17 Jun Minnesota Real Estate Market June 17th
Minnesota Real Estate Market June 17th
This is our Minnesota real estate weekly update for June 17th, 2022. We are now experiencing a correction in our real estate market as the result of doubling of interest rates since the first of the year and additional homes coming on to the market. In addition, many buyers have not so much affordability with the higher rates that they are electing to rent for another year (although rents went up over thirty percent the last year nationwide).
Coronavirus? It is still out there and continuing to affect us. It seems everyone knows someone with it right now. I know I do. The good news is that the severity of the current form of COVID is less and hospitalization have not increased.
We review real estate facts and future trends
We are still in a seller’s market, but this is changing quickly, with low housing inventory. So, what does that mean? That you should strongly consider working with an experienced real estate agent to give you an edge in buying or selling process. Experience is priceless and for a buyer it costs you nothing but can save you much.
Here are facts of our current Minnesota real estate market. Our current housing affordability Index for Minnesota real estate for April was 102, and this compares to 144 this same time last year. The number of 102 is the lowest ever recorded. The higher the number means the greater home buying affordability in the Twin Cities. So, this trend is not positive at all. Our current inventory of homes for sale is 6,968. Of that number 38% is new construction with the majority of those yet to be built. So, the real number of available homes to buy right now is lower than 6,968. In comparison, we had 6,458 in 2021. So, the inventory of homes for sale is up 7.9% from last year. This is the new trend with our much higher interest rates. A point of interest, in 2009 at the time of our first real estate correction in 40 years, we had over 36,000 homes for sale in the seven county Minneapolis/Saint Paul metro area. The Minnesota real estate pending sales for the last week, which have sold but not yet closed, was 1,077. That compares to 1,248 pending home sales last year. That is a decrease of 13.7% from the same week last year. So, forty-five of the last fifty weeks that number has decreased compared to the previous year. An average real estate market would have a three-to-four-month supply of housing inventory and we have 1.2 months (April figures – this will be going up in May).
Minnesota seller’s benefit financially when real estate values rise. The median sales price (April numbers) increased by 10 % since this time last year. $370,000 is now the median sales price in the Twin Cities area. A market health indicator is the comparison of our sales price to original list price. For April, the average sale to list price was 103.8 %. And that compares to 100.3 % in 2021. That number will adjust downward as we get May and June figures. For even more Minnesota real estate market information visit my website at https://www.mnrealestate.com/twin-cities-information/area-appreciation-rates/. It features a comprehensive review of our Minnesota real estate market for those that like all the data!
Our current interest rates in the Twin Cities
The low interest rates have been a real catalyst for buying power for buyers the last two years. The Federal Reserve has started raising interest rates (did again this week) and expect at least two more this year. Rates increased this week by .75% and expect the Federal Reserve to raise them again in July. These interest rate increases are to reduce the rate of inflation, but they will also impact what buyers can afford. Rates are up quite a bit from last week. Borrower paid lender fees are 5% for VA, 4.5% for FHA and 5.375% for conventional. Rates for lender paid closing costs are 5.930% for VA, 5.756% for FHA and 6.363% for conventional. Just reach out to me if you need contact information of a lender with those interest rates.
My opinion of the future of Minnesota real estate
I have experienced many real estate markets in over 30 years of real estate, but hard to compare to the last couple of years. With inflation forcing the Federal Reserve to raise interest rates they could go to as high 6.5 % or more by late summer of this year. This is having a chilling affect on the market and what buyers can afford. Many buyers have and will decide to rent instead of buying. I predict this summer and fall that inventory will increase and we will move out of a buyer’s market into a neutral Minnesota real estate market.
This is a suitable time to discuss your housing needs for 2022!
Your house and neighborhood in our MN real estate market
We find that price ranges and neighborhoods have its own specific trends and facts. In so if you are interested in knowing the specifics for your home…just call Jeff.
The Anderson Team