MinnEcon readers know we’ve been hearing from Realtors and others connected to the local housing market that we are in a summer of discontent.
Ordinarily upbeat folks who make their livings in real estate and mortgages started feeling the effects of a “hangover” from the end of the federal home buying tax credits.
New data the Minneapolis Area Association of Realtors are confirming those down feelings with numbers.
From the Minneapolis Realtors’ July Housing Outlook:
The inventory of active single-family (detached) homes is now 19,722, up 8.4 percent from a year ago, and the number of pending sales over the last twelve months has declined by 0.7 percent.
As a result, this segment is the only property type showing an increase in Months
Supply from a year ago.
Since the expiration of the tax credit, home sales have particularly slowed in the
lower price ranges–a segment that up until recently had been showing very
strong demand. Home sales under $120,000 (the lowest price range we track)
are down 3.7 percent over the last 12 months. Inventory is up in that price range
by 25.5 percent.
Home builders have been making larger price concessions in recent months to
spur sales. The Price Per Square Foot (PPSF) of new construction homes has
declined by 11.5 percent in the past 12 months, while previously owned homes
have seen their PPSF hold relatively steady.
The Realtors’ most recent weekly analysis shows the drop off that began in May after the home buying credits ended.
For the week ending July 10, the number of pending sales held steady with the week before but remained well behind last year’s pace. The 545 signed agreements during the week represent a drop of 45.9 percent from last year at this time.
That’s the tenth consecutive week of year-over-year declines in buyer demand, a period that coincides with the loss of the federal tax credit for first-time home buyers…The July Supply-Demand Ratio of 7.44 means that there are 7.44 houses for each buyer this month, up 46.9 percent from the mark of 5.06 seen a year ago.
The market will improve. The problem is this is supposed to be the big home buying and selling season in Minnesota.
MPR Reporter Annie Baxter a couple weeks ago reported on the plunge in pending Twin Cities real estate sales.
Here and nationally, even record low interest rates can’t attract potential home buyers.
Of course, to buy a new home for the first time or to upgrade your home, you need income, which for most of us comes from a job. And we are not growing jobs yet consistently in this recovery.
Seems like ancient history. But it was only December when the Minneapolis Realtors talked about the market being on “recovery road.”
I’d love to hear from MinnEcon readers about which mile marker we’re at on recovery road.
Post something below or drop us a line directly.