Lakes Sotheby's International Realty SHIPMAN + KOLKMAN PARTNERS

Supply and Demand are a driving force in any market. In the real estate market, supply and demand are currently the most important single factor to consider.

Quick Caveat - I think the current market is a good one. I represent buyers and sellers. In this marker my clients are by and large getting better, more "fair" deals. Buyers can carefully consider their choices, and sellers are forced to be competitive for buyers business. This is a great time to be in the market, buying or selling because it's fair.

People often blame our current market conditions on the boom, or the credit crunch, over building, foreclosure rates, etc. But looking back at the number of sales and listings over time it's easy to see the root cause of the current market.

When the "boom" started, when appreciation rates really started rising fast (1999/2000) there were darn near as many sales, as there were listings. That's amazing. It means darn near every seller who put a home on the market sold it, almost no one took it off the market because they didn't get the price they wanted, or changed their mind, or for any other reason. Everything sold, demand was high, and supply was low. Prices went up.

By 2005 the number of homes for sale was far above the number listed. The supply (listings) had been rising faster than the demand (sales) since 2000 and was at the over supply point. Now no one saw that coming, well some say they did but I didn't hear them saying at the time ;-)

Today demand has dropped off, and supply continues to rise. The gap between listings and sales grows, resulting n a market flooded with listings and buyers picking and choosing among them for the best deals.

While home sales are down, a lot, right now, look back to historical homes sales and remember that sales are strong, there's no lack of demand here, is a supply issue, too many homes for sale.

This over supply will take years to correct, in the mean time average sales prices will continue rising, just at a slower rate than over the past 10 years.

Issues like the sub-prime melt down, credit crunch, over building are all contribution factors but are not root cause of the market conditions.

The Twin Cities Real Estate Market is as volatile as the weather, warm/cold/warm/cold.  The market is generally flooded with listings, and this long term issue will take many months to correct.  But a strong under current of demand keeps things interesting. 

Buyers continue to show strong interest.  Pending sales made a strong showing this week.  While the number of new listings came in lower than expected.  The net result was none the less an increase in the number of homes for sale.

As new listings hit the market, some are being snapped up quickly, while other sit with few showings.  Buyers are more savvy than ever, and can smell a good home almost before it hits the the market. 

Average stats in no way reflect the actual value of your home. To find out the value of your home, contact me for a free Market Analysis based on comparable sales in your price range, neighborhood, and property type!

Minneapolis Metro Area: Real Estate Market Stats – as of February 18th

Eden Prairie continues to rise in spite of soft market condition elsewhere. While the Metro area's average sales price drops, and in spite of neighboring communities doing the same, Eden Prairie posted a 12.1% rise in the average sales price for 2007.

Average sales price can be a misleading statistic, but is usually gives us an idea for the over all strength of the market. Average sale price does not accurately predict home value application due to many reasons.

For example, if an area's average sale price is $200,000 and a high number of new condos sell for around $125,000 it has an effect on the average sales price. We see this often in real estate booms. A bunch of new condos, or a new subdivision of homes, might bring the average up or down while actual home values are doing the opposite!

Eden Prairie has seen a boom in all areas of the market; commercial, residential, high end and low end. The good news for everyone, is that sales are occurring, demand is out there. We are not lacking for buyers in this Twin Cities metro market.

Eden Prairie's success proves the point that real estate is a highly specific, local phenomena. Working with a professional, honest Realtor, who understands your is always the best way to make the most of your situation! Good Luck!

Pending sales rose 18% this week!  Things are looking up in the Minneapolis Market.  This is exactly the kind of market activity we need to see to return to healthy market conditions. 

As we sell off inventory we'll begin the recovery.  While an 18% increase in pending sales is a good start, new listings out paced the sales activity this week.  The total number of listings rose from 28,153 to 28,803.

Activity is hotest in the lower price points, as investors buy up high quality, low priced rental units.  There is a bit of a buying frenzy at the high price points as well.  Many of these buyers are "cash heavy", and able to take advantage of the soft market.

Keep eyes on Supply and Demand numbers, and mortgage rates.  Appreciation rates rise when demand is strong.  With this many homes for sale, supply has overwhelmed demand.

Before selling or buying, be sure you know your local market states, not the city or neighborhood average, but the stats on your specific, price range, neighborhood, and property type.  Some markets remain HOT, HOT, HOT, and others are really, really depressed.  Be sure you know where you stand.

Minneapolis Metro Area: Real Estate Market Stats – as of February 18th

Both Pending Sales and New Listings are up this week. Not a big surprise. The news is that Pending Sales are only up a very small amount, while the number of New Listings rose significantly. Therefore we are left with a net increase to the available inventory.

The "health" real estate market, is driven by supply and demand. We all know there are more homes for sale than there are buyers. The critical question is, "Do we have too little demand, or too much supply?"

The number of homes sold has been on the rise for many years, but has plateaued, and fallen slightly recently. Meanwhile the number of homes for sale has continued rising. It's tempting to say the buyers left the market, there's no more demand! But ask yourself, "How often can we expect people to move?" The number of times a person moves in their life has been rising since the 50's but eventually it's got to stop. We'll never get to the point where people are moving an average of every couple years.

So, if demand is at about the same point as it's been for the past 3-4 years, I'd say we have a supply issue. Which is better than a demand issue. There are buyers out there buying homes, believe it or not! It's just hard to find them through the "forest" of homes for sale!

Minneapolis Metro Area: Real Estate Market Stats – as of February 11th

January Minneapolis, MN

Minneapolis Neighborhood Average Sale Prices

*** These statistics should NOT be used as a basis for valuation of specific properties. Value estimates need to be based on data specific to the property type and recent sales of similar properties. For a free market analysis on your home, please feel free to contact me at the number above.

Data courtesy of MAARcollected from the RMLS database.