No question, the market is adjusting. Predictions vary on how long before interest rates level out. If you were considering buying or selling in the next year, it can be overwhelming to sort through the news and know what to do. Markets like this make it even more important to ask this question: What is best for you and your family? Many factors play into this that the news doesn’t account for! Factors such as being unable to climb those stairs, a growing family, a new opportunity in another town or state, all may outweigh what the market is doing! As you consider the pros and cons, your equity, your move, your plan (even if it’s months or years out), please don’t hesitate to call! – Kristin and John Beise, The Right Realtors.
(For more on the market, you may appreciate the following post by the Minneapolis Area Realtors….)
(September 16, 2022) –According to recent data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, both sales and listing activity were down in August while home price growth has slowed to its lowest level in two years but remains positive. Sellers also accepted lower offers as market times rose.
Inventory & Home Prices. The median home price in the Twin Cities reached $369,750 but the year-over-year growth rate is slowing. While prices are not falling, they’re not rising as quickly as they were. The 5.6 percent price growth in August is below the roughly 8.0 to 16.0 percent gains seen over the last two years. The deceleration in price growth likely reflects the pullback in demand caused by higher interest rates and economic uncertainty. Closed sales were down 20.3 percent in August compared to last year. Buyers also still face low inventory and limited options, although there’s evidence that’s changing.
“We’re seeing a less competitive landscape as the market has slowed given current interest rates,” said Denise Mazone, President of Minneapolis Area REALTORS®. “But the silver lining is that a less frenzied market could spell more inventory and opportunity for persistent buyers.”
August ended with 8,552 homes for sale, nearly flat compared to last year. Although the region is still a seller’s market, the momentum has been shifting back towards a more balanced marketplace. Month’s supply of inventory rose 13.3 percent to 1.7 months.
Sales & Listings. Buyer activity has softened compared to recent years. This is partly caused by higher mortgage rates, but it also reflects demand being pulled forward (i.e. sales that would’ve occurred in 2022/23 instead took place in 2020/21). August showed 4,981 signed purchase agreements, 23.8 percent short of 2021 levels and the lowest August figure since 2014. But seller activity reached its lowest level since August 2012. The easing of demand has impacted how quickly homes sell. Homes remained on market for an average of 26 days, 18.2 percent longer than last August.
“Sellers may notice that their homes are taking an extra few days to go under contract,” according to Mark Mason, President of the Saint Paul Area Association of REALTORS®. “But nobody talks about the fact that even this slower pace is still fast historically. A cooling of red-hot demand and a less intense landscape means a more sustainable and accessible marketplace.”
Sellers listed 6,186 properties on the market, 19.9 percent fewer than last August. Many Baby Boomers are choosing to age in place and aren’t listing their homes. Some homeowners are reluctant to trade into a higher mortgage rate on a higher priced home given economic uncertainty. And, some sellers are choosing to wait given their lack of options once their home sells. The industry has also underbuilt housing for about 15 years, and it will take time to rise out of that deficit. ***
