06 May Real Estate Market May 6th
Real Estate Market May 6th
This is our MN real estate weekly update for May 6th, 2022. We are experiencing record sale prices, historically low inventories, and multiple offers. But with rising interest rates we are beginning to see our intense market beginning to show signs of relaxing a little has buyers come to grip with getting less house for the same payment.
Coronavirus, what Coronavirus? It is still out there, and I personally know of quite a few people with Covid right now. But let us hope that it is in our rear-view mirror!
We review real estate facts and future trends
With our historically record low inventory, we are in a seller’s market. 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 March was 108, and this compares to 136 this same time last year. The number of 108 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. Our current inventory of homes for sale is 5,278. 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 much lower than 5,278. In comparison, we had 5,921 in 2021. So, the inventory of homes for sale is down 10.9 % from last year. 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 1,759. That compares to 1,770 pending home sales last year. That is a decrease of .6 % from the same week last year. So, forty of the last forty-five weeks that number has decreased compared to last year. Our monthly supply of homes is one month compared to the same one-month last year (March figures). An average real estate market would have a three-to-four-month supply of housing inventory.
Minnesota seller’s benefit financially when real estate values rise. The median sales price (March numbers) increased by 7.8 % since this time last year. $354,000 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 March, the average sale to list price was 102.7 %. And that compares to 101.9 % in 2021. For even more Minnesota real estate market information visit my website at mnrealestate area appreciation. 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 2-4 more 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 big time from last week. Borrower paid lender fees are 4.349% for VA, 4.250% for FHA and 4.999% for conventional. Rates for lender paid closing costs are 5.5% for VA, 5.456% for FHA and 5.994% 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
In the last 30 years I have experienced many real estate markets, 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 fall of this year. This will affect what buyers can afford and some will decide to rent instead of buying. I predict this spring and summer inventories will continue to be below the level needed for all buyers to find a home. This will create multiple offers and high appreciation.
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