What Does the Eagan Area Real Estate Market Look Like?
As 2018 Draws to a close, the local real estate market continues to see what many would call a seller’s market. There may be a shift in this market as we enter 2019 towards more balance. This will depend in part on what the forecast of rising interest affects buyers.
Home in ISD (Independent School District) 196 [Apple Valley, Rosemount, Eagan] have seen a steady decrease in homes for sale for the past two years. Looking at a rolling monthly count, January of 2018 saw 444 homes for sale. In November 2018, we ended with 384 homes for sale.
What is notable about this, however is that we have seen no peak in the traditional high time of the market (Late February – June). This has a high correlation to the increase in sales price as related to the original list price. Homes are selling for 99.3% of the original list price (on average) for our area [Chart below]
What does selling look like?
Statistics from Northstar MLS thru November 2018 show that the average days on market for a home is 38. It is important to note, that this is for CLOSED sales, so reflects houses that reached an agreement to sell between September/October 2018. We can expect to see an increase in days on market (DOM) for houses currently for sale. A survey of current listings in ISD196 (12/3/18) shows the average DOM at 62 days on market currently across ALL price points.
Looking closer, the average is currently 47 days on market for home priced $200k-300k. This number jumps to 68 days for homes priced from 300-400k.
The takeaway is that we still are seeing some of the typical season ebb and flow of a low-season. Buyers on the market now, are likely to see the best prices of the year since seller’s are often in a greater need to sell.
As I noted in the start of this update, a lot of what happens in 2019 will hinge on buyer sentiment in the coming year. In a speech at the Economic Club of New York in late November, Fed Chair Jerome Powell said “Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy, that is, neither speeding up nor slowing down growth.” Investors took this as a sign that the Fed may not make as many rate adjustments in 2018, which could signal a stabilizing of interest rates for buyers.
If that turns out to be the case, interest rates could stay pretty favorable for buyers. The average interest on a 30 year mortgage started out 2018 at just below 4%, and sits currently at 4.81% [YCharts]. The other factor in this is inventory. Every indication with the current inventory is that the early part of 2019 could be a busy time for buyers. An early start by sellers to get listings ready could pay off in
Shift to a Buyer’s Market?
Further into 2019, I predict more parity between buyers and sellers because the average monthly payment for the typical Eagan home is up $155 a month than it was this time last year based on current interest rates alone. However, that will likely slow price increases we have seen over the last few years because the amount of earnings a homeowner can put to monthly payments is limited.
In conclusion, our market (and to a larger degree the Twin Cities housing market in general) is looking stable into 2019. Inventory will be a key variable here. People who bought at the bottom of the market between 2009 and 2011 have been in their homes between 7 and 10 years. Some of those homeowners needs have changed. Families have gotten larger for some, while for others, grown children and retirement have caused homeowners to look at downsizing. At the heart of every sale is the people. Whatever your needs are, I have a strategy to help you sell or buy your home.