As summer settles in for Minnesota, three trends continue to dominate the residential real estate market.
Trend 1: Home Values Continue to Rise
Home values throughout the state are up with a statewide increase of 5.7% over last year (May ’16- May ’17). A look specifically at the West Metro is even more positive with significant upticks in median sales price in three of four major markets.
Even the laggard (Plymouth) has been on a growth trajectory this year despite a negative number for May.
Median Sales Price Changes
|
|
Eden Prairie |
+13.7% |
Maple Grove |
+ 8.4% |
Minnetonka |
+ 16.0% |
Plymouth |
-8.4% |
Trend 2: Inventory Remains Low as Demand Outstrips Supply
Low inventory continues to pinch buyers, particularly among those seeking homes in the $300k - $500k market segment. The housing shortage that began last year is only continuing, with inventory trailing 2016 by nearly 20% across the board in the west metro. Buyers are struggling to find homes that fit their family at a price point they can afford.
|
|
Total Homes Listed
|
Total Homes Listed
|
Change |
Eden Prairie |
326 |
249 |
-23.6% |
Maple Grove |
308 |
293 |
-4.9% |
Minnetonka |
269 |
219 |
-18.6% |
Plymouth |
397 |
310 |
-21.9% |
Maple Grove while down, trails the other major cities in the region based largely on new construction listings.
Trend 3: Mortgage Rates Begin a Slow March Up
While rates are still low in a relative sense, they are trending up based on recent Federal Reserve activity. Even more changes may be coming as we continue to move off of historic lows. A look at the numbers shows that nationally rates are now consistently over 4% even with buyers paying an average of 0.5% in points.
Source: Federal Home Loan Mortgage Corporation http://www.freddiemac.com/pmms/pmms30.html
What does this mean for buyers?
For those seeking homes, these numbers mean more of the same. A tight competitive market will stay that way. This makes having a clear action plan paramount to a successful home search.
Action Items:
- Understand the nuance- know what it takes to land a house in a hot market
- Define success- look at a variety of homes at the outset of your search to clarify what you are after and what is a fair price
- Be ready to offer- obtain a credit pre-approval and be ready to write a competitive bid that is free from contingencies
- Work with a pro- engage an advocate who can not only submit your bid, but work with the selling agent, read the situation and win a competitive bid situation
What does this mean for sellers?
For those considering selling the time may be right to list. Home values are up and rates remain low. Where both land long term is anyone’s guess, but the empirical evidence seems to support higher rates which will almost certainly impact valuations.
Action Items:
- Seek a professional consultation- only an agent with local expertise in your search area can help you understand your particular situation and the current market
- Valuation- obtain a home appraisal from a reputable agent to help you to understand the value of your home and how you might compete with existing inventory
- Consider some updates- maximizing sales price means sensible and cost effective updates to maximize the value of your home
- Price your listing carefully
The Bottom Line
At Zachary Adams and Associates we have successfully collaborated with buyers across the spectrum for all of their real estate needs. We are focused solely in the west metro and have facilitated hundreds of transactions, bringing clarity, expertise and wisdom to each and every one. Contact us today at 612-656-9647 to get started.
Check out our Summer 2017 buying and selling guides for even more information
