Twin Cities Housing Market: May - 2020
The median home price in the Twin Cities moved past $300K for the first time ever in April setting a new all-time high of $305,000. What started out the year as a low inventory level was exacerbated by COVID-19’s impact on new listings.
The lower price brackets continued to lead the way with much of the single-family price inflation coming in price segments under $350K but higher end and luxury segments where new construction inventory is not a primary competitor also performed well.
Mortgage Forbearance in the US: As of June 2nd, 2020, 4.73 million homeowners, representing 8.9% of all mortgages in the U.S. are in COVID-19 mortgage forbearance plans. If you add in the 2.5% default rate that we had heading into the COVID-19 crisis a total of 11.4% of all mortgages in the US are not currently being paid. The last time we had that many Americans behind on their mortgage was back in 2010 during the height of the last financial crisis. It is of course widely believed that most of the 4.73 mortgages in forbearance will be brought current once the COVID-19 related economic crisis ends but this is something that we will be keeping an eye on.
COVID-19’s Impact on Showing Activity: After other states had announced official lock downs prior to Minnesota’s lockdown, there was a two-week period from about March 13th until April 2nd where a significant number of home buyers and sellers were in limbo waiting on Minnesota’s executive order and on clarity about how the order was to be interpreted which lead to a significant but temporary contraction showing activity. Since April 2nd, showing activity has recovered and is now mirroring year over year showing trends which leads me to believe that COVID-19’s impact on showing activity has largely resolved.
Mortgage Rates: Mortgage rates have been falling in May and currently sit at a new record low of 3.18% for the average 30-year fixed mortgage.
Home Builder Confidence: The NAHB housing market index in the US rose to 37 in May of 2020 rebounding slightly from 30 in April which was the lowest read since June of 2012 and above market forecasts of 35. Still, the sentiment remained in the negative territory as the reading came below 50. The index stood at 66 in May 2019 and hit a high of 76 in December.
Closed Sales: We had 4,626 residential closings take place during April. That was up 10%, month over month as expected and up 4% year over year.
The Median Home Price: The Twin Cities’ median home price moved up 3% in May to $305,000. That is up 9% year over year and as stated earlier, is a new record high.
New Listings: This is where we start to see COVID-19 showing up in the data. 5,992 residential properties were listed in April. In a month which typically experiences a strong increase in new listings, that is down 19% month over month and down 23% year over year.
Homes for Sale: The home inventory level remained completely flat in April with 9,401 units. That is down 12% year over year and is the lowest inventory level on record for the month of April.
Pending Sales: Only 4,619 single family homes and condos went under contract in April. In a month where home sales are typically rising dramatically, that is down 10% month over month and down 20% year over year.
This concludes my housing market insight for the month of May. Please don’t hesitate to connect with me if you would like to have a more in-depth discussion regarding the conditions in your specific market segment or neighborhood and I thank you for taking the time to watch this video.
By Nick Leyendecker, Founder | Broker | REALTOR®