Rising mortgage rates haven’t affected Twin Cities home prices yet, but they’re starting to affect buyers as well as sellers, agents say.
With the rapid rise in mortgage rates, cost-conscious buyers adjusted their budgets for several months. Currently, agents are aware that sellers are a bit less aggressive about prices. And more promising sellers are asking agents about listings, feeling that prices and bargaining power may soon shift from them.
“There is a fear of the unknown,” said Angela Schlinz, chief operating officer of Chris Lindar Real Estate. “They want to take advantage of what the market is currently offering.”
Median sales of all Twin Cities Metro homes rose 10% to a record $ 370,000 during April, according to a monthly report from a Minneapolis area realtor.
This profit adds to the complexity and expense of rising mortgage rates becoming a buyer in one of the most competitive markets on record after months of single-digit percentage price increases. Brought when you are.
Fixed-rate mortgages for 30 years averaged 5.3% last week, up from 2.94% in the previous year. Still, Twin Cities homes are selling faster than last year, and listed inventories continue to decline.
Data are still catching up, but visible changes in the market are underway, Schleinz said. By the end of April, new listings were up 11% from last year. The number of inquiries from people who are thinking of selling a house has increased significantly.
This is also the segment of the market with the highest sales, as most of the lists currently on the market are priced at over $ 350,000.
“There’s an atmosphere of rarity,” Schleinz said.
Buyers outnumber sellers in some parts of the metro, with just 5,758 homes, condominiums and townhouses selling at the end of last month, down 9.2% annually for the 25th consecutive month.
Due to the small number of homes on the market, Twin Cities saw a 9% decline in both pending and closed home sales in April. These declines were primarily caused by a shortage of homes priced below $ 350,000. Top bracket sales increased by double digits, similar to the list in these price ranges.
Last month, we saw about the same trend across the state. According to another report from the Minnesota Real Estate Agents Association, pending sales in Minnesota fell by nearly 10%, with a median sales of $ 340,000, up 11.5% from last year.
There have been dramatic fluctuations in pricing and sales rates within the state. Communities with high share of second houses, such as Cook County in the Arrowhead region and Eightkin County in north-central Minnesota, reported a historic shortage of lists and stagnant demand for lakeside real estate.
The strongest growth was also seen in regional metropolitan areas such as Rochester and St. Cloud. The same forces driving sales in Twin Cities create an imbalance between buyers and sellers.
Twin Cities distributor Tracy Ferrand, who tends to focus on southern metros and communities, including Rochester and Faribaud, is instructing all buyers and sellers to adjust their expectations. said.
Sellers may have fewer offers than they did a few months ago, and many buyers need to cut their budgets to account for the lower affordability of higher mortgage rates.
“I’m sure some people are pushing the gas, but some are braking,” Ferran said. “The market is definitely changing, it’s definitely changing.”
For now, it’s still a juggling act, especially for those who are trying to sell a home and buy the next one. Ferran recently helped Lena Marashenko and Robert Smith sell their South Metro town home and buy a single-family home in Isanti County.
“Sales weren’t really a problem,” Marashenko said. “But I was pretty disappointed to buy.”
After receiving four offers, they sold the townhouse quickly and above the asking price, but made several highs when trying to buy the next home.
In one case, they offered $ 45,000 more than the asking price and didn’t get it. Next time, they exceeded the asking price of Fridley’s house by more than $ 30,000, but still lost. In that case, there were more than 50 other offers.
These bidding wars were particularly frustrating as they went to buy a home for two months, and mortgage rates continued to rise, further increasing the urgency to get accepted offers.
“We were disappointed,” Smith said. “But we couldn’t offer any more penny because we had the best offer.”