February 2024 Twin Cities Market Update

February 2024 Twin Cities Market Update

Since 2022 in the 16-county metro area:

  • New listings have decreased by 29.88%.
  • The months’ supply of inventory has increased by 44%.
  • Median number of days on the market has increased by 55%.
  • New construction inventory has skyrocketed, up 117.85% (now that is actually a lot).
  • The number of showings required to sell a home has decreased by 25%.
  • The price per square foot is still rising, up 7.86%.

 

If you were to read just those statements as headlines, you might be confused or concerned. Let's dive into these numbers with a logic- and data-driven approach. I am not a three-letter news outlet. I am a professional who sells a ton of houses, runs a successful team, and coaches agents all across North America, so I know a thing or two about this stuff!

 

Hello everybody, my name is William Huffman. I'm a professional real estate agent here in Minnesota with RE/MAX Results, A Good Life Group. I want to share some interesting information with you. 

 

As real estate agents, we often get asked, "How's the market?" There are many pithy, cutesy ways we can answer, and one of them is, "Well, it depends if you're looking to buy, sell, or invest.” That's a proper response, but it's not a real response. So what I'm going to do right now is give you a few key performance indicators (KPIs) that I follow as a real estate professional to see what is going on in the market in real time.

 

One of my superhuman strengths is data. I love data. I'm a self-proclaimed data nerd, and I want to share a few stats with you right now and give you a brief overview of what I think they mean, based on the history of these numbers, and where I think we're going forward, based on the speculation, guesses, or whatever you want to call it, of industry experts all across the world.

 

I'm going to give you data from 2022 and compare it to where we are right now. As I'm writing this, it is Tuesday, February 20th at 3:09 p.m., so it's really up-to-date data.

 

I'm going to be talking about the 16-county metro area here in Minnesota, and I’m going to be talking about pre-existing single-family homes that are non-waterfront, so that's a vast majority of the properties in this metro area.

 

I have excluded new construction because new construction skews the data of our pre-existing homes. I’m not ignoring it; I’m putting an asterisk next to it, because a traditional new construction buyer is not the same as a pre-existing single-family home buyer.

 

Since 2022, new listings have gone down 29.88%. Holy crap, what does that mean? Well, if you take it at face value, you would think there's a heck of a lot fewer homes available for sale. That's true, but with that being said, if that's the only KPI we're going to look at, we're not getting the full picture. In 2022, we had 44,496 homes available for purchase; right now, we have 31,203. Those numbers might seem alarming, and we're not going to stop there.

Now, we're going to look at the months’ supply of inventory. Well, if we have fewer homes for sale, you would think we would have less inventory on the market. That's actually not true. Since 2022, our months’ supply of inventory has gone up 44%. That seems like a huge number, right? It isn’t really. In 2022, we had 0.9 months of inventory; right now, we have 1.3 months of inventory. (If you want to know more about how we calculate this, please contact me directly. I can talk about that for hours. I want to keep this ball rolling here.)

Next, we're going to talk about median days on the market: how long will your home be on the market before you can expect an offer? And I choose “median” over “average" because median is a better indicator than average. (If you need more information on that, feel free to Google it, or once again reach out to me directly.) Our median number of days on the market has gone up 55%. Once again, that sounds outrageous. But what does it really mean? Well, in 2022, nine days on the market was what you'd expect before you’d have an offer and be pending and no longer for sale. In 2024, our number of median days on the market is 14. You might think that would fluctuate significantly based on price, but even in the half-million-dollar-plus price point, our median for days on the market has gone from 10 to 17. That's not a significant jump at all, so things are still moving quite quickly.

If you're not confused yet, you're a really smart human being and probably smarter than me, because, just based on this data alone, I'm confused, and I kind of know what I'm doing here!

 

All right, I said I wasn't going to talk about new construction too much, and I won’t, but I do want to share this incredible statistic with you. In 2022, we had 2.8 months of inventory of new construction. That's a decent amount; that's good. We can see about four or five months; that's considered a balanced market of all homes available for sale. But since 2022, new construction is up 117.85%. We are at 6.1 months of new construction in the $3-400,000 range, the $4-500,000 range, and the $500,000 plus range; all are over six months of inventory. Unfortunately, we're not building new construction at a fast enough clip under $300,000. That's a whole other discussion for a whole other day for affordable housing, and trust me, it's something near and dear to my heart.

As we continue down this path, let’s talk about the ratio of showings to pending. How many showings would you expect before your home has that accepted offer in the median amount of days? This is interesting. Since 2022, the number of showings required to sell a property has dropped 25%. It used to take 16 showings as a median. Now, it only takes 12. What that tells me is we have more serious buyers looking right now than we had before because there are fewer “looky-loos."

Now I'm going to talk about something called “price per square foot.” I hate even bringing this up, because price per square foot is the last and worst leading key indicator to determine the value of a pre-existing single-family home. But the reason I'm bringing it up is that it's a term people understand. I don't like it in the pre-existing single-family home space. I love it in the new construction and condo and townhome space. (Once again, that’s another topic for a different day.) To keep things simple, I will share with you what has happened to price per square foot in all price ranges since 2022: it has gone up 7.86%. In 2022, we were at $178 per square foot; now, we're at $192. This is also an increase over last year, when it was $189.

Okay, I've given you all these stats, but what do they mean? They mean that the only bad time to sell is when you have to. The only bad time to buy is when you have to, if you're stuck between a rock and a hard place. This might be when a big life event happens: death, divorce, diapers, diamonds, degrees—the 5Ds, we call them. Those are the life events that will kind of force your hand at times.

 

So what's the advice I can give you? What's the parting wisdom that I can leave you with? What's the magic blue pill you can take to wake from The Matrix and fully understand everything? Well, it doesn't exist. All I can do in this short write-up is give you the data and tell you wholeheartedly: if you're ready to buy, let's analyze your situation. If you're ready to sell, let's analyze your situation, because everybody's different. You're in a uniquely specific position for you. 

 

I hope I brought you some clarity, though quite possibly I also confused you more. Just know that this is what I love. This is what I do, and I'm really darn good at it. Our team sells $70,000 condos and $3.8 million mansions and everything in between. Not all realtors are the same. If we all did the same things, we would all have the same results. We don't. The data that I'm bringing you here is used by fewer than 7% of our local Realtors, and I would say fewer than 1% of them can use it the way that I use it. Yeah, that sounds a little confident, maybe borderline cocky, but I know what I'm good at. Selling houses and helping buyers is what I'm fantastic at. So if you're ready to enter this market, let's talk. And even if you're 24-36 months away, let's put a plan in place to get you to your goals, to your finish line. 

 

I really appreciate your reading this. If you have any comments or questions, please give me a call at 651-278-2089 or email me at [email protected]. And as always, we out. Deuces!

 

William Huffman

RE/MAX Results | A Good Life Group

 

P.S. We will never see interest rates in the 4s again, so stop waiting for that. If we are lucky, we might get mid 5s in a year or so, maybe.

 

William Huffman is a seasoned REALTOR® with RE/MAX Results | A Good Life Group based out of Loring Park in Minneapolis, Minnesota. His expertise in the real estate market has provided invaluable insights to investors and homeowners alike.

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