29 Jul Minnesota weekly real estate update
Minnesota weekly real estate update
This is our Minnesota real estate weekly update for July 29th, 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 experienced reduced affordability with the higher rates and are electing to rent for another year (even though rents went up over thirty percent nationwide the last year).
We review real estate facts and future trends
We are now in a neutral selling market (not a buyer or a sellers). 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 that understands the market. 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 June was 100, and this compares to 139 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 8,441 and climbing. In comparison, we had 7,668 in 2021. So, the inventory of homes for sale is up 10.1% from this time 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 Minnesota 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 1,097. That compares to 1,458 pending home sales last year. That is a decrease of 24.8 from the same week last year (wow). So, fifty-one of the last fifty-six 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 1.6 months (June figures -was 1.4 in May). Expect July figures to increase.
Minnesota seller’s benefit financially when real estate values rise. The median sales price (June numbers) increased by 8.6% since this time last year. $380,000 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 June, the average sale to list price was 103.3%. And that compares to 104.1 % in 2021. That number will adjust quite a bit downward as we get July 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. The Federal Reserve raised interest rates on July 27th but the mortgage lenders liked the move and didn’t increase rates for home buyers. Rates up are down from last week. Rates for lender paid closing costs are 4.95% for VA, 4.905% for FHA and 5.69% for conventional. Rates for borrower paid for VA and FHA is 3.875% and 4.5% 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 6.5-7% by late summer/fall 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 late summer and fall that inventory will continue to increase and we will move into a somewhat of a buyer’s market real estate market in Minnesota this winter.
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
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