Mortgage rates are up. Home prices are down. The market is tanking again. Those are the headlines we're seeing in a lot of places, but is that really the truth about what is going on? In today's blog we're going to talk about what's happening in the Twin Cities real estate market. We're always here to help serve you for any of your relocation purposes to the Twin Cities or just in and around the Twin Cities, and part of how we do that is by giving you the data on what is really going on in the Twin Cities market.
All of the data we'll talk about in this blog is taken using the following qualifications: The 13-County Twin Cities Metro, single-family homes that are previously owned, and traditional sales.
Now we did drop from last month. As you can see below, we dropped from a median sales price from $411,000 to $400,000. This means June could have been our peak month for this year and we'll continue to see prices drop slightly.
Sometimes that peak comes in August or we see a slight dip in July and then things come back up in August, which we saw in 2019 and 2020. So what are a few of the other indicators as far as what is going on? Next, we'll look at months' supply.
We did drop to 1. 4 months. We need more inventory in today's housing market We are at some of the lowest inventory of homes for sale In history, iand there are more buyers than we have ever seen. So this is a problem and we need more houses to come on the market.
And this is one of the main reasons why we are not seeing home prices crash and drop. Looking at the image below, we can see an overall decline in the number of houses for sale beginning around 2014-2015. The inventory bottoms out around the beginning of the year as not a lot of people put their houses on the market around the holidays. But each year we have fewer homes on the market at the peak of the year. Less houses for sale means more competition for those homes. And competition means that prices aren't going down.
So really, it's a housing supply crisis that we are in. There are a lot of reasons why we have such low inventory. And one big reason is simply due to interest rates. Interest rates are higher than they have been in a very, very long time and have been that way for about a year. During Covid our rates bottomed to some of the lowest we've ever seen. This means that 91.8% of homeowners with mortgages have a rate below 6%, 62% enjoy a rate below 4%, and 23.5% boast a rate below 3 percent, according to Redfin. So why would a homeowner want to sell their house and get a new mortgage for almost double the rate?
There are a lot of predictions that say mortgage rates are going to be coming down. Experts say that by the end of 2023 we could be in the low sixes, and Morningstar just came out and said they're expecting the average interest rate in 2024 to be 5%. Many buyers who saw the low rates and didn't buy a house are now watching the rates rise. This has left them on the sidelines, waiting for mortgage rates to drop. Now, as rates come down, they're going to come back into the market. And what do we expect to see happen? Buyers will flood the market once rates fall and we'll see a market like 2021 again, where houses were seeing 10+ offers and people were paying well over list price. This will help current homeowners as it will make home prices appreciate more.
Now let's take a look at the median days on market. This is the median number of days that a house is 'Active' on the MLS, before being switched to 'Pending'. You can see below that it's low, only 10 days. We dipped a bit lower in 2021 and 2022, but 10 days on the market is still a low number. This is just another indicator of a strong housing market.
Being a buyer in this market means you need to act quickly. You need to be prepared to write a good, strong offer and work with a real estate agent who knows what they're doing. But, don't get me wrong. There are homes that are sitting on the market for much longer than 10 days. But the homes that are the most desirable are selling very, very quickly. If you are considering selling your home, make sure to reach out very early on because proper preparation leads these nine or ten days on the market with multiple offers. And hopefully, sell for the above list price. Prepping your home for sale has never been more important! I highly recommend working with the Grey Duck Properties team, but you know, I'm biased. If you want our Prepping Your Home for Sale Guide, reach out today!
So now, we've looked at single-family homes; let's take a look at townhomes as well. As you can see, townhome prices are steadily increasing.
Condos haven't been as consistent. They kind of go all over the board as you can see below.
So let's take a look at some predictions as far as things are going to be taking place in the future. Zillow has is so sure home prices have bottomed that it just issued bullish calls for these 48 housing markets. Minneapolis is one of those that is expected to have a bullish future. We'll jump 6% in 2023 and another 7% in 2024.
Right now you can buy a home that you don't have to substantially overpay for and you are traditionally buying below the next peak. Buying a home now - or over the winter -when there are not as many buyers out can allow you to buy at a lower price, and refinance when rates come down. I will say between now and January or February of 2024 is probably going to be one of the best times to buy a home in the next five years.
We don't 100% know what's going to happen in the economy. We can look at all of the data but nobody knows 100% for sure what will happen. The best time to buy or sell a house is when it's right for you and your circumstances.
