Twin Cities Price Growth Stabilizes to Match Historic Norms
(February 15, 2022) – According to new data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, the median sales price across the Twin Cities grew 2.7 percent to $341,995. The metro is returning to historic trends for median home price growth.
Inventory & Home Prices
The Twin Cities’ median home price grew 2.7 percent despite 19.3 percent fewer signed contracts. After about three straight years of roughly 10.0 percent year-over-year price growth, this modest increase is more aligned with the historical average of 3.2 percent across the region. While price growth is slowing, it remained positive throughout 2022 and this year is expected to continue that trend of moderating growth, barring any unforeseen circumstances.
“Anyone concerned about runaway home prices should be comforted by the more typical price growth we’re seeing, which gives buyers a chance to catch their breath and incomes a chance to catch up,” said Brianne Lawrence, President of the Saint Paul Area Association of REALTORS®. “While the Twin Cities remains a seller’s market, homes are taking longer to sell and sellers are accepting less than their list price.”
Softening buyer activity led to 14.5 percent more homes on the market at month-end, closing out January with 5,588 units in inventory. Yet we remain undersupplied—especially if interest rates moderate in response to inflation subsiding and demand once again soars. The metro only has 1.3 month’s supply of inventory. Typically 4-6 months of supply are needed to reach a balanced market.
Sales & Listings
As the market reacts to a series of aggressive rate hikes by the Federal Reserve in an effort to slow borrowing and cool an overheated economy, home buyer activity has also cooled. Facing higher mortgage rates and monthly payments than they would have in 2022, buyers signed 2,560 purchase agreements, 19.3 percent fewer than last year. Meanwhile 2,083 homes closed, down 32.2 percent from last year and the lowest figure since 2010. But that reflects contracts signed 30 to 60 days earlier.
“Sellers need to be priced right and may not see a dozen plus offers immediately, but most sellers are getting deals done with terms they’re comfortable with, and still more quickly than in the past,” according to Jerry Moscowitz, President of Minneapolis Area REALTORS®. “The truth is, what feels like a slow-down from light speed is actually close to how the market used to and probably should feel. You know, there’s actually a chance that listing you’ve been eyeing will be there later tonight or even tomorrow!”
There were 3,285 homes listed in January, 10.6 percent fewer listings than January 2022. Last month, half of all sellers sold homes for at or below 97.3 percent of their list price compared to 100.0 percent last year. Additionally, they accepted those offers after an average of 60 days on market compared to 41. Today’s sellers should be patient, flexible and ensure their expectations are in-line with market realities.
