The Minnesota Real Estate Market Is Cooling: What Home Buyers Should Know
Learn about the current state of the Minnesota real estate market, including how home prices are changing and what buyers should know before making a purchase.
The Minnesota real estate market has seen unprecedented growth over the past decade, with home prices rising by nearly 98% since 2012. However, in July of 2021, there was a noticeable slowdown in activity, with closed sales declining 19.2%. This cooling of the market is good news for buyers who are feeling fatigued from competing for homes in the heated market.
While the rate of home sales has slowed, housing demand is still strong and there doesn’t appear to be a bubble or crash on the horizon. Home prices have continued to rise at a moderate pace, with the median value in Minnesota now at $334,858. Additionally, the Affordability Index has declined 24.6%.
The All-Transactions FHFA House Price Index for Minnesota reveals that the quarter (2021 Q4 – 2022 Q1) saw an appreciation rate of 2.28%. Over the last twelve months (2021 Q1 – 2022 Q1), it has been 14.87%, with a cumulative appreciation rate of around 127.11% over the past decade.
While home prices are still rising, the healthy balance of demand and supply signals that we may be entering a period of stabilized home values. This could be partially attributed to an increase in interest rates, as well as labor shortages and difficulty with obtaining certain construction materials. Minnesota’s housing supply is also still below the standard of a balanced market.
Overall, Minnesota’s real estate market appears to be cooling and returning to more historical levels of activity. But with prices continuing to rise, buyers should stay aware of their local markets and the current trends before purchasing a home. For those that are able and ready to purchase, now is a great time to take advantage of this cooling period before prices start to rise again.
Key Takeaways For Minnesota Home Buyers
- Home prices in Minnesota are still rising at a moderate pace, but with fewer sales due to the cooling market, buyers have breathing room to make an informed decision.
- Interest rates are on the rise, making mortgages more expensive for homebuyers.
- Labor shortages and supply-chain issues have influenced the housing market over the past year, making certain materials difficult to obtain and causing a slow-down in building.
- Minnesota’s housing supply is still below the standard of a balanced market.
- Buyers should stay informed of their local markets and current trends before purchasing a home.
Data referenced from: https://www.noradarealestate.com/blog/minnesota-housing-market/
