23 Jan My thoughts on our spring real estate market
My thoughts on our spring real estate market
We have three forces at play this spring real estate season. Our spring season normally starts right after the summer bowl and has also been influenced by the weather in the past.
The first force to deal with in our Minnesota real estate market is the pandemic and how it has eliminated some buyers and sellers from the real estate market. Some sellers are not able to sell and upgrade their housing because of how the pandemic has affected them financially. Also, the lack of housing inventory has made them uncertain if they will be able to find a home. For many buyers the same issue comes into play. Hours being reduced or their job eliminated pulls them out of the market.
Some people will be forced to sell their home when the foreclosure ban is lifted. But an influx of foreclosure homes on the market is not something I expect to see since people will just sell their home in this good market to capture the equity in the home.
Second force in our Minnesota real estate market is the low inventory of homes and that increases demand for the few homes that are available. We then have multiple offers and, in some cases, ridiculous sale prices. Seeing homes sell for $20,000 to $50,000 over asking price is not uncommon. We get a large influx of homes for sale in the spring, but I do not believe it will be enough to satisfy demand.
The third force in our Minnesota real estate market is the interest rates. Right now, FHA and VA are 1.99% and conventional is 2.25% and that is the lowest it has ever been. This creates demand since buyers can afford so much more home than before. In many cases it makes the mortgage payment less than what they would be paying for rent.
In conclusion, this lack of housing and interest rates has created a strong demand. Even though we are smack dab in our coldest period of the winter…the spring real estate season has already begun.
Let us pray the vaccinations come fast and furious and we have more sellers in the market. Fasten your seat belts…this will be an interesting 2021 of Minnesota spring real estate market!
Look for more articles and videos in the future on different aspects of Minnesota real estate and our state of Minnesota.
Real estate is a wonderful investment!