The kickoff to the spring housing market in the Twin Cities was unseasonably strong — especially for sellers.
During February, there was a 6.7 percent increase in signed purchase agreements in the 13-county metro area, according to a monthly sales report released Monday by the Minneapolis Area Association of Realtors. Though new listings increased slightly in February, there were just 10,953 available properties at the end of the month, a 19.4 percent decline compared with last year.
With buyers outpacing sellers in some parts of the metro area, that meant stiff competition and little room for buyers to negotiate. The median price of all closings during the month was $207,395, a 3.7 percent increase compared with last year and the highest in eight years.
“Many would-be buyers are waiting on sellers,” said Judy Shields, president of the Minneapolis Area Association of Realtors. “Early indicators such as mortgage applications suggest demand is only likely to strengthen. The uncertainty comes on the supply side, but there’s a good chance we’ll see more inventory this year.”
Greg Mason, president and CEO of Edina Realty Home Services, said agents have gotten creative to cultivate new listings — knocking on doors, sending solicitation-to-sell letters and using social media.
For buyers, mortgage rates are still below 4 percent — the lowest in a generation and half of the historic average.
By nearly every indication, the Twin Cities market appears poised to be the most robust it has been in more than a decade. Closings, a reflection of what was bought two to three months earlier, were up slightly. With listings in short supply in some areas, sellers are offering few discounts.
On average, sellers in February received 95.3 percent of their original list price, a slight increase compared with last year. And houses sold much faster than they did last year. The average market time in the metro fell 9.4 percent to 96 days. At the current sale pace, all of the listings on the market at the end of the month would sell within 10 weeks. In a balanced market, it would take five to six months to sell out.
Still, listing activity isn’t keeping pace with sales. In February, which agents say was a particularly robust month because of higher-than-average temperatures, there were only 5,848 new listings, just 3 percent more than last year.
While inventory remains unusually tight, listings are expected to rise in the coming months as prices rise and homeowners gain confidence that they’ll be able to both find a buyer and find a house to buy.
“When it hits, it’s going to hit brilliantly,” said Sheryl Petrashek, a sales agent with RE/MAX Results.
Petrashek and other agents say there are plenty of buyers who haven’t even called their agents yet, because they’ve looked online at the listings and aren’t finding anything worth pursuing. She said that with house prices on the rise and word getting out that buyers are waiting in the wings, many would-be sellers are getting their houses ready to list.
“This situation will wash itself out and the spring weather will help,” Petrashek said. “Historically, in my view, buyers are in the spring market first and sellers come second in mid-March.”