For an agent who handles plenty of business from the web I am beginning to see a clear trend in the Minneapolis real estate market that started to surface in the middle of 2011 and continues into 2012: the buying process is taking longer as move in ready and distressed inventory is evaporating from the market.
This blanketed statement does not apply to every niche real estate market across our country but in the areas that have begun to see significant decreasing inventory this statement holds true from a number of reasons. As many of the housing metrics were showing improvement, this change was also supported by the experiences I’ve had and the stories I have heard from many other agents in our market. In our local market:
Inventory dropped year over year by almost 30%!
The inventory of Twin Cities homes for sale has just hit lows not seen since the 2003-2004 time frame. Inventory at the end of 2011 dropped almost 30% from a year ago and I can tell you that my buyers certainly felt the difference in the number of homes that met their criteria. According to Realtor.com release this month there is a nationwide decrease of nearly 22%.
Home Sales in 2011 topped the peak of 2006
Twin Cities home sales in 2011 were the strongest (for non-tax-credit sales) since 2006. Nationwide home sales are up 12% (CNNMONEY.com) from 2010. As the economy slowly improves, consumer sentiment is likely to rise and more people will qualify for loans as they get back to work. A more optimistic population and more people working should push sales activity higher in 2012.
Vacancies are less than 1% in downtown Minneapolis!
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The apartment vacancy rate in the Twin Cities has dropped from 7.3% in Q4 2009 to 2.3% in Q3 2011 and less than 1% in downtown Minneapolis – its lowest level in 10 years. Average rents have risen from approximately $900 to $925 in that same time period. (source: Marquette Advisors via MHP) As vacancy remains low and rents continue to rise, the rent vs. own equation sways further towards ownership and more renters are likely to enter the home buyer market simply becuase it is becoming too expensive to rent.
Bank owned and short sales continnue to decline.
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Foreclosures and short sales have hit multi-year lows and with such high demand for them, inventory is likely to decline even further in 2012. Less competition=less price negotiation power by buyers. Traditional Seller have hit levels we haven’t seen since the early 2000′s.
The big question is how does this play into working with buyers? Simple, less inventory means buyers may be sitting on the sidelines *waiting* till the listing that fits their search criteria suddenly comes on the market. It's going to take a highly organized agent to:
- Stay on top of their niche market and keeping buyers apprized of the market inventory as the decrease continues.
- Use a CRM that can keep buyer/renter profiles updated.
- Consistent follow up on clients buying.
- A commitment to spending more time educating buyers and renters (future buyers) with proper market expectations.
- Multiple websites/micro blogs for maximum exposure in the market and optimum lead capture/follow up system.
The agents who can properly articulate the current market conditions to buyers out there will be the agents that make 2012 their best year yet!
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