Twin Cities home prices rise again amid tightening supply
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Twin Cities home prices climbed again in May as the seller's market continues.
The Minneapolis Area Association of Realtors reports that the median sales price rose to about $194,000, up 15 percent from the same month last year. It was also the highest median price since August 2008.
Home sales, both pending and completed, spiked last month. And sellers needed less time to sell their properties than they did a year ago. They also got a greater percentage of the original list price than they did in May of last year.
With strong demand from buyers, the number of homes hitting the market jumped by 26 percent over last year. But the overall supply of homes for sale is still at very low levels, prompting bidding wars on some properties.
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Real estate agents, in turn, are waging a campaign to get more homes listed. Some are calling or sending flyers to potential sellers.
Others, like Sophia Thu Pham of RE/MAX Results, are going out knocking on doors. Pham said she tries to have a light touch when she does so.
"I like to have a medium knock as though at friend's house — not like cops are at the door," she said.
Pham was knocking on doors in a condo development in Maplewood earlier this week. Her clients, a young professional couple, wanted to buy a place there. They had already put in a full price offer on another condo in the development but were outbid.
Pham explained her client's situation to the people on whose doors she knocked.
"I promised my buyers I would go knock door to door today to ask if you know of anyone or if you guys yourself are thinking of making a move," she explained.
Many showed immediate interest. Others, like Alicia Caskinette initially sounded skittish about selling their condos. When Pham asked Caskinette what she had heard recently about the housing market, Caskinette said, "Not much, probably that it's not good."
But after Pham explained how much the market has improved for home sellers, Caskinette agreed to meet again and discuss her condo's value.
There are a couple of other factors that could be affecting supply and demand in coming months.
Many sellers are still underwater on their mortgage, meaning they owe more than their homes are worth. However, the housing research firm CORELOGIC Wednesday reported a decline in the number of Twin Cities homeowners underwater in the first quarter of the year.
The report says 18 percent of metro homeowners were underwater in the first three months of the year, compared to 19 percent during the same quarter last year.
As more houses rise to the surface their owners may be more inclined to put their homes on the market, especially with home prices posting hefty gains in recent months. So the tight supply may ease.
Also interest rates are starting to rise. That may prompt potential buyers to come off the sidelines to lock in a mortgage before interest rates rise even further. But it could also encourage people interested in a new house to put their homes on the market and boost supply.
Whether any of these factors make it easier or harder to sell a house remains to be seen, but at the moment, there are no signs it's becoming any less of a seller's market.
