If you’re involved in the housing market at all — as a buyer, a seller, a real estate agent or simply a fiend for alarmist news — you’ve already digested the latest.
May was a tough month for the entire Minneapolis area, as almost everyone had predicted. The 18-month run of tax credits that persuaded so many to get out and house hunt expired at the end of April. The next month, pending sales took a nosedive. May witnessed the lowest number of pending sales for that month in the entire history that the Minneapolis Area Association of Realtors (MAAR) have tracked the statistic, which they have done since 1997.
Many sellers appeared to sit on the sidelines, as well. New listings were down 22 percent from May 2009 for the metro-wide area as a whole.
But Downtown seemed to fare worse than most neighborhoods, especially for those looking to sell. In the city’s core, new listings plunged a dramatic 39 percent from May 2009, the biggest drop of any neighborhood the MAAR tracks.
Even worse, the average days a property sits on the market before it sells stretched to an agonizing 171. That represents a 40 percent increase over May 2009, and balloons the year-to-date change — which is much more reliable, given the larger sample — to an increase of 45 percent.
Statistically speaking, properties in Downtown take longer to sell than in any other neighborhood in Minneapolis. Only two other neighborhoods, Uptown-Lakes and North, have also witnessed an increase in days-to-sale from this May to last May, but those have been much smaller, at +3.5 percent and +7.2 percent, respectively.
But both of these dire numbers, new listings and days-on-market, may not be as catastrophic as they sound.
MAAR Director of Research Jeff Allen shrugged off the new listings plunge, which he says just reflects what’s going on everywhere.
“Longfellow is 36 percent down, North is 32, Phillips is 33,” he said. “A lot of places took big dives in May. I wouldn’t say just from looking at that that Downtown has been hit the worst yet.”
The drop in new listings also might not even be a bad thing. Allen sees it as a return to a more logical market. “If you’ve got a drop in demand, you want your supply to drop at the same time.”
As for the extending days-on-market, Allen said he thinks it’s “probably a legitimate trend.”
Not so fast, says Fritz Kroll, a Downtown real estate specialist for Edina Realty.
“The market time gets skewed Downtown with new construction,” he pointed out. “Agents and developers will pick random units to be listed, and sometimes they’ll be listed before a building even starts construction.”
He added, “So there can be a unit that closed 10 days after it was completed, and it will show a market time of 300 days.”
Kroll agreed that May was a discouraging month. But he said, “June feels much better.” His showings are up and he’s keeping busy.
An even bigger sign of optimism, the housing market is starting to behave itself again.
“I think that Downtown is in better shape than it has been for years,” Kroll said. “I can’t say that about pricing, but I can certainly say that about the supply-demand ratio. It’s more in line now than it has been for years.”