Housing inventory levels in the Twin Cities are at their lowest level in nine years, and the downtown and Northeast housing markets are no exception, according to the latest report from the Minneapolis Area Association of Realtors.
The latest market update, which reflects August sales activity, shows that the supply of houses and condos on the market in the downtown area is down more than 47 percent compared to the same time last year.
In Northeast, inventory is down nearly 25 percent.
“With inventory levels nearing 10-year lows, buyers are scrambling to find the perfect house,” said Cari Linn, president of the Minneapolis Area Association of Realtors (MAAR). “The next step of the recovery will be getting hesitant and distressed sellers back into the market.”
Sales were also up in downtown and Northeast, consistent with trends across the Twin Cities.
In downtown neighborhoods, there have been 386 sales to date — up nearly 25 percent from last year. In Northeast, sales are up nearly 7 percent with 295 closed sales to date.
While overall the Twin Cities housing market has seen median sales prices increase — up 15 percent compared to last year — the median sales price in the downtown neighborhoods has declined by roughly 22 percent (from $270,000 last year at this time to $210,000). The median sales price in Northeast, however, has increased by 6.4 percent — jumping from $132,750 to $141,250.
The median sales price for the entire Twin Cities market is $179,000, the sixth consecutive month it has increased. Foreclosures and short sales made up about 32 percent of all the new listings, according to the August market update.
Scott Parkin, owner of Northeast-based Hoffman Parkin Urban Realty, said he’s seeing a lot of cash buyers and people looking to purchase second homes. Empty nesters looking to downsize continue to be a large segment of the housing market.
The lack of available listings in the downtown condo market is having a big impact on prices, said Fritz Kroll, a Realtor with Edina Realty.
“Inventory is down dramatically, and there are no new condos under construction,” he said. “This is putting a lot of upward pressure on pricing, and buyers are motivated to buy because properties are selling, sometimes very quickly. I see buyers that have been renting for years, accept that the market is on its way up, and want to buy before prices jump.”
Even some buildings that have had slows sales in the past are seeing a spike in activity, such as the Sexton Lofts, 521 S. 7th St. in Elliot Park, said Joe Grunnet, owner of the Downtown Resource Group.
The loft development had been under a cloud because of mortgage fraud and other legal troubles, but now times have changed at the building and Grunnet said there has been a lot of sales activity there.
While inventory is down and the market is stronger overall, some buyers are slow to understand how the real estate climate is changing, he said.
Many buyers think they can still ask for big discounts and concessions from the seller.
“They are not realizing the market is shifting. It’s starting to balance out,” he said. “Everyone wants to lowball. But when the rubber meets the road, good units are selling fast.”