Rising real estate prices, record low interest rates and a low inventory of homes for sale made 2013 a good year to sell a home in Minnesota and Wisconsin, Edina Realty reported.
The year 2013 was a good one in Minnesota and Wisconsin, as the real estate market continued to experience a strong and steady recovery. Edina Realty reported all signals indicate that 2014 will continue to be a seller’s market as the conditions are ideal for selling a home, while housing affordability remains high for potential homebuyers.
For the 14th year running, Edina Realty reported it led the market in both traditional home sales and lender-mediated sales with 20 percent market share in the 13-county Twin City metro area.
Last year, Edina Realty handled more than 35,000 pending transactions (buy and sell side) for a total of $8 billion in pending sales volume. Edina Realty also led the market in listing inventory.
The median closed sales price of a home in the 13-county metro area rose 14.4 percent to $192,000 according to data from the Minneapolis Area Association of Realtors (MAAR).
A key factor in the 2013 real estate market was the record low inventory of homes for sale, which dropped 10.5 percent from 2012 to the lowest level in 11 years. The average time on the market was down 29.1 percent to 83 days and the month’s supply of homes for sale also dropped 18.8 percent to 2.6 months, another 11 year low.
Overall, the number of homes sold in the 13-county metro area rose 8.8 percent during 2013, according to data from MAAR. Only 26.4 of all closed sales were lender-mediated, down from 39.7 percent in 2012 and 50 percent in 2011. This decrease is yet another sign that the market is fully in recovery.
“Last year, sellers realized that real estate prices were on the rise, and many were surprised by how much their home was worth,” said Bob Peltier, president and CEO of Edina Realty Home Services in a news release. “Even some homeowners who were ‘underwater’ or who didn’t have much equity in their homes were able to finally make their move. We also saw an increase in multiple offers, another strong indicator of a seller’s market.”
Potential homebuyers will likely face a competitive market in 2014 as well due to the shortage of inventory of homes for sale, Edina Realty reported.
Edina Realty reported the good news for homebuyers is that interest rates are expected to stay low, which translates to continued affordability even for first-time homebuyers. Fewer investors are in the market buying up inventory, which will make room for traditional buyers. Limited inventory will contribute to an increase in new construction, leading to more options for homebuyers, Edina Realty stated.
“Even former homeowners who lost a home to foreclosure or sold a home short may be eligible to buy again this year,” Peltier said. “We expect more of these buyers to wade back into the market this year.”
According to CoreLogic, 9.6 percent of mortgages were “underwater” in the third quarter of 2013, meaning the homeowner owes more on the mortgage than their property is worth. However, this number is down from 16.9 percent during the same period in 2012, and the trend is expected to continue in a positive direction.
Low unemployment is also helping to drive the real estate market recovery, and Minnesota’s unemployment rate, a seasonally adjusted 4.6 percent, is among the lowest in the country. Peltier said buyers still need to be prepared with proper financial documents in order to secure financing.
Peltier said he expects to see home prices continue to rise around 4 to 7 percent this year. “We’re anticipating a very robust market this spring, primarily driven by traditional home sellers who waited for the right time to sell,” he said, adding that even the price of upper bracket homes will continue to rise. Last fall, Edina Realty reported that sales of upper price bracket properties — homes valued at $500,000 and above — were up nearly 30 percent and upper bracket homes are also selling more quickly than in previous years.