The buyer’s market is over.
Buried in the Weekly Market Activity Report from the Minneapolis Area Association of Realtors was news that The Months Supply of Inventory in the marketplace is 5.
In other words, if no new houses came on the market today, in 5 months we’d be out of houses to sell.
A year ago, we had a 6.7 month supply.
Generally speaking, the housing market is considered to be balanced, with neither buyer nor seller having the advantage, at a 5 month supply.
Does this mean we’re once again on course for double digit rates of appreciation for single family homes?
Unlikely. Especially with the distinct possibility of higher interest rates on the spring horizon.
The duplex market for the week ending January 2, 2010, however, tells an entirely different story. The average off market price for a pended duplex or small multi family property for the week was $161,237. For the same week in 2008, that number was $92,656.
The number of sales week over week was a bit less promising, dropping 16 percent. Traditional sellers for the week represented 19 percent of the transactions. This is more than double their market share for the year before.
New listings continued to be few and far between, dropping 38 percent week over week. Just over one quarter of the new inventory for the New Year was offered by traditional sellers, an increase of three percent year over year.
While the months supply of inventory and increased traditional seller market share are good news, it’s important to remember the vast majority of the market is still controlled by lender mediated transactions.
While foreclosed duplexes seem to be increasingly rare, the same cannot be said in the single family home market. There are persistent rumours of a shadow inventory of foreclosure properties being kept off the market by banks, though the validity of those rumors is difficult to substantiate.
If they exist, we’re all likely to lose our balance.