If you are planning to buy your first home in 2020, there is a lot to learn about the market! With a pandemic, recession, and social distancing regulations, you might be wondering: How is the housing market fairing? Let’s take a look at what experts expect for the remainder of the 2020 MN housing market:
For the past several years, the Minnesota housing market has favored sellers. Sale prices trended up, and houses tended to be sold in a short period of time. This trend is called a seller’s market because more buyers are interested in the same type of houses and sellers benefit from the competition. In fact, we’re still in a seller’s market today, despite the effects of COVID-19.
A number of factors impact the real estate market, including inventory (the number of houses listed for sale), the number of buyers who are interested, and mortgage interest rates.
“As the state is re-opening slowly, listings are trickling in. The biggest challenge is still the shortage of houses,” says Adade Amenounve, Homeowner Development Coordinator with Twin Cities Habitat for Humanity. This limited inventory of houses is driving the price higher and creating inflation in housing costs.
Experts projected this housing shortage would be over after 2019, but many homeowners are opting not to sell since the pandemic has started. “Before COVID-19, we had hoped the price of homes would stabilize by now, but it has not happened yet,” says Adade. “The latest data from Minneapolis area realtors as of June 2020 is that the overall Median Sales Price was up 5.8 percent to $287,500 nationally.”
In the Twin Cities metro area, the June 2020 median sales price hit $305,000, tying the record high set in March 2020.
So, will the remainder of 2020 continue to be a seller’s market in Minnesota? Most likely, the answer is still yes.
Depending on the type of house you’re looking for, you may have more or less competition in this new pandemic-driven market. MAAR data continues by stating that Single-Family homes had the largest price gain, where prices increased 5.7 percent to $310,000. The price range that tended to sell the quickest was the $190,001 to $250,000 range at 33 days; market-wide, inventory levels were down 29.8 percent. The property type that gained the most inventory was the Condo segment, where it increased 9.2 percent.
While the pandemic may mean it takes a little extra time to find the right home, your patience will pay off. Give yourself some extra time by starting your search earlier, and consider exploring neighborhoods with lower average home values. Don’t be discouraged by multiple offers.
“While multiple offers are driving the price up,” says Adade, “the seller shouldn’t be selling their house to the detriment of the buyer. I hope there is a better system to favor the buyer in the multiple offer situation.”
The dream of homeownership is achievable, especially for those in the Twin Cities Habitat for Humanity Homeownership Program. No matter if the market favors buyers or sellers, you can reach your goal of owning a home by shopping smart—with patience and persistence.