University of St. Thomas Housing Market Analysis for October 2018 – Real Estate Matters
Home Prices, Housing, Housing Trends, Minneapolis / St. Paul Housing, Real Estate Trends, Residential Real Estate, Twin Cities Real Estate

University of St. Thomas Housing Market Analysis for October 2018

Twin Cities Rents Continue To Increase As The National Average Decreases

Median Home Sale Price Up 8.6%

Number of Homes for Sale – Beginning to Stabilize?

 

Twin Cities Rents Continue To Increase As The National Average Decreases                    In September, the Zillow national median rent index fell 0.2% year-over-year to $1,440, the first decline recorded since July 2012. However, during the same period the Twin Cities median rent index bucked the national trend, increasing by .5% to $1,638. Despite the addition of a near record number of new rental units the Twin Cities rental market remains one of the tightest in the nation. The outlook for rent growth next year is showing some signs of moderation. The expectation for new apartment supply in some sub-markets will peak as the year comes to a close and then are expected to flatten in 2019. Pockets of increasing supply may persist but demand is expected to remain strong. Any slowdown in rent growth will be good news to renters, putting more spending money in their already stretched pockets. There has been growth in the percentage of renewed leases, as well as a historically low turnover rate. This is a positive sign for apartment owners, as renters are choosing to remain in their units resulting in lower vacancies.

For the first time in six years, the median rent nationwide is slightly less than it was 12 months earlier. In the Twin Cities rents climbed steadily from 2013 through the end of 2017. Since then the rate of growth has moderated considerably. (See the chart above)

October Market Update

The median sale price increased 1.2% between September and October. The year over year median sale price of homes sold in the Twin Cities increased by 8.6% to $265,000. This is the highest year over year increase seen since earlier this year. This rate increase continues to exceed wage growth in the Twin Cities region. While good for sellers, higher median sale prices combined with higher interest rates will continue to make home ownership less affordable for many homebuyers.

The number of closed sales increased 3.8% between October of 2017 and October of 2018, reversing a trend of decreasing year over year sales that has been observed for 8 of the last 12 months. The number of pending sales decreased by 1.4% and the number of new listings decreased 7.8% compared to the same period last year. The combination of higher closed sales volume and the lower number of new listings will continue to put upward pressure on median sale prices in the coming months.

 Number of Homes for Sale – Beginning to Stabilize? 

The number of homes available for sale was down slightly (1.8%) compared to last October. This year 11,758 homes were available compared to 11,978 last year. Over the last four months the number of homes for sale appears to be stabilizing. Although still historically low, the number of double digit year over year decreases that has been observed over most of the last 3 years appears to be moderating.

For more information, visit the Shenehon Center’s complete report for October 2018 at http://www.stthomas.edu/business/centers/shenehon/research/. The report is also available for free via email from Tousley at hwtousley1@stthomas.edu

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