The Twin Cities real estate market has changed dramatically in the last 4 years. I have noticed in the last year it is becoming more difficult to locate homes that have normal floor plans and are in good condition for less than $300,000. The location I work most often is in the Cities of St Paul and Minneapolis. The amount of homes closed fell by just under 1% year over year. The original list price average increased by +5.2% and the average sale price increased by 5.3%. The Twin Cities has seen significant price increases: 2018 Average price increased 6.2% to an average price of $311,240. 2019 Average price increased 5.3% for an average price of $327,828. There was one chart that gives me cause for concern. Inventory of homes for sale had dropped in August (-1.6%), September (-3%) and October (-5.8%) compared to the same months last year. The concern has to do with supply and demand. Fewer homes with the same number of buyers means more multiple offers. Interest Rates for a standard 30-year mortgage have fluctuated from a high 4.8% to a current rate of 3.96%. That would be a $50.00 difference per $100,000.00. For the upcoming year I don’t see anything in the short term that could make a difference in the real estate market. In the longer term there are clouds on the horizon. The on-going trade war with China could push us into a recession causing stagnation of home prices. The election in November could have a great effect on the market depending on which party wins. In all fairness I will say I also guessed in 1983 that we would NEVER see interest rates below 8% again. Related Articles:
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