Our Market Hasn't Hit Bottom Yet

All of this data is based off of statistics provided by the Minneapolis Area Association of Realtors through April 2007. 

This is a year of wild extremes:

• Homes priced right and in good condition are often selling quickly, some with 2 or 3 offers.  An overpriced home that’s brought into the right price point can “pop” as well.
• Some houses get 3 or more showings a week, some get 1 or 2 per month.
• Foreclosures have doubled from last year to approximately 2% of the market but because banks are absolutely horrible to negotiate with, some buyers are ignoring the market.
• New construction inventory is falling rapidly as builders dramatically reduced their units in the last 18 months.
• Interest rates have hovered in the 6% – 6.25% range, historically a great rate
• Median sales price fell to $222,000 in the Metro in April, down 3.5% from April 2006.
• Because of low rates and falling prices, the Housing Affordability Index is up 7.6% over April 2006.

These figures point to both good and bad in this market, which has made it hard for Realtors and consumers to figure out which way this market is going.  While I still believe that we hit a psychological bottom last year, we’ve have not yet hit a statistical bottom, and I’m not sure when we will.  Here’s why:

New Listings from Jan-April 2007 are down 1.2% from 2006 but Pending Sales are down a total of 11.9% in the same period.  Because of this, inventory is still climbing steadily, up 10.7% in April 2007 compared to a year ago.  This brings current inventory to an 8.5 month supply, up 32.8% over last year and up over 100% since 2005!

Until we stop increasing inventory on a year-over-year basis and see Pending Sales start to strengthen, we will continue to see a weakening market for sellers.