Minnesota Realtors have released their latest housing report and it shows the market may be slowing slightly.
Pending sales were down 16.6% in June compared to the same month in 2021. Closed sales also declined by 13.7% during that time frame.
“2021 was the best year ever for sales, so we knew this year was going to be that way, and as interest rates started to go up, we also knew it was going to slow down,” said Chris Galler, the CEO of Minnesota realtors
The average 30-year fixed mortgage rate has increased from about 3% at the beginning of the year to about 5.5%. This increase is affecting what buyers can afford.
“Now they’re not looking at Cadillacs,” Galler said. “They’re having to readjust their priorities.”
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St. Paul homeowner Mary Olsen told 5 EYEWITNESS NEWS the higher rates were a factor as she and her husband determined their budget for a new home. The couple recently purchased a home near Lake St Croix Beach.
“We were at a 3.2 interest rate, and there was no way we were going to get that again,” Olsen said. “We got in at 5.75, but that does factor in when you think about payments.”
They close on their new home on Tuesday.
“If you really want to buy right now, I would make sure you sell first,” Olsen said. “We knew ahead of time, going in, what our plan was and what our hard number was [of what] we’d go to.”
The sale of their current home will also be finalized on Tuesday. Olsen worked with Dunn Realty Group to sell their St. Paul property, and they received multiple offers.
“They listed and we sold in just about a week,” said Olsen, who said she and her husband sold their home above asking price. “We priced it kind of aggressively, not as much as we might’ve six months ago, but it worked out great.”
According to the Minnesota Realtors report, the median sales price rose about $20,000 from June 2021 to June 2022. It jumped from $325,000 to $345,000.
Galler explained there’s still only about a six-week supply of housing statewide. A healthy market would be a 12- to 16-week supply.
“We’re talking 24 to 48 months probably until we get back to a normalized marketplace,” Galler said. “Last year was a record year, and the year before that it was a record year.”
As the market slows slightly, he encourages prospective homebuyers to take another look at what’s on the market.
“There’s more opportunities now than there was six months ago, a year ago, two years ago,” Galler said. “Go out and look again. Understand that interest rates have gone up, so you may not be looking at the same product as before and there are still multiple offers going.”
For sellers, he recommends patience.
“It’s not going to sell in a week,” he said. “It’s going to take a few weeks, you’re going to have to be competitive, your property is going to have to be in great shape.”