The current housing market in Minnesota can be described as competitive, albeit balanced. With a growing number of new listings and pending sales, buyers have a range of options to choose from. However, sellers are also benefiting from favorable conditions, including a steady rise in median sales price and a high percentage of original list price received.
Looking ahead, the future market outlook for Minnesota remains positive, albeit with some uncertainties. Factors such as economic conditions, interest rates, and housing policies may influence market trends in the coming months. However, the overall trajectory suggests continued growth and stability in the real estate sector.
So, How is the Minnesota Housing Market Doing in 2024?
The market is showing strong signs. There's more activity with listings and sales up year-to-date. Home prices are also rising, but inventory remains a challenge. While inventory remains low, this could be a great time to buy or sell with a qualified agent by your side.
Let's dive into the data to understand what this means for buyers and sellers. Here are the latest trends in the housing market.
Surge in Listings and Sales
Good news for both buyers and sellers: there's more activity in the market. New listings are up a healthy 20.3% year-to-date compared to 2023. This translates to a jump from 23,668 in April 2023 to 28,402 in April 2024, according to the data by Minnesota REALTORS®.
This indicates that more sellers are feeling confident about putting their homes on the market, likely due to a combination of rising home values and potentially lower mortgage rates compared to earlier peaks. On the flip side, closed sales are also up over 10%, with 5,465 homes sold in April 2024 compared to 4,635 in April 2023. This suggests there are plenty of buyers ready to snatch up these listings.
Home Prices on the Rise
Minnesota homeowners are seeing their homes appreciate in value. The median sales price has climbed over 4.5% compared to April 2023. In April 2023, the median sales price was $335,000, and it has risen to $350,000 in April 2024. This trend is expected to continue throughout the year, fueled by the limited inventory and healthy buyer demand.
Market Competition is High, but Stable
While the market is active, it's not quite the bidding war frenzy we've seen in recent years. The percentage of homes selling above original list price has dipped slightly, and the average days on market remain steady at 42 days. This suggests a balanced market where sellers have a good chance of getting a strong offer in the range of their asking price, but buyers also have room to negotiate.
Inventory Levels: A Cause for Caution
The one metric that shows a cause for concern is the months' supply of inventory. This number, which reflects how long it would take to sell all currently listed homes if no new listings came on the market, has increased by over 20%. In April 2023, there was a 1.8-month supply, and it has risen to a 2.2-month supply in April 2024. While a balanced market typically has a 6-month supply, Minnesota's current level indicates a seller's market with limited options for buyers. This could push prices higher and make it more challenging for some buyers to find their ideal home.
What Does This Mean for You?
- Buyers: Be prepared to act quickly and decisively when you find a home that interests you. Get pre-approved for a mortgage so you can make a strong offer.
- Sellers: With high buyer demand and limited inventory, this could be a great time to sell your home. However, don't overprice it – a competitive price will attract multiple offers and help you get top dollar.
The Bottom Line
The Minnesota housing market in 2024 is a positive one, with strong buyer demand and rising home values. However, the limited inventory presents a challenge for buyers. Whether you're buying or selling, it's wise to work with a qualified real estate agent who can guide you through the process and help you achieve your goals.
Minnesota Housing Market Predictions
The Minnesota housing market has been a topic of much discussion lately. With an average home value of $335,229 (Zillow) and houses going pending in a quick 16 days, it's clear there's still a strong seller's advantage. But what does the future hold? Will there be a crash, or will the boom continue? Let's delve into the data and see what experts predict.
Market Indicators Point to Continued, But Slower, Growth
The current market leans towards sellers. The median sale-to-list ratio sits at a high 0.997, indicating homes are selling close to or even above asking price. This is supported by the fact that over 31% of sales go above list price. However, there are signs of a potential shift. The median list price is higher than the median sale price, suggesting some sellers might be overvaluing their properties in this hot market. Additionally, nearly half of all sales (48.4%) are still happening under the list price.
Real Estate Predictions for Specific MSAs: A Mixed Bag
The forecast for Minnesota's MSAs (Metropolitan Statistical Areas) paints a diverse picture. Grand Forks, ND (which bleeds into Minnesota) is expected to experience the steepest decline, with a potential drop of 4.2% by April 2025. This could be due to a number of factors, including a smaller metro area with less economic diversity compared to the Twin Cities.
Minneapolis-St. Paul, the state's largest metro area, is also forecast to see a slight decline of 3.4% by the same timeframe. Here, the slowdown might be due to a combination of factors, such as affordability concerns and a potential increase in inventory.
However, not all areas are predicted to experience a dip. Rochester and Mankato are expected to see some continued growth, albeit at a slower pace, before a potential small decline in 2025. New Ulm is even projected to see a slight increase through the end of the year.
Here's a breakdown of the forecast for various MSAs in Minnesota:
- Grand Forks, ND (potential decline of 4.2% by April 2025): This could be due to its smaller size and less economic diversity compared to larger metro areas.
- Minneapolis, MN (potential decline of 3.4% by April 2025): Affordability concerns and a potential increase in inventory might be driving this slowdown.
- Marshall, MN (potential decline of 3.4% by April 2025): Similar to Grand Forks and Minneapolis.
- Faribault, MN (potential decline of 2.2% by April 2025): This price correction is expected in several areas.
- Red Wing, MN (potential decline of 2.2% by April 2025): See Faribault, MN.
- Worthington, MN (potential decline of 2% by April 2025): See Faribault, MN.
- Rochester, MN (potential decline of 1.9% by April 2025, with some short-term growth): This MSA might see a small decline after a period of continued growth.
- Mankato, MN (potential decline of 1.8% by April 2025, with some short-term growth): Similar to Rochester, MN.
- Winona, MN (potential decline of 1.3% by April 2025, with some growth through 2024): This MSA is expected to see some continued growth before a slight decline.
- New Ulm, MN (potential decline of 1.3% by April 2025, with some growth through 2024): See Winona, MN.
Additional MSAs:
- Alexandria, MN (potential decline of 1.2% by April 2025): This MSA is forecasted for a similar trend as Winona and New Ulm.
- St. Cloud, MN (potential decline of 1% by April 2025): A small price correction is expected here.
- Hutchinson, MN (potential decline of 0.9% by April 2025): Similar to St. Cloud, MN.
- Owatonna, MN (potential decline of 0.5% by April 2025, with some short-term growth): This MSA might see a small decline after a period of continued growth.
- Willmar, MN (potential decline of 0.4% by April 2025, with some growth through 2024): Similar to Owatonna, MN.
- Duluth, MN (potential decline of 0.1% by April 2025, with some growth through 2024): This MSA is expected to see some continued growth before a very minor decline.
- Bemidji, MN (potential decline of 0.1% by April 2025, with some growth through 2024): See Duluth, MN.
- Austin, MN (potential decline of 0.1% by April 2025, with some growth through 2024): See Duluth, MN.
Crash or Boom? Neither Likely
The data suggests Minnesota is headed for a period of stabilization rather than a dramatic crash or an extended boom. While some price corrections might occur in specific areas, a significant downturn is unlikely. Here's what this might mean for you:
- Buyers: You might have more negotiating power as inventory increases and the seller's advantage weakens. However, interest rates are still a factor to consider, and they could potentially rise in the future.
- Sellers: Selling quickly might become less common. It's crucial to price your home competitively to attract buyers in this shifting market.
Remember, this is a complex market, and local factors can significantly impact specific areas. Consulting a local realtor is vital for getting the most up-to-date information on your specific area and ensuring you make informed decisions.
As depicted in this graph, home values have increased year-over-year. This upward trend is expected to persist, with forecasts indicating continued growth over the next year.
Sources:
- https://www.mnrealtor.com/buyers-sellers/marketreports
- https://fred.stlouisfed.org/series/MNSTHPI#
- https://www.zillow.com/mn/home-values/
- https://www.neighborhoodscout.com/mn/real-estate
- https://fred.stlouisfed.org/series/ACTLISCOUMN#
