June was one of the best on record for home sellers in the Twin Cities, according to new monthly sales data. Last month, buyers signed 6,819 purchase agreements, 6% more than last year and the most during any June in nearly two decades, according to a monthly sales report from the Minneapolis Area Realtors.
That gain was fueled in part by pent-up demand from April and May, a topsy-turvy spring market when sales declined by double-digits amid a prolonged government shutdown and metro-wide protests following the death of George Floyd in Minneapolis.
“I call it ‘displaced demand,’ where sales activity is shifted into later months,” said David Arbit, Minneapolis Area Realtors’ director of research. “Record-low mortgage rates are a big motivator, especially for first-time buyers who are payment sensitive.”
Mortgage rates have been declining incrementally all spring, helping offset rising home prices spurred in part by a lack of inventory. On Thursday, Freddie Mac said the 30-year fixed-rate mortgage averaged 2.98%. It’s the first time rates have fallen below 3% and the lowest rate in the survey’s 50-year history dating back to 1971.
Motivated by low rates, buyers are competing for a dwindling number of listings. New listings have been declining for the past three months with buyers outpacing sellers in some parts of the metro area and in certain price ranges.
At the current sales pace there were enough listings on the market to last less than two months during June across all price ranges (a balanced market has five to six months of supply), but the availability of listings varies dramatically by price range. For houses priced at more than $1 million, for example, there were enough listings to last more than 11 months.
In Minneapolis and St. Paul, fewer homes hit the market during June compared with last year, but the new listings were a slight increase from May. In all suburbs, new listings during June were down from last year and the previous month.
During June, sellers got nearly 100% of their original asking price across the metro area, causing the median price of all closings to hit $305,000. That tied a record high set in March and up more than 5% year-over-year.
Pending sales in all areas of the metro area increased during June from the previous month and last year except in Minneapolis, where pending sales declined slightly in June compared with June 2019.
Home buying in the Twin Cities typically peaks in late summer, then tapers as kids return to school and temperatures drop, but an abundance of multiple offers suggests that there are plenty of willing and able buyers who will keep shopping well into fall. But with economic headwinds looming and the threat of a winter wave of coronavirus infections, it’s unclear how long the housing market will retain its resilience.
“As of right now, I don’t see any signs of the market slowing down,” said Kathy Borys of Coldwell Banker Realty. “The unknown is how the election will affect the market. I think that is more of an unknown than the stability of the market in the Twin Cities.”
Borys expects the market to remain strong well into fall, especially in inner-ring suburbs such as St. Anthony, where Dustin and Alisa Gingerich were recently both buyers and sellers. With three kids, they’d outgrown the two-bedroom house they bought in 2008 before starting a family. With mortgage rates low and houses in their neighborhood selling quickly, they decided it was a good time to make a move.
Just after Easter they started shopping for a bigger house in the same city so their kids wouldn’t have to change schools. They quickly found one they both wanted. They toured it the day it went on the market and made a full-price offer the same day. After touring it again the next morning they upped their offer, which was one of four bids on the house, by $11,000 and the sellers accepted.
Though their options as buyers were limited, Alisa Gingerich said being a seller in this market was far more difficult than being a buyer in part because of their emotional connection to their midcentury-modern house and their fear that it wouldn’t be perfect enough for the market.
They listed the 2,120-square-foot house in late June for $309,000 and on the first night had two showings and at least 10 scheduled for the next day. The first person who toured the house made an offer for nearly 10% more than they were asking. Though they could have waited for a potentially higher offer from those scheduled to see it the next day, they canceled those showings and took the offer.
The decision to sell to the first person who looked at their house was made in part because the buyer had such an appreciation for the house’s unusual features, including an original Thermador oven and vintage bathroom tiles, Gingerich said,
“This gentleman was the perfect buyer for the home,” she said. “I’m sure that made some folks mad, but we had to do what’s right for us.”