How's the market?
No matter the kind of market we're in, the questions we get most commonly are...how's the market? And, how's the market going to be?
The first one is easy, we just have to be on the forefront of the facts, which you can trust we are. And, keep it local, which we always do. Median sale price in September was $280,000, down off the peak of $290,000 in June, but still annualized appreciation is up 6%. The Twin Cities sold about 4,800 units (homes, town homes, condos) in September, pretty much dead on the same as the last four Septembers. Showings per listing, roughly 6 in September of '19, are also equal to those of the last four years. Every year the cycle of seasonality is questioned as a greater sign of market slow down, i.e. "where'd all the showings go?" The facts so far this year show nothing but normal seasonality.
The second question usually sounds like, "how's next year going to look?" If you google real estate predictions for 2020 you're likely to find the work recession repeated in the results and maybe even the word crash. Those talking crash seem like just an attention grab...make a doomsday prediction and if you're right you can crow about it later, if you're wrong nobody remembers. There might be a recession, 2 successive negative quarters is all it takes for that (of GDP really, but we'll call it housing). That's bearable for most people, we can handle some down side especially after the recent period of tremendous growth. Crash seems unlikely though, here's the best information we've found to illustrate why (credit to David Arbit, Minneapolis Area Association of Realtors).
Chart A, above, actual median sales price since 1990 (red) and what median sale price would look like as a steady 4% annual growth (blue), which is a proven historical average for Minnesota. You can see we've recently crossed into above the historical norm but a quick look at today versus before the crash of the late 2000s shows the obvious difference. Yes we're above, but not nearly to the degree, and therefore could come out of it a couple ways. Chart B, below, shows a 5% correction over a year or two which would be a recession but hardly a crash.
Chart C, below, a prolonged slowing of appreciation rates where values never go negative but still correct.
All said, anything can happen of course, it's a world of volatility. Housing is as much personal as it is business, make your real estate choices around what fits your life versus market predictions. And, enjoy homeownership, it's so much more than the numbers.
Happy Fall Y'all!
Thanks for reading,
Ben Johnson