Growing inventory helps home buyers as market pace slows
Neal Gendler
Star Tribune
Published Oct 17 2001
A growing inventory of homes for sale is improving conditions
for Twin Cities buyers, who don't seem to have lost much
enthusiasm.
At the end of September, 19,693 listings were on the Twin
Cities market, up from 18,475 in August and a 35 percent
increase from 14,581 in September 2000, according to data
released Tuesday by the Minneapolis Area Association of
Realtors.
"The buyers in the market are experiencing a wonderful
scenario," said Budd Batterson, association president.
"First-time buyers have the best situation they've had in years.
Inventory has increased quite strongly, so there's now a
selection in the $160,000 to $170,000 range, which today is a
first-time home-buyer range." And with interest rates so low,
some buyers who couldn't qualify for a $160,000 to $170,000
home last spring now can.
"The surprising thing is that more people aren't taking
advantage of this opportunity," he said. "They're not going to
see 0.0 percent interest; the housing market is not General
Motors. But we do have phenomenal rates and a great
inventory to shop in. ... Buyers have the great luxury of taking a
lot more time in making a purchase."
In recent autumns, slimmer inventory kept the market brisk,
but this fall, there's "much more sanity in the buying process,"
Batterson said.
Although closed sales last month were down from August, the
market normally calms in autumn. The median price -- half
the sales above, half below -- remained at $174,900, 13
percent ahead of $154,772 in September 2000.
Tuesday's report showed most housing activity above the levels
of September 2000. An exception was "sales pending,"
purchase agreements signed for sales not yet closed. Those
totaled 3,070 last month, down from 4,015 in August and off 5
percent from 3,233 in September 2000.
The market is experiencing some effects of consumer
uncertainty, Batterson said. "At the same time, we have a great
volume of inventory on the market, which tells me there are a
lot of people who are looking to move on to the next home.
Where we seem to be in need is for buyers for those homes," he
said. For sellers, the increasing inventory means their homes
are on the market longer.
The Regional Multiple Listing Service processed 6,291 new
listings last month in the 13-county metro area. Although
down from 6,773 in August, the number was up 19 percent
from 5,266 in September 2000.
Sales closed show market activity 45 to 60 days earlier, when
purchase agreements are signed, so last month's closed sales
show activity in July and August.
"There is a slowdown in sales that are [pending], and that also
shows up in the building of inventory," Batterson said. "I think
a couple of things are working here."
One is a "a somewhat surprising year" that changed into a
"buyer's market," partly a normal seasonal occurrence and
partly from a months-long growth in inventory. "Now we add
into it substantial world events and we're seeing a slowdown. ...
At the same time we're seeing a refinance boom," Batterson
said.
For the nine months, 35,715 single-family home sales closed,
up 9 percent from 32,802 in the 2000 period. The 54,798 new
listings processed were up 17 percent from 46,670 in the 2000
months.
While the median price didn't slip in September, Batterson
said he expects "some leveling" of prices. "We're not seeing the
bidding up of a price the way we were in the spring." That's not
unusual in fall, when more homes for sale decreases
competition for each.
Part of the buildup of inventory may be from sellers who still
are thinking in terms of the spring market, when, "to a large
extent if there was a 'for sale' sign, it sold," Batterson said.
"Today, buyers are taking more time and it's affecting sellers in
this respect: The home needs to be brought up to show
condition," he said. "Pricing no longer can be done by looking
at what other houses sold for in your neighborhood and figuring
your house is better. Part of our buildup of inventory is caused
by sellers who have not accepted that change."
-- Neal Gendler is at ngendler@startribune.com .
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