The Twin Cities housing market continues to hold strong, with average housing prices increasing by 8% since September last year. Moreover, fewer homes are on the market, which creates more demand.
However, with the rising mortgage rates and far fewer home sales being closed, the market is showing signs of cooling down (eventually). Since houses within Saint Paul and the Minneapolis area are, on average, still on the market for a month or less, a cooldown will likely not happen for the rest of the year and into 2023.
Average Sales Price
Days on Market Until Sale
Months Supply of Inventory
Source: Minneapolis Area REALTORS®
Based on the above statistics, we have made an educated hypothesis on how the housing market will go in the coming months in Saint Paul and Minneapolis.
While the mortgage rates are rising, the demand for houses is still high as the market is even more undersupplied than last year. As a result, housing prices will likely steadily rise at a much slower rate because of the competitive seller's housing market. The housing market for the whole Hennepin and Ramsey County area (the counties in which Saint Paul and Minneapolis reside) is also incredibly competitive. Bloomington, MN, for example, rests in Hennepin County, and homes are selling (on average) in 18 days. Additionally, over half of all homes sold in Bloomington sell for more than the asking price. Source: Redfin
Similar housing market trends can be found throughout other cities in the area, such as Minnetonka, Maple Grove, Eden Prairie, and Edina.
However, the time on the market will continue to increase slowly. It is no longer the trend for buyers to feel the need to skip inspection or go well beyond the list price. And sellers still often think that the housing market is in the same position as it was in 2021. As a result, it can take longer for a buyer to accept a buy from a seller. So, while buyers can still expect their home to sell in the Twin Cities area easily, they should also not expect interested buyers to put in offers immediately or to get way over the market value price.
Additionally, housing prices are continuing to sell much higher than last year. There is an 8% increase in average home sale prices in Saint Paul and Minneapolis from September 2021 to September this year.
The Twin Cities housing market will continue to be one of the hottest markets in the United States going into 2022 and one of the hottest markets for rental property investing. We expect the real estate activity to continue to grow into 2023. However, we also predict that there will continue to be limited housing and properties available, and interested buyers and renters may have to pay more than they are right now for their housing choice when looking in metropolitan areas such as Saint Paul, Bloomington, and Maple Grove.
The Twin Cities area has always brought in interested investors and homebuyers as it's an area that has a lot of opportunity, recreation, and excitement. With so much to offer, there is rarely a time when it isn't a good idea to invest in Twin Cities real estate. In addition, Minneapolis hosts large events in the U.S. Bank Stadium, and Saint Paul is known for its culture and historical landmarks.
The Twin Cities have a consistently short supply of real estate, so when an investment opportunity comes up at a fair market price, it is rarely a bad investment.
Moreover, with the strong job market and high demand for housing, we predict that investing in real estate within the coming months can still be profitable.
The Twin Cities housing real estate market is still incredibly competitive despite the high-interest rates and remains a seller's market as there is more demand than supply.
In September, the Twin Cities housing market had 1.9 months of inventory, an almost 19% decrease since last year.
So again, the higher interest rates contribute to the increased market time.
For the real estate market to switch to a buyer's market, the inventory needs to increase by several months. The Twin Cities housing market could become a buyer's market, but likely not for a while. Therefore, those looking to purchase real estate in the Twin Cities area during the upcoming months should consider that it is still a seller's market before submitting an offer.
Why are there fewer closed sales within the Twin Cities region when homes are selling for more than they were on average less year?
Well, fewer homes are going on the market. So the demand is still high, but the supply is low. And, even though homes are staying on the market longer than they were last year, they still are selling at a fast enough rate where the supply of inventory is pretty low.
Houses for sale across the Twin Cities are getting fewer multiple offers and rarely sell without an inspection. However, with few homes on the market, the Twin Cities housing market is still strong. The imbalance of homes available versus interested buyers in the area makes the Twin Cities a hot market and a dream for home sellers.
Therefore, we predict the Twin Cities will still be a seller's market going into 2023.