I’ve been puzzled by the Minneapolis and St Paul duplex weekly market statistics the past few weeks.
Well, the pieces don’t seem to make a complete picture.
For instance, 64.7 percent of the pended listing sales for the week ending July 20 belong to traditional sellers, compared with just 50 percent for the same week in 2012.
So the gradual diminishing supply of bank-owned or negotiated duplexes for sale should bode well for traditional sellers, right? After all, buyers purchase distressed properties at a discount. So it stands to reason that the more properties being sold by traditional sellers, the higher the prices.
Not over the past few weeks.
Last year’s average sold price for the third week in July was $217,871. This year’s average off market list price, however, was $207,141. And the average list price is usually a little higher than the sold price. This makes the fourth consecutive week this has happened.
The only plausible explanation I can come up with is the increase in interest rates has caused buyers to either qualify for a reduced mortgage amount, or be unwilling to take lower returns on their investment thanks to the reduction in cash flow caused by the higher cost of borrowed money.
There were 31 new duplex, triplex and fourplex listings during the week. At 67.7 percent, most of these belong to traditional sellers. One year ago there were 34 new listings; just 47 percent of which were brought to the market by equity sellers.
The single family home market saw pending sales up 6.2 percent for the week, and does not appear to be experiencing the same anomalies as the small multifamily market. New listings were up 25.1 percent, while inventory continued to be down 14.3 percent.
The Median Sales Price for single family homes for June was $210,000; up 17.5 percent from June 2012.
As the summer marches on, let’s hope we can at least find the border pieces of whatever this puzzle is about.