The Minnesota housing market experienced significant changes in April 2023. The decrease in new listings, pending sales, and closed sales indicate a shift in market dynamics. However, the minor decrease in the median sales price suggests relative stability in home prices.
With an increased number of days on the market and an uptick in supply, buyers may have more options to consider. It's important for both buyers and sellers to stay informed about these market trends to make well-informed decisions. As the market continues to evolve, monitoring these key metrics will be essential for anyone involved in real estate transactions in the state.
Minnesota Housing Market Report April 2023
The Minnesota housing market experienced notable changes in April 2023 compared to the previous year. Let's dive into the key metrics and trends to gain insights into the current state of the market by analyzing the report released by the Minnesota Realtors®.
New Listings: Decrease in Inventory
In April 2023, the number of new listings decreased significantly by 27.0% compared to the same month in 2022. A total of 7,290 new listings entered the market, reflecting a decrease in available inventory. This reduction in new listings can impact buyers' options and contribute to a more competitive market environment.
Pending Sales: Decrease in Demand
The number of pending sales in April 2023 showed a decrease of 28.7% compared to the previous year. With 5,769 pending sales, the market experienced a decline in buyer demand. This decrease could be attributed to various factors, such as changes in market conditions or buyer preferences.
Closed Sales: Decrease in Transactions
The closed sales in April 2023 recorded a significant decline of 30.9% compared to the same period in 2022. The total closed sales stood at 4,522, indicating a decrease in real estate transactions. This decline may be influenced by the decrease in new listings and pending sales, as well as other factors impacting buyer and seller activity in the market.
Median Sales Price: Minor Decrease
The median sales price in April 2023 experienced a slight decrease of 1.5% compared to the previous year. The median sales price was $335,000, showing a small adjustment in prices. However, looking at the year-to-date figures, the median sales price increased by 0.3%, with a value of $320,000. This suggests relative stability in home prices over the course of the year.
Percent of Original List Price Received: Decrease in Negotiation Power
The percent of the original list price received by sellers decreased by 3.4% in April 2023. The market saw sellers receiving 99.3% of their original list price, indicating a slight decrease in negotiation power for sellers. This change may be influenced by market conditions and buyer preferences.
Days on Market Until Sale: Increased Timeframe
The average number of days on the market until sale increased by 36.7% in April 2023. Homes stayed on the market for an average of 41 days, compared to 30 days in the previous year. This increase suggests that homes are taking longer to sell, which could be attributed to factors such as market conditions, buyer demand, and pricing strategies.
Months Supply of Inventory: Increased Supply
The months supply of inventory increased from 1.3 to 1.7 in April 2023, indicating a 30.8% increase in available supply. This suggests that the market has shifted towards a more balanced state, with slightly more inventory available for buyers to choose from.
Minnesota Housing Market Forecast 2023-2024
The Minnesota housing market has shown steady growth and resilience in recent years. With an average home value of $320,657, representing a 1.2% increase over the past year, the market continues to be a favorable environment for homeowners and investors. Additionally, homes in Minnesota typically go pending within approximately 14 days, indicating a strong demand and competitive market.
Market Indicators
When looking at market indicators, several key metrics provide insights into the current state and future forecast of the Minnesota housing market.
Median Sale to List Ratio: As of March 31, 2023, the median sale to list ratio is 0.997, indicating that homes in Minnesota sell close to their listed price on average. This suggests a balanced market where sellers have some negotiating power.
Percent of Sales Over List Price: Approximately 31.4% of sales have been recorded as selling above the list price. This indicates a competitive market environment where buyers are willing to pay more to secure their desired properties.
Percent of Sales Under List Price: Around 48.3% of sales have been closed under the list price. This suggests that buyers still have opportunities for negotiation and potential bargains in the market.
Median Days to Pending: The median number of days from listing to pending sale is 14 days as of April 30, 2023. This signifies a relatively fast-paced market where homes are attracting buyer interest and going under contract swiftly.
Minnesota MSA Level Forecast
Looking at specific Metropolitan Statistical Areas (MSAs) within Minnesota, here are some forecasts by Zillow for selected regions.
Minneapolis, MN MSA: The forecast for this area indicates a growth rate of 0.3% by May 31, 2023, and July 31, 2023. By April 30, 2024, a more substantial growth rate of 2% is expected. This suggests a positive outlook for the Minneapolis housing market, with steady appreciation in property values.
Duluth, MN MSA: The forecast for Duluth predicts a growth rate of 0.4% by May 31, 2023, followed by a more significant increase of 1% by July 31, 2023. Looking ahead to April 30, 2024, the growth rate is projected to reach 4.5%. This forecast indicates a promising market for Duluth, with steady growth and potential investment opportunities.
Rochester, MN MSA: Rochester's forecast shows a growth rate of 0.7% by May 31, 2023, and further increases of 1.4% by July 31, 2023. By April 30, 2024, a growth rate of 3.8% is projected. This suggests a positive outlook for the Rochester housing market, with steady appreciation in property values.
St. Cloud, MN MSA: St. Cloud's forecast indicates a growth rate of 0.5% by May 31, 2023, followed by a slight increase of 0.7% by July 31, 2023. By April 30, 2024, the growth rate is projected to reach 3.6%. This forecast suggests a stable and growing market in St. Cloud.
It's important to note that these forecasts are based on current data and assumptions, and market conditions can change. Local factors, economic trends, and other influences can impact the accuracy of these forecasts.
Is Minnesota a Seller's Market or Buyer's Market?
Based on the available information, the Minnesota housing market in 2023 appears to lean towards a seller's market. Several factors contribute to this assessment:
- Limited Inventory: The number of new listings in April 2023 has decreased by 27% compared to the previous year. This decrease in inventory creates a situation where there are fewer properties available for buyers to choose from, potentially giving sellers an advantage.
- Low Days on Market: Homes in Minnesota are going pending within approximately 14 days, indicating a high demand and a quick turnover of properties. This suggests that buyers are actively competing for available homes, which typically benefits sellers.
- Percent of Sales Over List Price: Around 31.4% of sales in Minnesota have closed above the list price. This suggests that buyers are willing to offer more than the asking price to secure their desired properties, further indicating a market favoring sellers.
- Months Supply of Inventory: The months supply of inventory is at 1.7, indicating a relatively low inventory level. A supply of fewer than six months is generally considered a seller's market, as it indicates a scarcity of available properties.
While these indicators suggest a seller's market, it's essential to consider that market conditions can change over time. Factors such as economic shifts, changes in interest rates, and shifts in buyer demand can influence the market dynamics. Therefore, it is advisable to monitor market trends and consult with local real estate professionals for the most accurate and up-to-date information.
A key factor to consider when buying or selling a home is whether it's a seller's or buyer's market. In a seller's market, there are more buyers than available homes, which can drive up prices and lead to bidding wars. In a buyer's market, there are more homes for sale than buyers, which can lead to lower prices and more negotiating power for buyers.
Based on the report's findings, it appears that the Minnesota housing market is leaning toward a buyer's market in 2023. With the overall slight decline in home values and some regions experiencing a more significant decline, buyers may have more negotiating power and opportunities to find homes at lower prices.
However, it's worth noting that this is not necessarily the case for all regions in Minnesota. Some regions, such as Duluth, may still be a seller's market with home values projected to increase slightly.
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#
