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

homes and not many buyers. Since then it’s been rising at warp speed!

Demand grew and is now at a 15 year peak. At the exact same time, inventory is at an ALL TIME low and dropped again this year due to covid. This is nuts!! So let’s dive into this year and a try to take a look at a close up this 10,000 foot view.

As I write this, it’s October 9 th and I’m going to use stats for this week in comparison to this SAME week in 2019,18, 17 and through 2015. A five-year history of THIS week in time. We’re going to look at Active Listings & Pending Listings to get an idea of supply vs. demand. Take a look at this chart and tell me what you think:

So let me break it down as simple as possible to get the point across. In this 41 st week of the year -October 7 th vs. what we had just 5 years ago at this point in time - There are 51% less listings with a 43% increase in sales volume.

And you want to know what comes next?!? Yeah – so do I. We’ll continue this on page 9 – Is the Bubble Going to Burst?

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