Record-low mortgage rates helped make last month the best July for home sellers in the twin cities, with sales – and prices – in double digits.
During the month, buyers signed 6,866 sales contracts, an increase of 10.3% over the previous year. This is based on new data from the Minneapolis Area Realtors and the St. Paul Area Association of Realtors
"July was an undeniably strong month, especially given some headwinds," said Linda Rogers, president of Minneapolis Area Realtors. "There was sales growth and other improvements in most areas, including the two major core cities where buyers continued to outbid each other."
New registrations rose less than a full percentage point year-on-year, well below what is required to meet demand. As the number of buyers outnumbered sellers, the number of homes in the market at the end of the month was down almost a third year on year. On average, sellers received 100.01% of their original asking price, the second highest value since 2003.
That meant sellers in some areas were getting more than one listing on their home, often for $ 10,000-20,000 more than they asked for, causing the average price of all closings to rise 10.4% to $ 312,500.
Rising house prices in recent months have been slightly offset by falling mortgage rates, which fell to record lows last month, but a lack of supply in some parts of the subway kept many on the sidelines.
"We're not interested in being homeless," said Cecilia Mische, who is considering upgrading the house she bought eight years ago in northeast Minneapolis. "We have two dogs and we're in the middle of a pandemic. We don't want to deal with more stress than we need."
Mische said she loved the house and her neighborhood, but now that she and her fiance both work from home, they feel the need for a house with more space and a bigger yard.
Anything that fits her needs in the same neighborhood on the outskirts of downtown is selling for more than double what she paid for her home. They are considering building it, but the prices in the inner ring suburbs which would keep them close to things she likes to do in the city are too expensive. A buildable lot that she's excited about in Roseville costs about $ 200,000, and building a home on it will more than triple the total price.
For now, she and her fiance are considering their options, including where to stay. When they don't sell, they are in the growing ranks of homeowners feeling trapped in a highly competitive market in both core cities and most of the suburbs. For example, in Minneapolis, sellers received offers that averaged 100.8% of their list price, compared with 101.3% in St. Louis Park.
Although sales in twin cities have increased, the pandemic and rising crime rate in core cities has created some level of uncertainty among a contingent of shoppers taking elective action. Last month, detached home sales rose more than 7% while annual condominium and townhouse sales fell. Apartment buildings tend to appeal to corporate move buyers, who are in short supply these days, and empty nests, who are likely more concerned about living in buildings where they share common space with other residents.
Mische's agent, Shawn Korby of Keller Williams, calls the property market "an anomaly" this year. August is almost twice as busy as July, and he reckons that the pent-up demand will flow from a slow spring into autumn.
Although the mood is upbeat, especially for sellers, it is a very challenging time for buyers, he said, and that makes it all the more difficult for buyers and sellers to make decisions.
"The perfect person for this market is someone who has to sell but don't have to buy," he said. "The name of the game helps buyers avoid the limbo."