October stats released this week reflect the same trend we have been seeing all year, with the 16th consecutive month of year-over-year increases in pending sales. Last year's closed sales showed an abnormal blip up in September marking the end of 100% financing and this year showed an abnormal upward blip in October, anticipating the expected end of the first-time homebuyer tax credit in November.
With the tax credit extension, November sales may not be as high as expected as some buyers delay closing to relieve the burden on the system flooded with buyers seeking to close by the end of the month. I know I have some buyers who are moving their closings out, and I would expect there are other agents with clients doing the same.
While last month's pending sales were up 61.2% over last year, this month was only 34.4% above last year, a sign many buyers who were planning to buy to take advantage of the tax credit have already done so.
The extended and expanded homebuyer tax credit will open things up a bit again, as some current homeowners will also qualify, but I would guess it will take a little while for its effect to kick in as buyers and sellers regroup under the new rules. Due to the time delay between starting to look for a home to buy or listing a home for sale and actual purchase agreement and closing I would expect to see a blip down before sales come up again after a surge in closed sales this month.
New listings continue to hover just below last year. Hopefully the new tax credit will be the incentive some current homeowners need to put their homes on the market. We really need some more homes available for sale, especially in the lower price ranges.
After a prolonged period of surplus inventory it can be hard to comprehend just how short the supply is right now. And when you consider short sales with offers submitted to the bank the supply is even lower than the official active listings...because those listings usually still show active until the bank accepts the offer weeks or months later even though they are essentially sold.
I have buyers ready to buy who aren't finding anything...and when they do make an offer they often find they are involved in multiple bids. I remember a listing of mine where we had 6 offers almost immediately. When I called to talk to the agent with the winning offer she said her client started crying! It is currently an extreme sellers market in the lowest price ranges.
The months supply of current inventory has dropped in all price ranges compared to last month, and sales are shifting up to higher price ranges as supply has dropped in the lowest price ranges. The percent change in sales dropped in the under $120K price range, but increased in all other price ranges except over $1M. This is a tough time to be a seller in the luxury market. Previously-owned homes in this category have 40.5 months supply of inventory.
Median sale price continues to hover on the same plateau where it has been since it stepped up in May and June.
Months supply of inventory by property type dropped in all three categories this month, with townhome supply again getting closer and closer to that of houses. Buyers have been favoring houses, but as that supply is being gobbled up they are buying other types of homes. Even condo months supply is coming down.
You can see more clearly in the chart above how houses, townhomes and condos were all selling at about the same rate in 2006. Condos started to break away in 2007 with all the new condo construction, then the three types started to split apart in 2008 at least in part likely due to changes in financing. Houses and townhomes are now eerily close again, at levels close to those in January 2007. It will be interesting to see the impact of the expanded tax credit moving forward.
The figures above are based on statistics for the combined 13-county Twin Cities metropolitan area released by the Minneapolis Area Association of Realtors. Click here for links to local reports for 125 metro area communities.
Sharlene Hensrud, RE/MAX Results - Email - Minneapolis - St. Paul Real Estate Market Information
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