We’re running out of analogies and metaphors to try and explain the struggles of the Twin Cities housing market.
Last week’s market update from the Minneapolis Area Association of Realtors described the housing market as stuck “in a sort of frozen state” compared to last year, when federal tax credits were driving deals.
Today, in its newest report, the association’s president says the group was no longer able to give an “apples-to-apples” comparison because last year home sales got a boost from the home buyer tax credit.
There’s no doubt the federal home buying incentives front loaded a lot of purchases. But the current malaise is deeper than expected.
Now one indicator that had returned to normal — the supply of housing for sale — is out of whack again.
Today’s data show 8.6 months of inventory for the entire Twin Cities market, “up 30.3 percent from the 6.6 months of supply last year at this time,” the association noted.
“Negotiations also slid back toward buyers for the third consecutive month. The percent of original list price received at sale declined 3.2 percent to 90.9 percent. The last time this metric was this low was April of 2009.”
The inventory number is much greater than the five to six month supply typical of a market in sync.
Here’s the Realtors’ inventory graph from last week (click for a larger view):
It seems like ancient history, but we recall the Minneapolis Realtors in December talking about the market being on “recovery road.”
While we’re not at the bad old days of 2008, the climbing inventory and sliding list price is good only if you’re looking to buy a house.
If you’re waiting for a normal market and the economic positives that come with it, it’s not a good sign. The reality is that the “recovery” is going to have to save the housing business this time around.
“Private companies are hiring,” Minneapolis Realtors President-Elect Pat Paulson said, in a written statement. “But we need several months of real job growth for housing demand to improve.”
What’s the housing market like around you? Post below or drop us a line directly at MinnEcon.