Home buyers and sellers love to refer to the online prices suggested by real estate websites, such as Zillow Zestimates. Prospective buyers love to ask why a home is listed as more expensive than it is online, and home sellers are often puzzled and frustrated when their home doesn’t sell for the price estimated by their favorite real estate website. It presents real challenges for real estate agents and lots of room for unnecessary disappointment for buyers and sellers, as explained in the L.A. Times:
If a house for sale has a Zestimate of $350,000, a buyer might challenge the sellers’ list price of $425,000. Or a seller might demand to know from potential listing brokers why they say a property should sell for just $595,000 when Zillow has it at $685,000. Disparities like these are daily occurrences and, in the words of one realty agent who posted on the industry blog ActiveRain, they are “the bane of my existence.” Consumers often take Zestimates “as gospel,” said Tim Freund, an agent with Dilbeck Real Estate in Westlake Village. If either the buyer or the seller won’t budge off Zillow’s estimated value, he told me, “that will kill a deal.”
So how accurate are Zillow Zestimates? According to Zillow CEO Spencer Rascoff, they are “a good starting point” but the nationwide “median error rate” is 8%.
Given the countless factors involved in calculating a home’s value, most of these websites do a pretty good job estimating the value of a property. However, there’s no substitute for having a professional realtor walk through the home, evaluate the neighborhood, and adjust the suggested price based on local market conditions.
This article was written by Aubray Erhardt for the Minneapolis Area Association of Realtors (MAAR) website. It can be read in its original setting here.
With the spring market officially underway, both buyer and seller activity rose in March 2016 compared to last March. Buyers signed 5,861 new purchase agreements, pushing pending sales up a respectable 12.6 percent. Would-be sellers were still concerned about their ability to secure their next property in this competitive environment, so new listings only increased 0.5 percent. Hence, supply levels remained near 13-year lows. Compared to last March, inventory levels fell 20.6 percent to 11,893 active properties. Prices continued their disciplined trek back towards levels last seen 10 years ago. The median sales price rose 5.7 percent from last March to land at $222,000. Median list price, by contrast, has already reached and exceeded its previous record, perhaps an indication that the median sales price could do the same this year.
Buyers came out swinging with strong offers in March. Sellers accepted offers closer to their list price, as the percent of original list price received at sale was up to 96.7 percent. Homes tended to sell in less time, with cumulative days on market declining 17.5 percent to 85 days. Months supply of inventory fell 28.6 percent to 2.5 months—the third lowest figure on record going back to 2003. Generally, five to six months of supply is considered a balanced market. While the metropolitan area as a whole is favoring sellers, not all areas, segments or price points necessarily reflect that.
“Between new loan applications and anecdotal evidence, we knew this spring would be another big one for buyers,” said Judy Shields, Minneapolis Area Association of REALTORS® (MAAR) President. “The small gain in seller activity was nice, but it falls well short of the supply levels needed to sustain the demand we’re seeing. That should be motivating for sellers, but it’s still important to understand that your home needs to be priced right.”
It’s also useful to assess specific area and segment performance, since no single property spans the entire metro area nor all market segments and price points. The percentage of sales that were foreclosure or short sale fell to 13.4 percent while traditional pending sales rose 16.2 percent. Single-family homes continued to dominate sales volume, even though townhomes had the strongest increase in closed sales compared to last March, followed by condos. Previously-owned sales had a stronger performance than new construction. Sales activity in the $200,000 and below range declined 13.8 percent while sales activity between $200,000 and $300,000 rose 10.5 percent and activity above $300,000 rose 3.4 percent. Cities with the highest median home price include North Oaks, Orono, Edina, Plymouth, Chanhassen and Minnetonka.
The national unemployment rate ticked up to 5.0 percent in March—reflecting more confident job-hunters actively seeking work. The most recent wage data is also encouraging—a positive factor that could offset declining affordability brought on by rising prices. Locally, the latest Bureau of Labor Statistics figures show the Minneapolis-St. Paul-Bloomington metropolitan area was among the top eight metros with the lowest unemployment rate. The 30-year fixed mortgage rate is about 3.7 percent compared to a long-term average of about 8.0 percent. Rates took a surprising dive after the Federal Reserve announced the first hike last year. Nevertheless, marginally higher rates are expected in 2016.
“Serious buyers should be prepared to make their strongest offer right up front this spring,” said Cotty Lowry, MAAR President-Elect. “Traffic at open houses is as strong as I can recall, which makes additional options on the supply side of the equation that much more critical.”
Article By Jim Buchta at StarTribune.com
Foreclosure inventory in Minnesota was among the lowest in the nation, bolstering the notion that foreclosure prevention efforts and a strong economy have been a boon to the state’s homeowners, according toCoreLogic’s National Foreclosure Report.
The states with the lowest foreclosure inventory rate, which represents the number of homes at some stage in the foreclosure process, during February were Alaska (0.3 percent), Minnesota (0.4 percent), Arizona (0.4 percent), Colorado (0.4 percent) and Utah (0.4 percent).
Nationwide, the national foreclosure inventory included approximately 434,000, or 1.1 percent, compared with 571,000 homes, or 1.5 percent, in February 2015.
Completed foreclosures or the total number of homes lost to foreclosure, declined 10 percent compared with February 2015 to just 38,000 properties. Compared with a peak of 117,776 in September 2010, completed foreclosures fell 71.3 percent.
CoreLogic said that since the start of the financial crisis in September 2008, there have been about 6.2 million completed foreclosures across the country. Since homeownership rates peaked in the second quarter of 2004, there have been approximately 8.2 million homes lost to foreclosure.
Frank Nothaft, chief economist for CoreLogic attributed the trend to income growth and improved. “Job creation averaged 207,000 during the first two months of 2016, and incomes grew over the past year,” he said in a statement.
The states with the highest number of completed foreclosures for the 12 months ending in February 2016 were Florida (72,000), Michigan (49,000), Texas (29,000), California (25,000) and Ohio (23,000), all o which accounted for almost half of all completed foreclosures nationally.
Spring is here, and with it comes the annual springtime seller’s market! The national trend of low inventory and high demand have dropped the number of days for homes staying on the market and driven prices higher. Interest rates have remained low, which also provides further incentives for buyers to bid high to get the best deal as soon as possible.
The Following statistics have been sourced from MAAR: (View the full report here)
In the Twin Cities, for the week ending March 26th:
For the month of February: