The summer of 2018 is stacking up to be the most competitive on record for Twin Cities home buyers.
In June, for the second month in a row, the average home seller received more money than they were asking for, pushing the median selling price to another record high, according to a midyear report from the Minneapolis Area Association of Realtors (MAAR).
The dynamics are putting pressure on buyers.
“Being a successful buyer in this market takes patience and compromise,” said Kath Hammerseng, MAAR president and a local sales agent.
The median sale price for June closings hit $271,900, up 5.7 percent from the same period a year ago. Closings during the month were off 8.1 percent. Sellers listed 8,730 properties, 1.2 percent lower than June 2017.
Though housing demand is strongest in the summer, the housing market in the Twin Cities has been on a monthly seesaw: Listings fall, then prices rise. That imbalance, however, is concentrated among entry-level houses, which are the most scarce.
At the current sales pace there were only enough houses priced at less than $250,000 to last a bit more than a month. For houses priced at more than $1 million, there was more than 12-month supply. That disparity is reflected in how much buyers were willing to pay. Buyers of houses priced at less than $250,000 on average received 100.7 percent of their asking price compared with 95.2 percent of list price for houses priced at more than $1 million.
The scarcity of entry-level homes on the market also explains why June was the seventh consecutive month of year-over-year declines in closed sales. With more entry-level buyers than sellers in the market, there were only 11,374 properties on the market at the end of the month, 15.9 percent fewer than 2017.
Those dynamics are the continuation of a trend that started last year. During the first six months of 2018, there were 5.7 percent fewer new listings than the previous year and closings were down 7.2 percent.
Artemisa Boston, a Realtor with Realty Executives Results, said that with interest rates still near record lows and a proliferation of programs aimed at helping first-time buyers, she expects more sellers to step forward. Meanwhile, she advised buyers to be persistent.
“It is always a good time to purchase a house, even in this competitive market,” said Boston, who is based in West St. Paul — one of the hottest cities in the metro so far this year.
She said many homeowners in West St. Paul are aging baby boomers who are downsizing, making their modest houses, many of them built after World War II, available to the swelling number of first-time buyers who are getting into the market.
That focus on first-time buyers is helping make Boston one of the most active agents in the country. Last year she did 174 transactions, making her the 93rd busiest in the U.S., according to an annual survey by Real Trends.
Todd Urbanski, MAAR’s president-elect, is optimistic that the market will become more balanced in the coming months as homebuilders increase production and sellers step forward.
“We’re not there yet, but we do expect the inventory declines to moderate,” he said. “Until then, sellers are enjoying their market position and finding the move-up market more navigable.”