01 Oct Minnesota Real Estate Market Update October 1st
Minnesota Real Estate Update
This is our Minnesota real estate weekly update for October 1st, 2022. We are now experiencing a change in our Minnesota real estate market. The rates and housing inventory are increasing and the number of buyers in the marketplace is decreasing. Inflation is still very high, and this will continue to impact interest rates now and in the future.
We review real estate facts and future trends
We are now in a more neutral selling market (neither a buyer nor seller’s market). So, what does that mean to you? 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 August was 102, and this compares to 137 this same time last year. The number of 100 is the lowest ever recorded. The higher the number means the greater home buying affordability in the Twin Cities. So, this trend is negative. Our current inventory of homes for sale is 8,678 and climbing. In comparison, we had 8,962 in 2021. So, the inventory of homes for sale is up 1.3% from this time last year. This has been our new trend with our much higher interest rates. A point of interest, in 2009 at the time of our first real estate correction in Minnesota in 40 years, we had over 36,000 homes for sale in the seven county Minneapolis/St. Paul metro area. The Minnesota real estate pending sales for the last week, which have sold but not yet closed, was 906. That compares to 1,321 pending home sales last year. That is a decrease of 31.3% from the same week last year (wow). An average real estate market would have a three-month supply of housing inventory and we have 1.8 months Last year it was 1.5 months’ supply.
Minnesota seller’s benefit financially when real estate values rise. The median sales price (August) increased by 5.7% since this time last year. $369,000 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 August, the average sale to list price was 99.9%. And that compares to 102.4 % in 2021. That number will adjust downward as we get September 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, but rates have doubled this year. These interest rate increases are to reduce the rate of inflation, but they will also impact what buyers can afford. Rates are up substantially from last week. Rates for lender paid closing costs are 6.962% for VA, 6.927% for FHA and 7.519% for conventional. Rates for borrower paid are 5.625% for VA and FHA is 5.625% and 6.25% 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 different 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 will continue to increase them more this fall and winter. This is having a chilling affect on the market and what buyers can afford. As a result, some buyers will decide to rent instead of buying. I predict this fall and winter that inventory will continue to increase, and we will move into a somewhat of a neutral or slightly a buyer’s market real estate market in Minnesota.
This is a good 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