Maple Grove Realtor on Fall Housing Market: ‘I Have Never Seen Anything Like This’
Even with a pandemic and an uncertain economy, home buyers remain in strong supply. There’s just one problem. The supply of homes is relatively nonexistent.
“We do have plenty of buyers, we just don’t have any houses for the buyers,” said Michael Doyle of Maple Grove-based Doyle Real Estate Team and Re/Max Results.
According to the Minneapolis Area Realtors, the inventory of homes for sale in August was down to 2,123 in the $250,000 to $350,000 range. That’s down 35% from last year. It’s a 1.3 month supply, whereas a balanced market is generally in the 6-month supply range.
Doyle, a realtor of 22 years, says there are multiple factors at play for the lack of homes on the market. For starters, people are staying in their homes longer.
“It used to be people moved every seven years. We’re just not seeing that anymore,” he said.
Then there’s less home construction, caused in part, by supply-chain issues and soaring lumber prices.
“Lumber prices have gone up five times since June,” said Doyle, who also sells new home construction.
The lack of housing inventory for sale has led to pent-up demand. Multiple offers are often going out for homes that end up above asking price. Doyle says he had one client who tried to buy a 4-bed, 2-bath home in Plymouth that was selling for close to $400,000. The home ended up selling for $20,000 above asking price.
However, there’s one major factor in the buyer’s favor: interest rates are at an all-time low. According to a Freddie Mac survey, the traditional 30-year fixed mortgage is 2.87%.
“That is great for the real estate market. That is I think the reason the first-time home buyers want to get into a home is they know these low interest rates aren’t going to last forever,” said Doyle.
Buyers Looking Farther Out
There’s another thing Doyle is seeing. Instead of the office, people are choosing and needing to work from home. And that has buyers looking farther and farther out. Places like Maple Plain, Waverly, Annandale and Buffalo are no longer considered too far away from the Twin Cities metro. In Annandale sales are up 29% so far this year compared to last year. In Buffalo, closed sales have increased 17%.
“I’m seeing where you can buy new home construction out a little bit farther, probably for a $100,000 less than an existing home in Maple Grove of a similar size.”
Because COVID-19 pushed back the home buying season and interest rates remain at historic lows, Doyle says mid-September still feels like a spring market.
“I’ve been doing real estate for 22 years now and I have never seen this strong of a fall market,” he said. “I have never seen anything like this.”
He sees the pent-up demand riding into next year.
“I think it’s going to be a phenomenal spring. As long as nothing changes dramatically with the economy, I think real estate will be really strong in 2021.”