For Twin Cities home sellers, it was the best March in more than a decade. For many buyers, it was one of the most demoralizing.
There were 4,306 closings last month, the most since 2005 and 8.3 percent higher than last year, the Minneapolis Area Association of Realtors said Monday. But buyers faced dwindling options, signing only 5,631 purchase agreements, 3 percent fewer than last year.
“My gut says the mood for entry-level [homes] is deep frustration and fatigue,” said Cotty Lowry, president of the Minneapolis Area Association of Realtors.
Inventory fell, prices rose and houses sold in near-record time compared with last year.
Still, the housing market this spring has been dogged by a shortage of properties for sale. Demand outpaces supply in some areas, chiefly in neighborhoods that are popular with first-time buyers.
During March, 8,032 new listings hit the market, 1.3 percent more than last year.
At the end of the month, however, there were only 10,213 listings on the market, a 20 percent decline from 2016 and 4,700 fewer listings than two years ago.
Starter houses were the most coveted and by far the most difficult to find. There were only 883 houses priced from $150,000 to $190,000 on the market, a 40 percent decline, and only 410 houses priced at $120,000 and less, a 57 percent decline.
Move-up houses were far more plentiful. At the end of March, for example, there were 674 houses priced at more than $1 million, 4 percent more than last year.
That dearth of the least-expensive listings has led to one of the most competitive spring markets in more than a decade.
People who are selling well-priced, move-in ready starter houses in the best locations are getting several offers, often for far more than their asking price and on the same day the house hits the market.
Bryan Paschke, a sales agent with Keller Williams, has an acronym for people who are reluctant to sell: FOBH, for fear of being homeless.
“Potential sellers are thrilled to hear about soaring values and would like to make the move, but are extremely weary of the daunting pace that is this market,” he said. “It’s getting more and more difficult to line up a seamless buy and sell. Not all buyers can put their lives on hold to see a new listing within the first hours, days or weekend that it is on the market.”
He’s already spent several hours going door-to-door asking homeowners in neighborhoods where his clients want to live if they would be willing to sell their homes.
Across the metro, houses sold on average in just 73 days, 14.1 percent faster than last year. For the most affordable houses on the market, sellers found buyers even more quickly. Houses priced from $190,000 to $250,000 sold within an average of 48 days, 21.3 percent faster than last year. In contrast, houses priced at $1 million were the slowest to sell, they took on average 185 days to sell.
Those starter houses are also commanding the best offers. On average, people who sold houses priced at $190,000 to $250,000 received 98.4 percent of their list price.
Move-up buyers entered the market last month at an astonishing rate. Sales of houses priced from $500,000 to $1 million increased 18 percent, signaling deepening confidence in the economy and the housing market.
Lowry said that he’s seeing firsthand and anecdotal evidence that upper-bracket buyers were picking up the pace last month. He recently showed a house in Minneapolis that was priced at $1.2 million and within a couple of days it had three offers. And a couple high-end houses recently sold near the Minneapolis Chain of Lakes after lingering on the market for years.
In March, the median price of all closings in the metro was $237,500, a 7 percent increase and the highest median sale price for any March in more than a dozen years. The next previous March high was in 2007 when the median hit $223,000; last month’s figure was nearly $100,000 higher than March 2011.
Agents and brokers say that buyers are worried that mortgage rates will rise, so they’re not giving up. In fact, in recent weeks, rates have fallen. Last week, Freddie Mac said that rates had fallen to their lowest level this year. The 30-year, fixed-rate mortgage averaged 4.08 percent with an average 0.5 points, according to Freddie’s Primary Mortgage Market Survey. A year ago, the 30-year averaged 3.58 percent.
“Buyers still want homeownership badly, so they continue to make offers,” Lowry said. “But they may have to adjust their expectations.”