Entry-level home buyers outnumbered sellers in the Twin Cities metro in October, boosting prices and stifling sales of houses priced at less than $300,000. For those willing to spend more than that, it was a radically different story — sales and listings of move-up properties increased double-digits.
During the month there was a 16% increase in sales of houses priced from $300,000 to $500,000, and a nearly 20% increase in closings on those priced from $500,000 to $1 million, according to a monthly sales report from the Minneapolis Area Realtors.
Low mortgage interest rates, a healthy economy and rising rents are boosting demand — and prices — for move-in ready houses in the most desirable locations. The median price of sales during October increased nearly 6% to a record $280,000.
"Interest rates are boosting buyer confidence," said Todd Urbanski, president of Minneapolis Area Realtors, in a statement. "Consumers may also be realizing that some of their fears around the market and economy could be overstated."
Though new house listings increased 3.8% last month, the starter market remains woefully undersupplied. At the current sales pace there were enough houses throughout all price ranges to last 2.3 months, an 8% decrease compared with last year at the same time. The market is considered balanced when there's a five-month supply of houses on the market.
Despite the dearth of starter homes, total sales in the Twin Cities so far this year are still on track to outpace 2018. And buyers aren't wasting any time. During October it took on average 46 days to sell a house, 4.2% fewer than last year.
And when the houses are in top-notch condition, some sellers are still getting multiple offers.
"In this price range and in certain parts of the Twin Cities this is still happening," said Steve Schmitz, a sales agent with Coldwell Banker Burnet.
Schmitz said that within a day of listing a four-bedroom stucco Tudor-style house in south Minneapolis for $399,900, he got more than a half dozen offers all for more than the asking price.
"I expected it to sell quickly and probably with more than one offer, but I didn't expect seven," he said.
Schmitz said that while it's still considered a seller's market in all price ranges, buyers are still finicky and unwilling to overpay.
"Sellers usually have to do quite a bit to get a home ready for sale," he said. "Many people, if not most, want it done and don't want to take on the project unless they're getting some kind of deal."
Schmitz said Brooke Bundy, the seller of the Tudor in south Minneapolis, is a professional designer with an eye for what buyers today want.
Though Bundy and her husband weren't planning to sell as quickly as they did — a job transfer drove the decision sooner than she expected — she nonetheless considered a future sale when planning the remodel.
"We chose finishes that we like, but that also have a mass appeal," she said. "We were really thoughtful in our decisions and made sure that all the finishes complemented the style of the house while also being current — meaning looks that people are pinning and sharing right now."
