The spring market is in motion! According to our statistics, appointment activity is up nearly 17 percent over the first quarter of last year. While some of this activity can be attributed to interest rates going to record lows, let’s not forget that people are taking advantage of great deals among distressed and traditional properties.
There are many multiple offer situations in our market. This is encouraging because it means consumers are recognizing the historic opportunities present in the combination of low prices and low interest rates. Buyers have learned quickly that they may not get a second shot at a great deal.
Many economists are saying that housing is showing more hopeful signs of recovery than other market segments. We see an ongoing decline in new inventory coming on the market and pending sales continue to be on the rise. In fact, pending sales in the Twin Cities market have been up for the past 10 months straight. While there are some ongoing challenges, it’s clear that people are seeing the value of investing in real estate once again.
Edina Realty in the Marketplace
· YTD March 2009, homes priced under $250,000 comprised 77.5 percent of our total pending sales compared with 67.6 percent in 2008.
· Homes priced from $250,000 - $500,000 made up 18.6 percent of our total pending sales.
· Homes priced at $500,000 and above made up just 3.9 percent of our total pending sales.
· In the first quarter, bank-owned properties accounted for 41.8 percent of our business compared to 16.6 percent this same time last year.
· The median sales price of Edina Realty’s pending sales is $165,000 compared with $200,000 in March of 2008.
· Edina Realty continues to lead the market with 21.4 percent market share in closed transactions; our closest competitor has 17.8 percent market share according to the Regional Multiple Listing Service of Minnesota (RMLS) for the previous 12-month period.
The Marketplace
As of April 3rd, mortgage rates fell to 4.75 percent. That means, on an average $250,000 home loan, a consumer can expect to save $276 per month – more than $99,000 over the life of the loan – at a 4.75 percent rate versus a 6.5 percent rate that we had in July 2008.
13-County Metro
According to the Minneapolis Area Association of REALTORS® (MAAR):
· The median sales price in the 13-county metro area in March was $154,125 – down 23 percent from 2008. This can be largely attributed to the drag distressed properties have had on the market. It’s important to keep in mind that traditional homes are experiencing declines of around 5 percent.
· Nearly 60 percent of first quarter pending sales have been lender-mediated foreclosures and short sales, while just 37.1 percent of new listings have been lender-mediated. The fact that sales of these properties are out-pacing new listings of distressed properties is a hopeful sign.
· Pending sales were up 13.7 percent from first quarter 2008.
· Active listings were down 13 percent from first quarter 2008.
· New listings were down 14.2 percent from first quarter 2008.
· Average days on market were at 150 compared with 165 this same time last year.
According to statistics compiled by the Keystone Report for the Builders Association of the Twin Cities (BATC), new residential building permits issued in March increased by 5 percent over February.
Looking Ahead
While we see several hopeful market indicators and our pending sales are slowly and consistently moving in the right direction, we anticipate many challenges in 2009. We are faced with a growing unemployment rate and a continued decline in the median sales price. We may also be faced with additional foreclosures as people lose their jobs. Buyers continue to respond to low interest rates and the $8,000 tax credit!
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