The real estate spring market has kicked off with record short supply, according to a number of media outlets. “Presidents Day weekend is traditionally seen by real estate agents and homebuilders as the start of the spring housing market — the busiest time of year for home sales. The number of listings always rises, and it will this year as well, but inventory is already so low to begin with that even the new listings will not be nearly enough,” reports CNBC.
The national trend is true locally as well. On Tuesday, a report from the Saint Thomas Real Estate Program has demonstrated that the availability of Twin Cities housing has hit a 10 year low. Additionally, the metro median home price was $215, 000 at year end in 2015, 10.4 percent higher than January 2014.
Says Judy Shields, President of the Minneapolis Area Association of Realtors: “I think there is extra buying pressure right now. There’s a lot of people out there looking and not a lot available, so it just magnifies the problem.”
While promising news for sellers, this is not to discourage buyers. Preparation is the key to winning a dream home. Says Herb Tousley, Director of the University of St. Thomas Real Estate Program, “if you are looking for a home, be ready,” Tousley said. “Get your financing pre-approved. If you find something you like a lot in a good neighborhood be ready to act on it right away.”
Shields and Tousley cite, as reasons for high demand and low supply:
- the concern of increased interest rates,
- people looking to buy rather than rent, and
- businesses recruiting out of state talent.
Mortgage Rates Approach Record Low
The average rate on a 30 year fixed mortgage is in freefall, reports CNBC, despite the recent minor hike in interest rates. They explain: “Mortgage rates are falling because investors are flooding the U.S. bond market. Mortgage rates follow the yield on bonds that loosely follow the 10-year Treasury. Investors are buying bonds as a safety play in a highly volatile and largely negative stock market. Signs of weakness in the U.S. economy, in addition to trouble in overseas markets, pushed the yield on the 10-year Treasury to its lowest level since 2012, and mortgage rates followed south.”
“…investors are looking for safe havens as global stock markets and oil prices nosedive,” writes Lorraine Woellert, contributor to Forbes. “Money is pouring into Treasury bonds and other safe investments, which helps drive down mortgage rates.”
Companies Flocking to the Heart of the Twin Cities
Companies, not just residents, are flocking to the urban hearts of the Twin Cities, reports the Minnesota Real Estate Journal. Both residents and tenants are drawn to live-work-play areas, like the one expected to come to the Ford Plant site in Highland Park, Saint Paul. “Tenants are focused today on downtown CBDs or suburban markets that have a lot of amenities. They are going after these live-work-play environments. There is a lot of that in downtown [Minneapolis/St. Paul], so companies are migrating toward that market. They want to attract the best employees, and to do that they need a presence in the downtown.”