Housing to become more affordable soon

Home prices keep going up. The chart below shows median home prices over the past decade:

Median home prices
Median Home Prices – TwinCities Metro area

The reason why home prices went up during the Biden administration is because Biden caused prices to rise. It had nothing to do with higher demand or the buying frenzy after the pandemic when interest rates were at an all-time low.  Home prices went up during the last Trump presidency because of something President Obama must have done while he was in office. I am not sure why this executive order wasn’t issued in 2017 but it wasn’t.

Those days are behind us now. Last week President Trump signed an executive order to lower the cost of housing.

“I hereby order the heads of all executive departments and agencies to deliver emergency price relief, consistent with applicable law, to the American people and increase the prosperity of the American worker.  This shall include pursuing appropriate actions to:  lower the cost of housing and expand housing supply; eliminate unnecessary administrative expenses and rent-seeking practices that increase healthcare costs; eliminate counterproductive requirements that raise the costs of home appliances; create employment opportunities for American workers, including drawing discouraged workers into the labor force; and eliminate harmful, coercive “climate” policies that increase the costs of food and fuel.  Within 30 days of the date of this memorandum, the Assistant to the President for Economic Policy shall report to me and every 30 days thereafter, on the status of the implementation of this memorandum. ” January 20, 2025

On a somewhat related note, gasoline prices are on average $.20 a gallon higher in Minnesota this week than a year ago.  Egg prices are way up too.

I’ll keep publishing information about home sales and prices every month as I have been doing for the last 20 years. I will start including a monthly chart that shows home prices in the current month compared to the same month a year ago. I will track falling home prices.

Extra bedrooms everywhere

I remember how excited I was as a new empty nester about the empty bedrooms. One of them became a guest room and for a few years, it housed my niece, while she attended college at the University of Minnesota. Now it is an empty guest room.

In 2023 “excess bedrooms” reached a record high of 31.9 million according to a study done by Realtor.com. Houses have more bedrooms while at the same time, household size is shrinking but shrinking household size was the biggest factor.

We have a guest room and a home office. I see this configuration in many three-bedroom houses, which leads me to this: Do I really have “excess” bedrooms? What is a bedroom?

 

Bedroom
Bedroom

 

Property taxes for 2025

House The 2025 proposed Ramsey County tax statement arrived in the mail on Saturday. It always comes on the weekend. Maybe they do that so we have a few days to deal with our shock and grief over the increases while county offices are closed for the weekend.

Our property taxes will increase by slightly more than 16%. Ouch. The city of St. Paul increased property taxes by 7.9%, the largest part of the increase. It should be noted that Minneapolis taxes increased by 8.1%. Inflation and rising property values contribute to the increase.

We knew property taxes would be increased but seeing the bill is shocking. It is actual money that we have to send to the county. There are state refunds for property taxes but the taxes have to be paid before money can be refunded.

If you haven’t opened your Ramsy County Proposed Property Tax statement yet you might want to pour yourself a drink before you do.

Move to Minnesota

MN state capitol bldg
Minnesota State Capitol building

Soon it will be very cold here in Minnesota but there won’t be any earthquakes, hurricanes, and no flooding until spring.  There are very few 100-degree days and they always occur in the summer. There aren’t any forest fires during the winter.  Move to Minnesota or the weather.

Minnesota’s mean elevation is about 1200 feet above sea level.

In most cases, homeowners can insure their property.

The unemployment rate is 3.3%, slightly lower than the national 4.1%. The cost of living in the Twin Cities is 6% lower than the national average. [rent cafe].

According to AI, the cost of living in Minnesota is 4% lower than the national average. Housing is 15% lower than the national average, and utilities are 4% lower. 

Minnesota has income taxes and we can expect to pay more for utilities, especially in the winter.

We have cold weather and warm weather and weather that is just right.

Top Employers in Minnesota

More homes for sale

The number of homes for sale is slowly rising. The number of houses being purchased has slowed a bit. The inventory of homes for sale remains low.

Graph of homes for sale
Homes for sale

I like to look back to 2019 as the last normal year for home sales. Since about 2013 we have experienced a strong seller’s market. Home prices will continue to rise because demand is strong and supply is relatively low. The average days on the market for homes for sale in the Twin Cities sits at about 20 days, another indicator of strong demand for real estate.

Mortgage interest rates are news.

Mortgage interest rates are making the news again. They have gone down to just over 6% for a 30-year mortgage. Experts believe that lower rates result in more home sales. That isn’t the case because we still have that old supply and demand problem. Expect home prices to increase as the demand is stronger than the supply.

Don’t get me wrong. I strongly favor lower interest rates. I just wish there were more houses so that people could buy them.

mortgage rate graph
Mortgage interest rates