The summer home sales season is heating up in the Twin Cities. As you might expect the Minnesota real estate market changes fast in the summer months. You can check out the most recent Twin Cities real estate market update here. But before getting into July and August, which are the most popular selling months, let’s take a look at the Minnesota real estate market in June. After a flush of spring sales and with the busiest part of the year for home sales right around the corner this is what was going on with the Minnesota real estate market in June.
Now is a great time to find the perfect home in the Twin Cities area.
Interest Rate Spike
There’s been talk since January that interest rates would be going up in an attempt to bring down inflation and cool the market off a bit. And that’s exactly what happened. The interest rate spiked to 5.8% which is a big increase. That’s not going to make buying a new home out of reach for buyers but it means that buyers are probably going to be more selective about the price range they’re looking at. The cost of living in Minneapolis, Minnesota is fluctuating based on inflation and other factors which makes buyers a little more careful about how much they spend on a new home. If you’re looking for a new home in Minnesota check out these affordable Minnesota neighborhoods.
And it also means that sellers should adjust their expectations and price their homes accordingly. A buyer paying a 5.8% interest rate on a 30 year fixed mortgage isn’t to be inclined to come in over asking or be willing to make a lot of financial concessions to get a home.
The interest rate may not be done climbing. There is more talk of another increase in the fall or winter so buyers who are on the fence about whether or not they want to jump now and purchase a home shouldn’t wait to start looking for that new home. The interest rate could decease, but more than likely if it does change it’s going to increase. Buying a home before that will mean that you can lock in that 5.8% interest rate in case interest rates do go up.
More Inventory Bringing The Market Closer To Balance
It’s not a surprise that inventory has been low for the last few years. Plenty of homes have come on the market but they’re not staying on the market long. It wasn’t unusual to see homes sell the same day they were listed in the last year.
But now the inventory of available homes is increasing a little and the days that the house is sitting on the market are giving more buyers a chance to make offers on those homes. There’s still not a total balance between inventory and demand yet, but later in the year the market should shift more towards a balance point.
July and August are the most popular months for home buying in the Minneapolis suburbs because people want to get their move done and the kids settled before the new school year starts. If you’re looking for Minneapolis suburbs with great schools you should look at these neighborhoods. So during July and August there will be a higher demand than usual for new homes and that could throw the inventory slightly out of whack. But once Labor Day comes and the market drops off there should be a much more balanced market in the Twin Cities.
Home Prices Will Remain Steady
In the fall home prices in the Twin Cities area may come down a little bit to compensate for the dropoff in sales that always happens in the fall and winter. But until then home prices in the Twin Cities area will remain steady. Sellers won’t be able to charge inflated home prices now the way they have in the past though. The spike in interest rates has made buyers wary.
And the increased cost of a mortgage due to the higher interest rate means that buyers are being more cautious about their purchase. They’re no longer willing to offer tens of thousands of dollars offer asking just to secure a home. They would rather wait for more inventory to come on the market and provide from balance.
If you’re planning on selling your home in the Twin Cities area don’t given into the temptation to overprice your house and get the most money you can for it. If your home is priced at fair market value there’s a much better chance it will sell quickly.
If you’re moving to Minnesota check out some of the cheapest places to live in Minnesota and get in touch with me today. I’d love to help you and your family find your dream home in this beautiful state! Let’s talk!