The University of St. Thomas’ Shenehon Center for Real Estate released their May Residential Real Estate Index, and in sum, the supply shortage situation still hasn’t let up. In fact, the number of homes sold in May 2017 is actually down from last year’s number (6,265 in 2017 compared to 6,314 in 2016), and the report thinks that drop can be attributed to the lack of home supply (down almost 17% from last year). Meanwhile, the demand certainly hasn’t decreased, causing the “upward pressure” on sales prices that everyone’s talking about. This situation has set the stage for new sales price records; the traditional median sales price increased over 4% from last year’s value to a shocking $254,500.
The Index also points to a study by Genworth Mortgage Insurance, saying that first time homebuyers accounted for a whopping 38% of home sales in Q1 2017, which is an increase of 11% over their share of Q1 2016’s sales. Just like others, first time homebuyers are encouraged by the low interest rates and the strong economy, according to the report. Of course, people buying a house for the first time also usually tend to bring their own set of baggage, so to speak. Their student loans can be an issue on multiple fronts when it comes to purchasing a home, including qualifying for a mortgage, having a sizeable down payment and simply being able to afford another regular payment, as stated in the Index. If they’re able to get past those hurdles, they face the daunting challenge of finding an affordable home in the right location before someone else. And timing is really everything in this market; the Index cites average days on market as 51 days for May 2017, a decrease of 15% from last year’s already low number. With all that being said, it seems to still be going okay for quite a few first time homebuyers, given their large share of Q1’s market.
Interestingly, on the opposite side of the coin, the Twin Cities is facing a shortage of skilled workers which is having a negative impact on the already low housing supply, as stated in Jim Buchta’s recent Star Tribune article. While some eager citizens are held back from home ownership by the magnitude of their student loans, most likely accrued while obtaining a 4 year degree, additions to the home supply are hindered and made more expensive by lack of qualified constructions workers, technicians and other specialists, many of which can be taught at a trade school or technical college without the hefty price tag. Of course, we’re not here to harp on life choices. What we are here to do is help connect our clients with their new dwelling, retreat, and gathering place. So, if you’re ready to test the waters, call (952-258-3100) or email!
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