Housing Market Trends
Local and National Housing Market Trends
Let’s be honest. Nobody can predict the future though we can look at trends and data and use it to create reasonable scenarios of what the months ahead will hold in store for us. Why is studying trends significant? For those who prefer to plan for tomorrow, knowing what lies ahead helps us make better decisions that get us closer to achieving our goals.
While we may not know what will happen, it is a safe bet to say trends are always evolving. Real estate isn’t different in that respect. What was hot in housing last year, maybe so over now. That is not to say we can keep up with the latest, and let’s face facts if you expect to live in your current home for the next ten years or more, you probably don’t care.
But if you are in the process, on the brink, or planning to buy or sell a home in the coming months, knowing what’s happening in the market today can make the difference between a good or bad experience. What makes it even more critical is the effects that COVID-19 has had on just about everything in our lives, including how we search for, buy, sell, and perceive real estate.
Housing Trends That Affect Buyers and Sellers in MN
Here is what you may want to know about some of the current real estate trends and the ways it may affect buyers and sellers both nationally and in our own Twin Cities Housing Market.
When housing demand outstrips the supply of available homes for sale, we experience a seller’s market. It seems like it’s been this way forever at times. While it may not be that long, the housing market has been trending in favor of sellers since 2012, a long stretch. For any of us who thought the pandemic might change the trend, we were very wrong. If anything, the demand for housing seems to be more robust than ever.
Both locally and across most of the nation, property showings were higher in July than last year with multiple offers on desirable homes being the norm in today’s market. Both closing and pending sales were higher than as well, 0.8% and 10.3% respectively. While on the national front, The National Association of Realtors July housing report showed a 24.7 percent increase in sales from the previous month.
For the moment, even with an increase in applications for unemployment insurance and $600 a week cutback in compensation, buyers appear undaunted.
Advice for MN Home Buyers
Be ready with a pre-approval letter from a lender. Have a plan for how much your down payment will be and what contingencies you will request. Then, make an offer. Be prepared to make it your best because you are not likely to get a second chance if your bidding on a desirable property.
Advice for MN Home Sellers
Don’t assume that it doesn’t matter how you present your home. Properties that show well are those that get multiple offers and higher prices. That being said, mazel tov the world is your oyster right now!
Trending: The Affordable Housing Shortage
Here in the Minneapolis-St. Paul metro and nationally as well, we have been watching the pool of homes for sale continue to be outstripped by the demand for housing. In greater Minneapolis-St. Paul, the July housing inventory was down by twenty-eight percent, and the decline held for all pricing tiers and housing types from the same time last year. On the national housing scene, the inventory of homes for sale declined twenty-one percent in July compared with 2019.
Why is the shortage of affordable homes been so persistent over the last several years?
- Homeowners are staying put longer. They are concerned with the fact that if they sell their home, they might not find something to buy and be forced to take temporary housing. Instead of moving, they are putting on additions or creating more space by renovating basements or attics into living space.
- Our aging Americans, the baby-boomer generation, are staying in their family homes longer rather than downsizing. Many have aging parents who need care and maybe living in their home or grown children who are moving back because they can’t afford to buy a home.
- Levels of new construction are not keeping pace with the demand for affordable housing. Due to escalating prices of building materials and land, federal, state and local fees and permit requirements, and a labor shortage, it has become cost-prohibitive to build affordable housing.
Advice for Twin Cities home buyers
The inventory situation is not liking to improve any time soon. Have your pre-approval in your hand and move fast if you want to buy a home. Another option is to buy a fixer up and renovate it into your dream home. There is less competition for homes that are dated and in need of TLC.
Advice for Twin Cities home sellers
I repeat what I said earlier. If you decide to sell, don’t just throw your home out there as is. Showing your home to the best advantage still matters in regards to how fast you sell and the offer price.
Trending: Historically Low-Interest Rates
Rates for home loans have fallen below 3% and are the lowest since Freddie Mac started tracking them in 1971. The loan cost of borrowing to buy a home right now is a big deal, and one of the reasons demand is so strong. According to financial analysts and economists, rates should remain historically low into the coming year.
Tips for MN buyers
With interest rates so low, consider the possibility of taking out a fifteen-year mortgage instead of a conventional 30-year loan. Not only will you pay thousands less in interest, but you will also own your home outright in fifteen years or sooner if you pay extra on your principal.
Tips for MN sellers
If you have been waiting for the perfect time to sell your home and either buy a move-up house or a retirement property, this might be your best opportunity. Once rates bottom out and then start to rise again, it is bound to hurt demand and push prices down as well.
Trending: Rising Home Values
While the early days of the COVID-19 pandemic exerted downward pressure on home prices, that trend is over. If we look at median home prices in the Twin Cities for July, we see an increase of 5.5 percent over those in July of 2019, while nationally, that figure was 8.5 percent at $304,100. It’s also significant to note that the median price for homes in the US went over $300,000 for the first time.
Home buyer tips
Low-interest rates may offset the rising cost of homes. It’s a safe bet that property values are going to continue to rise into 2021 as long as the cost of borrowing remains so attractive. The sooner you buy, the sooner you start building equity. If you’re in a position to make a move now, do it, but pay attention to your budget. Don’t throw all caution aside and pay more for your home than you planned.
Home seller tips
If you have decided now is the time to sell, don’t make the mistake of over-pricing your home. Request that your listing agent does a market analysis of comparable homes and suggest a selling price. Be honest when you make a comparison. And I can’t emphasize enough that if you want the best price, prepare to show your home at its best.