Home Buying · home selling · Uncategorized

I had other plans for this week’s post…

Next week I’ll give you another neighborhood profile – I’m excited about my small town series, and I have one I love and plan to talk about, but this week I’m going to beat a dead horse a bit and talk some more about what is happening in the real estate market in the Twin Cities metro area. I don’t usually do “market update” posts or videos on my YouTube channel, but the fact of the matter is that right now I’m actively helping 6 buyers try to navigate this market and I want to share a bit of how we look at the market and measure it and then also show you what that means for the Twin Cities right now.

I swear … it was this big!

I feel like anecdotal evidence about how many offers a listing gets, how fast something sells or how far over list price the offers are is shocking at times or maybe sounds like a fish tale that we like to tell – “the big one that got away” kind of thing. Stories are great and interesting, but in this post I want to talk about DATA. Weee! Exciting!

Not exciting? Well, I disagree. I think this tells a very clear story and because it looks at the entire market and then breaks it down by price it might tell the story in a way that makes sense in a different way to more people. This is the WHY behind the HOW that I’ve talked about before when I’ve done videos/posts about making the best offer.

How DATA tells you if it is a buyer or a seller’s market: Meet the “Absorption Rate”

These are my words, not something from a real estate dictionary somewhere.

When we look at a market and try to decide who it favors we look at the number of active listings available in a 30 day period and then look at the sales. It’s a ratio. But the way that I think is easiest to visualize this ratio is as the “absorption rate”. This rate shows us how long it would take for ALL houses actively listed to be sold if NO OTHER homes were put on the market during that time.

We are measuring time in months for this exercise, and the magic number of months where REALTORS feel that the market is in balance is 5 (not set in stone, some argue for 6 months etc). This means that when it would take 5 months for every home to be sold should no other homes be listed, the market does not favor either a buyer OR a seller.

Any number smaller than 5 indicates a sellers market. The smaller the number the more it favors sellers. This works in the converse as well, the LARGER the number over 5 the more the market favors buyers.

What is the Twin Cities absorption rate today?

Emphasis on TODAY because this rate changes seasonally and with market forces – I’ll talk a bit about what those are too.

The current absorption rate for the Twin Cities metro is 0.86. LESS than one month’s supply of homes. Very much in the favor of the seller. And it is not getting better – in the past 6 weeks the rate has consistently decreased from 1.32 the first week of January to where we are today.

The last half of 2020 was a crazy market, due to Covid hitting in spring and the uncertainty that brought with it there was a lull in what would typically be the busy spring market, but once everyone got their bearings it was off to the races and it never really slowed, even during the holidays. Add extremely low interest rates into the mix (under 3% for a pretty extended stretch), and a bubble of Gen Y aging into home ownership and bumping up what was already high demand from buyers, and things have just not cooled at all. All of this to say we sold a LOT of homes last year and possibly ate into what would have been inventory for this year. January 2021 started with 38% FEWER listings than we had in January 2020.

Supply continues to drop, particularly in the under $300K price range where new listings are down 15% YTD. The over all market YTD has 6.9% fewer listings. If you’ve taken any economics classes at all you’ll know that price is a function of supply and demand. We have low supply and high demand and that is pushing prices higher as people bid against each other for homes.

Absorption rate by price point

The best way to show this is to give you a screen shot of the table that we looked at in our data meeting this week. I love this table because it breaks it out by general price points and you can see the trend over the past 9-10 months for each. You’ll notice that higher price points have slightly looser markets because there are fewer buyers that can manage those budgets. I do think that the $500-$1M may need to be broken up a bit because at $500K there is still a quite a large bubble of buyers that are able to enter the market and compete for homes at that price. There may be a break closer to the mid $600’s where the ratio gets closer to 1.4, but I think $500 is still quite competitive.

credit to Tim Sipprell who pulled this together for our office
baby data geek

So, that is the data geek light version of the market at this point in time in the Twin Cities. An opportunity again for me to encourage you to be as prepared as you possibly can be before you enter the fray. You really need to be in the best position possible if you want to land at the top of the heap when you get into this market.

Let me know if you have questions… 🙂

home selling · Uncategorized

Selling your home? Do yourself a favor…

Right now – inventory is low, interest rates are low and it’s still a seller’s market, but that doesn’t mean you can be sloppy if you are selling your home. Houses get the most traffic in the first week or so, and right now most are under contract in that time. If yours sits there it will quickly raise suspicion – I think of it as having a “bad smell” to buyers – they wonder WHY it hasn’t gone and may avoid it. Don’t miss this golden window of opportunity by turning buyers off when they walk into your home. Especially because in this market they will likely be paying premium prices.

I also have a checklist that you can download (for FREE) of things to do to make sure your home gets sold QUICKLY and for the best possible price and did a video on this topic as well.

Click here! http://bit.ly/MSPMaryHomePrepChecklist

In this post I want to give you guys a list of 8 related things that you should take care of before you let the first buyer in the door.

ODOR

This one I can’t emphasize enough! Even as an agent previewing for someone, smells can drive me right back out the door. We’re talking about pets, moisture / mustiness, food odors like fried foods and strong spices, old food in the fridge, cigarettes (!!), and even air fresheners.

I’ve developed migraines in minutes when walking into a home that was hosed down with air freshener. Artificial scents can make people feel quite sick (even scented candles) and they also lead you to wonder what is being covered up?

Cigarette smoke is another one – I don’t see this all that often anymore, but I did go into a home that had obviously been owned by a heavy smoker. Even with all of the windows open it felt like we were in an ash tray. Depending on the severity of this, the walls should be painted with an oder killing primer and then paint, carpets & drapery removed etc. There isn’t a big market for homes that need to be remediated in order to live in them.

Check your fridge – people open refrigerators when they are looking at homes. We did and we regretted it. The seller had left fish in there for well past the time when it should have been cooked or thrown away and the smell nearly knocked us out. We didn’t make it past the kitchen.

Taxidermy

I don’t think this is just a MN thing… If you hunt or fish (and a LOT of people here do), take the dead animals off your wall when you go to sell. You can rehang them in your new home, but keep in mind that you are trying to appeal to the largest possible audience and you want to refrain from alienating people.

Actual Pets

I love dogs but not everyone does. Not everyone enjoys having a dog nose pushed into their nether regions, and many don’t enjoy “kisses” either. Your pet may also have some territorial feelings that surprise you and they may nip, bark or jump on people who are there to see the home.

Cats are usually easier – but they can be sneaky and slip out of an open door. NO ONE wants to be responsible for your pet escaping. If you have a cat, make sure that the litter box is sparkling clean. See “odors”. I’ve also looked at home with people that have kids who do not know what a litter box is… that’s fun when they think its a little sandbox! yuck.

Other animals – snakes, lizards, rodents etc. Remove them if you can, and if you can’t make sure the cage is secure and very clean.

Pests

Do you have an inkling that there might be a mouse? Seen a roach a time or two? Ants in the kitchen? Does Fido have fleas? Please make sure that ALL of these are handled before a potential buyer gets an unwelcome surprise.

Carpet

I’m going to say specifically in the BATHROOM. If you have carpet in the bathroom or the KITCHEN (I’ve seen it!), remove it and have a hard floor installed. That just screams DIRT. No one wants to buy someone else’s dirt. They don’t.

And if you have wall to wall carpet elsewhere, have it professionally cleaned before showing the home. This will help with any potential odors as well. (It’s a theme).

Ceilings

If you have acoustic tile ceilings in any room, it would be worth your while to have them replaced with drywall. This also applies to popcorn ceilings, people are very turned off by this. If the drywall underneath is good, it may be possible to just scrape this and paint.

Locked Rooms

Limited access to the building while you have a buyer looking at it will raise some questions. No one’s mind jumps to “that’s where they have their jewelry” – it’s usually more like “is that where they are keeping the bodies?”. Always lead with transparency and don’t introduce doubt or assume that someone will come back to take another look.

Mismatch

People don’t always replace all of their appliances at once, but if you’ve got avocado green & stainless steel it can be a glaring change and reinforce exactly how old the green appliance is. Some things (like refrigerators and dishwashers) can be inexpensively updated to match new ones with either a panel or appliance paint to give a cohesive look to a kitchen. It can be worth it to do this if the older items are in a good condition, if not, it is definitely a selling point to have new appliances in a home and knocks down an objection right off the bat.