The inventory squeeze is creating a drag on home sales in the Twin Cities metro area, according to new data from the Minneapolis Area Association of REALTORS®. There are simply not enough homes for buyers to purchase.
A slight uptick in new listings over the previous year offers a little hope, but not a lot of relief for buyers who are running into tough competition and rising prices.
Key insights
(All comparisons are year-over-year)
- New listings in March: 8,030 — up 1.3 percent
- Inventory of existing homes for sale fell 20 percent
- Pending sales fell 3 percent
- Median sales price: $237,500 — up 7 percent
- Average days on market: 73 — down 14 percent
Economic check up
- Minneapolis-St. Paul area unemployment rate: 4.2 percent
- Mortgage rates fell to the lowest point in 2017
Inventory is a problem nationwide
The story of dwindling listings and high buyer demand is far from unique. Many areas in the country are experiencing inventory shortages for a variety of reasons, including:
- The average homeownership tenure has increased to nearly eight years—compared to about 4 years pre-recession.
- Investors own a larger share of homes; they tend to keep properties longer than typical owners.
- Sellers are concerned about facing a tough buying market once they sell their current place.
Consult a professional
For homeowners who want to move but are wary of facing the market as a buyer, a REALTOR® can advise solutions such as:
- Reverse contingencies
- Short-term transitional housing
- Rent-back agreements
Consider new construction
- The inventory of new construction homes is the highest it has been in five years.
- Home building permits were up nearly 30 percent over last year.
- Building could be faster than you think, especially if you opt to use production or semi-custom builders.
Let your Realtor help you make a competitive offer
When buying in a sellers’ market, it’s important to work with an expert Realtor. They can help you make an attractive offer using smart tactics including:
- Make your highest and best offer first
- Nix contingencies (except the inspection)
- Get pre-approved and bring your best down payment
- Be flexible to what the seller needs for closing dates
- Write a love letter to the sellers
