cities Housing Market - Job Wages Showing Improvements
While the Twin Cities economy experiences fewer economic swings than many companion metros during housings tumble, income earners definitely felt its impact. Sustainable income is the backbone of a prospective buyers' ability to gain a quality home loan. However, compensation rates (wages and benefits per hour) for trades workers in the Minneapolis-St. Paul metro area are rebounding fairly well, according to data provided by the labor relations law firm Management Guidance LLP.
The Department of Labor Statistics says the Minneapolis-St. Paul-Bloomington, MN-WI Metropolitan Statistical Area ranked at 4.1 in Aril of this year. Twin Cities condo buyers are more confident their earning will support a home purchase, as noted in a Finance & Commerce June 2 report titled "Top Residential Transactions: Condo buyers snap up downtown Minneapolis units". The recent wage increases may feel like hard earned news for union workers after two years of stagnated efforts. Many of the income increases ran a similar thread within home construction occupations. Among licensed housing trades, electricians and plumbers serving residential housing have the highest compensation per hour.
The strengthening in the labor market is beginning to have a positive impact on consumer confidence, as the number of sellers listing their homes for sale indicates.
May Twin Cities Housing Market - Retiring Seniors Boost Single-Family Home Sales
Seniors retirig to a one-level Twin Cities single-family home are not your typical generation of seniors. William Frey, a senior fellow at the Brookings Institution in Washington who specializes in demographics says they are truning the tide of the housing market. “As boomers go through the stages of life, they change everything they touch,” Frey commented. “Whatever housing decisions they make as they near retirement will have an impact on the market. If they have the ability to be free of a mortgage when their income diminishes, they’ll do that.” Senior home buyer activity in the metro shows they are buying and selling real estate into their ripe 80s. Advanced medical practices and society's focus of being active and eating right means being healthy, allowing them to move past ideas of traditional retirement.
The light at the end of the tunnel is so bright it's almost blinding. Home sales are in an upward trend, and mortgage financing is easier to obtain. Progress is slow but clearly positive." ~ Sioux City Journal
If you are encouraged by the many positive signals in the Twin Cities housing market and are ready to make new housing decisions, call me at 612-396-7832. There’s nothing quite like the privileg of owning your own home.
Jenna Thuening, a Twin Cities residential Realtor offers real estate news on the positive signals in the Twin Cities housing market as of June 1, 2014.
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