Record low mortgage rates helped make last month the best July on record for home sellers in the Twin Cities with sales — and prices — up double-digits.
During the month buyers signed 6,866 purchase agreements, a 10.3% increase over last year, according to new data from the Minneapolis Area Realtors and the St. Paul Area Association of Realtors
"July was an undeniably strong month, particularly in light of some of the headwinds," according to Linda Rogers, president of Minneapolis Area Realtors. "Most areas saw sales growth and other improvements, including both large core cities, where buyers continued to outbid each other."
New listings increased by less than a full percentage point compared with last year, well short of what's needed to satisfy demand. With the number of buyers outpacing sellers, the number of houses on the market at the end of month was down by nearly a third compared with last year. On average sellers got 100.01% of their original asking price, the second highest figure on record since 2003.
That meant sellers in some areas got more than one offer on their house, often for $10,000 to $20,000 more than they were asking, causing the median price of all closings to increase 10.4% to $312,500.
Rising home prices have been offset slightly in recent months by declining mortgage rates, which fell to record lows last month, but a shortage of listings in some parts of the metro kept many on the sidelines.
"We're not interested in being homeless," said Cecilia Mische, who is contemplating whether to upgrade from the house she bought in northeast Minneapolis eight years ago. "We have two dogs and we're in the middle of a pandemic and we don't want to deal with more stress than we need to."
Mische said she loves the house and her neighborhood, but now that she and her fiance are both working from home they've feeling the itch for a house with more space and a bigger yard.
Everything that suits their needs in the same neighborhood, which is on the periphery of downtown, is selling for more than double what she paid for her house. They're considering building, but lot prices in the inner-ring suburbs that would keep her close to things she loves to do in the city are too expensive. A buildable lot she's smitten with in Roseville will cost about $200,000 and putting a house on it will more than triple the total price.
So for now, she and her fiance are considering their options, including staying put. If they don't sell, they'll join the growing ranks of homeowners who are feeling trapped by a highly competitive market in both the core cities and most suburbs. For example, in Minneapolis sellers received offers that were on average 100.8 % of their list price compared with 101.3% in St. Louis Park.
Though sales are up in the Twin Cities, the pandemic and rising crime rates in the core cities has injected a certain amount of uncertainty among a contingent of buyers who are making elective moves. Last month sales of free-standing houses increased more than 7 % while annual sales of condos and townhouses declined. Multifamily housing tends to appeal to corporate relocation buyers, who are in short supply these days, and empty nesters who are likely more concerned about living in buildings where they share common space with other residents.
Mische's agent, Shawn Korby of Keller Williams, calls the housing market this year "an anomaly." August has been nearly twice as busy as July, he said, and he expects pent-up demand from a slow spring to flow into fall.
Though the mood is optimistic, especially for sellers, it's a very challenging time for buyers, he said, and that makes it all the more difficult for buyers and sellers to make decisions.
"The perfect person for this market is someone who needs to sell, but doesn't have to buy," he said. "The name of the game is helping buyers avoid limbo."
