Housing Market Sees ‘Long Overdue Cooling Trend’
Local realtors say the “craziness” of the past couple of years is far from the norm and home sales are returning to pre-pandemic levels.
“Frantic bidding and drive-by homebuying have given way to thoughtful negotiations between buyers and sellers,” said Emily Green, president of Minnesota Realtors.
Realtors provided a look back at 2022 and a look ahead to the spring homebuying season. They say inventory levels remain tight, but because of higher interest rates, sales have cooled off since last fall.
“We’re talking about a market where people have a chance to breath,” said Jerry Moscowitz, a Brooklyn Park-based realtor and president of Minneapolis Area Realtors. “The good houses are still selling fast.”
Cities that saw the most home sales in 2022 included Maple Grove, Plymouth and Brooklyn Park, but those cities also saw what was described as a “staggering” drop in sales last fall.
“I think it’s just that we saw that reaction to a market and interest rate that felt like it changed overnight,” said Moscowitz.
Green described the current market situation as “a long overdue cooling trend.”
Prices Remain at Historic Highs
While home sale prices may have cooled, they’re still at all-time highs in the Twin Cities metro area.
The median sales price in 2022 was $362,500, 6.6 percent higher than the year prior. It’s the 11th straight year of price increases.
During 2020 and 2021, home sale prices jumped 10 to 15 percent. The median sales price in December for the Twin Cities metro was $348,660, 5.2 percent higher than the previous year, which realtors say is closer to historical trends.
Moscowitz projects the 2023 housing market to be closer to 2018 and 2019, which he said “nobody was calling a bad real estate market.”
According to sales data, sellers accepted 101 percent of their list price on average in 2022, a 1 percent decrease from the previous year. By December, sellers were accepting 96.5 percent of list price, more consistent with pre-pandemic levels.
Realtors pointed out that homes $200,000 and below are taking the most time to sell, which Moscowitz says is “likely because they’re needing the most updates and may not offer everything today’s buyers are looking for.”
Sales of homes $500,000 and below fell nearly 24 percent in 2022. However, sales of homes $1 million and above increased 7.5 percent.
“A big factor here is a lack of supply of more affordable homes and budget-conscious buyers are much more rate sensitive,” said Moscowitz.
There is a sign of optimism for the spring buying season. Buyers are seeing mortgage rates falling to levels not seen since September. The average rate for 30-year fixed-rate mortgages decreased to 6.23 percent. Historical averages are between 6 to 8 percent, but higher than the 2 to 3 percent rates buyers were seeing during the beginning of the pandemic.
“We’ve been extremely spoiled,” said realtor Brianne Lawrence.
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