There is still rising demand for housing in the Twin Cities, but data suggest the crazy housing market run that started in 2020 is unsustainable.
That's according to the Minneapolis Area Realtors and the St. Paul Area Association of Realtors in their monthly housing market update.
“We are still in a period where year-over-year comparisons can be skewed,” Todd Walker, president of Minneapolis Area Realtors, said in a statement. “We’ve gone from Mach 3 to Mach 1 — still a fast pace, but agents are seeing fewer multiple offers. Bypassed inspections and appraisal gap clauses are also less prevalent.”
During the height of the market seen in the the past 18 months, homebuyers would forgo inspections and add appraisal gap clauses in their purchase agreements in hopes of wooing the seller into choosing their offer.
The Realtors groups say buyers closed on more homes in the Twin Cities metro in September 2021 than in September 2019 but sales were down 5.9% from the "heightened pace" of September 2020.
That being said, the Realtors groups said the Twin Cities metro remains a "firm seller's market" with a small supply of homes on the market. There is 1.5 months supply of inventory, which is the lowest figure for any September going back two decades and a 21.1% drop compared to September 2020, the monthly update said.
A balanced market (where the market doesn't favor the buyer or the seller) is considered 5-6 months of supply.
The median sales price for the metro was up 10.2% from last year at $341,750. However, that's shy of the $350,000 record high in June, July and August.
“While pricing remains firm, we’re at a time of year where activity typically slows down for the season,” according to Tracy Baglio, president of the Saint Paul Area Association of Realtors. “Even though we don’t quite see as fiercely competitive a market as last year or earlier this year, that doesn’t mean buyers suddenly have an upper hand, especially while sellers are still accepting offers over their list price and in record time.”
Buyers do remain active and persistent but they may be a bit more cautious, the groups said, adding: "Because much of 2020 and 2021 are not apples-to-apples, year-over-year comparisons will continue to be distorted."
Here are some other findings from the monthly housing report:
- The number of signed purchase agreements fell 14.4% last month compared to September 2020.
- The two-year growth from 5,047 purchase contracts in 2019 represents a 10.8% gain, which amounts to about 5.4% demand growth per year, which is considered a stable and healthy rate, the Realtors groups said.
- Seller activity was down 8.6% over last year. But September 2021 marks the third consecutive year where new listings in September exceeded 7,000, something that hasn't happened since 2007-2009.
- Home sales rose in Farmington by 65.9%, while home sales in Golden Valley were up by 34.3%. Sales in Lino Lakes and Buffalo fell 51.7% and 48.3%, respectively.
- Signed single-family contracts fell 17.5% while Condo agreements rose 10.4%.
- Sales of homes priced below $200,000 declined 33.6% compared to last year. Sales between $400,000 and $600,000 were up 22.2% compared to last year.
- Home sales over $1 million were up 7% from last September and are up 71.6% year-to-date.