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Balance, in a real estate market, is when there is a 5-6 month supply of single family home and duplex inventory available for sale in a given market.
When this happens, both home and duplex buyers and sellers have equal leverage. In other words, a buyer can no longer beat desperate sellers up on price.
And, of course, sellers can’t crank up prices on buyers simply because there’s nothing worthwhile on the market for them to buy.
Heads up, those of you looking for a Minneapolis duplex deal…
Buried in today’s market report from the Minneapolis Area Association of Realtors was the following statistic:
- for the month of September, the Months Supply of Inventory decreased 21.9% to 6.8 months.
In other words, in the Twin Cities, we’re .8 of a month from a balanced market.
In the duplex sector, there were 16 sellers who accepted purchase agreements during the week ending October 22, 2011.
Of these, 25 percent were traditional sellers who will leave the closing table with a check to spend on something else.
All of the other sellers will watch proceeds of the sale go to a bank.
Last year, there were also 16 sellers who accepted offers during that week. Of those, however, just 12.5 percent were going to have money left over.
Most of the duplexes this year left the MLS at an average list price of $106,982. This is up from the average sold price one year ago of $92,156.
Here’s where things get interesting. One year ago during the third week of October, there were 44 newly listed duplexes, triplexes and four unit apartment buildings for buyers to chose from.
The same week this year?
14.
There were also 110 property owners who received Notices of Default in Hennepin and Ramsey counties alone this morning. This is up significantly from the daily averages of the last 8-10 months.
Looks like it’s going to be an interesting winter for Minneapolis duplex sales…
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Thank goodness for traditional Minneapolis duplex sellers.
You know who they are. They’re the ones who have equity in their duplexes and as a result, don’t have to get a bank’s permission to sell them.
Those sellers were responsible for 43.5 percent of the duplex sales in the Twin Cities the week ending October 1.
They also contributed 56.25 percent of the newly listed duplexes, triplexes and four unit buildings.
Compare this to the same week one year ago, when traditional sellers were responsible for just 15.35 percent of the duplexes sold and chipped in 48.27 percent of the new listings.
Because of these equity duplex sellers, the week saw an average off-market list price of $132,021. Although this figure will likely drop when those duplex sales are closed, this number is nonetheless up considerably from last year’s sold price of $111,646 for the week.
The single family home market continued to see inventory shrink, with a 21 percent drop of new lisitngs week over week.
Meanwhile, pending home sales saw a weekly spike of 32.7 percent over last year’s mark.
In all, there are 22.8 percent fewer homes on the market at this time than there were one year ago.
As these reduced numbers may well be a result of the bank foreclosure freeze, it’s promises to be an interesting winter.
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Sometimes it seems like the more things change, the more they stay the same.
Take Minneapolis and St Paul duplex sales, for example. For the week ending May 14, 2011, there were 29 duplexes, triplexes or four unit apartment buildings that sold.
That’s exactly the number that sold during the same week last year.
Traditional, or equity sellers, contributed 34.5 percent of the accepted purchase agreements for this year’s number, while last year only 31 percent of the transactions did not involve negotiations with a lender.
The good news here is the average list price when this year’s group of investment properties left the market was $152,366. While this is sure to drop some when these sales close, it nonetheless is significantly higher than last year’s average sales price of $114,088.
Perhaps this higher average off market price is due to the lack of inventory noted in previous Duplex Chick posts. While there were 51 new duplex, and small multifamily property listings that came on the market for the week last year, this year there were just 33.
Of these 33 new Minneapolis and St Paul duplex listings, 42.4 percent were brought to the market by traditional sellers; slightly below last year’s 43.1 percent.
Single family home sales actually saw a jump in their numbers for the week, up 15.4 percent over the same week last year. However, the numbers may well be skewed due to last year’s rush to beat the tax credit deadline.
The number of new listings was up 7.7 percent, with numbers more in keeping with historical norms. However, the total amount of inventory on the market is still 10.1 percent below 2010’s figures.
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There’s a lot of doom and gloom in the air today, and not all of it has to do with last night’s Viking loss.
Some of it has to do with today’s announcement by the National Association of Realtors that nationally, existing home sales fell in December. It wasn’t entirely unanticipated. Most economists thought the rush to beat the original November tax credit deadline might have an effect on December’s housing market. And it did.
So that’s the bad news. But there was some good news in the rest of the story.
See, while existing home sales fell 16.7 percent, they were still 15 percent higher than they were in December 2008.
More importantly perhaps, 4.9 percent more existing homes sold in 2009 than they did in 2008.
The national median home price was $178,300, which is again up over December 2008; albeit a slight 1.5 percent.
Of course, foreclosures and short sales, which represented 36 percent of all home sales last year continue to skew those median price numbers.
The Vikings had a sliver of good news too. Yesterday’s loss means they’ll get a better draft choice.
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Shame on me. When I didn’t receive notice from MAR of the sales activity for the week ending December 13, I assumed they’d gone on vacation. Well, we all know what happens when we assume anything…
Pending sales of single family homes were up 36.3 percent and new listings up 2.2 percent over the same week in 2007. Forty-eight percent of the new listings involve lender mediation, while 60 percent of the sales did.
The encroaching holidays did nothing to slow the small multi-family unit market, however. Fifty new listings came on the market, down 29.5 percent from last year. Of these, 78 percent involve mediation with a lender. This is up only slightly from the comparable week last year, when 73 percent of the new listings involved lenders.
While shrinking supply is sure to drive prices up in the future, such was not the case in this report. While the number of pending sales was up 186 percent, the average sale price dropped from $164,280 for the second week of December in 2007, to $96,810 for the comparable period in 2008.
The statistics for the week before Christmas are set to arrive tomorrow. It will be interesting to see if the number of new listings continues to drop.
