Believe it or not, for certain segments of the market, it might actually be considered tight. Right now across most of the western suburbs of Minneapolis, housing supply of homes for sale is under 4 months. A market is usually considered in balance between buyers and sellers when the housing supply is 5-6 months. It’s a sellers market when it’s under that.
Everyone seems to calculate housing supply a little differently. The way I do it is to divide the number of active listings for sale by the number of properties officially listed as pending in the MLS. At that pace of pendings and homes still for sale gives you the months supply.
Here how it looks for some of the bigger western suburbs. (Source: RMLS 13 County Metro – search run by John Murphy, RE/MAX Results on 4-24-11).
- Plymouth: 483/132 = 3.65 months supply
- Eden Prairie: 425/106 = 4 months supply
- Minnetonka: 348/77 = 4.5 months supply
- Maple Grove: 511/130 = 3.9 months supply
What you don’t see accounted for here is the amount of inventory of vacant lots that could have new homes built on them. This is not a small number for Plymouth and Maple Grove.
What’s interesting to note is that the market was DEAD, DEAD, DEAD in January, 2011. Of course all the news today is about the double dip in the U.S. housing market with the latest results from the Case-Shiller Index. The sky is falling according to the pundits. We are now 3 months beyond what Case-Shiller mentioned. And while I can’t tell you for sure if we are still down by 8%, what I can tell you is that homes priced really well and in excellent condition are selling quickly. If your home is tired, outdated and overpriced…then yes, those prices will definitely be down 8%. I’ve suspected for some time that a number of those homes may be overpriced by 15-20%.
I would love to hear what you think? Please comment below.
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