Homes Group Magazine - Issue 16

HOLMES ON HOMES What in the world is going on with real estate in the Twin Cities?? This is the hottest market I’ve seen in 20 years of practice but the better question to ask is: What comes next?!

You’ve heard me say it for years and I write about it constantly – low inventory, shortage of listings, where’s all of inventory? Well.. let’s toss in Covid and historically low interest rates and take this conversation for a spin and it gets a bit crazy. We’re going to analyze the market and try to answer the question of “What’s next?”

You all know I’m a stat geek. Serve me up a bowl of numbers with my cheerios in the morning and I’m a happy guy. So let’s look at the market in a context of 15 years and then down to the nitty gritty of the last 5 years and specifically this year. Hang in there.. sounds like a lot but I promise to make it easy.

Supply vs. Demand = Price. Basic stuff, right. So let’s take a look at the last 15 years of those concepts in our Twin Cities MLS. See Figure 1 – Supply. We’ve had a steady decrease in supply for the last 5 years and technically the last 12 years but I believe the supply we saw in 2012-2015 is about normal. And then comes covid and drops it even farther.

See Figure 2 – Demand. This charts closed sales over the same period or in other words- Demand. The demand has been pretty steady over the past 5 year and overall we’re at a peak of demand in context of the last 15 years.

See Figure 3 – Price. Well of course this chart looks this way. The bottom of the market was 2012 which was an imbalance of available 4