The ups and downs of the October 2022 Housing market

October home sales MN
October housing market

2021 was a record-breaking year for home sales. We can expect to see the arrow pointing down when comparing the number of home sales year over year. While home sales went down as compared with last year,  days on market went up but seriously 36 days on market is a quick sale. Prices are up by 3.8% from October 2021.

There are more homes for sale and that is a good thing. The inventory of houses for sale will get smaller each month and then increase again in early 2023. Some experts are predicting that sometime between 2023 and 2024 we will go back to having a more normal supply of houses on the market. Most of the time that will mean at least twice as many houses for buyers to choose from.

The graphic is a screenshot from the Minnesota Realtors Association monthly housing report for the state of Minnesota. Real estate is a bit more local than that but the general trends are statewide.

Long range US housing market forcast

Forecasting the housing market is kind of like predicting the weather. There are unknowns and unforeseeable circumstances that can change everything.

With that in mind:

Housing prices will rise slightly and sales will dip next year before making a comeback in 2024, according to Lawrence Yun, the National Association of Realtors’ chief economist.

That scenario actually makes sense to me. Right now there isn’t any evidence that prices will go down but they are rising much more slowly than they rose during 2021 which was a record-smashing year.

My own prediction for St. Paul is that home prices will rise by 3% give or take half a percent. That is more than the 1% projection for the country but real estate is local. I usually don’t make this type of prediction but I am pretty confident about it.

We will see fewer home sales due to the higher interest rates and possible recession heading into 2023.

As much as we like to have the business I can’t recommend buying a house without a secure job.

As for the projections regarding home sales we need to keep in mind that 2021 was a peak year.  There will be fewer home sales in 2022 and 2023 than there were in 2021 which is why we call it a peak year.

If we take that logic further and look to 2024 home sales will be up as compared with 2023 which will likely be an off-peak year for home sales.

 

National Association of Realtors Forcast Nov. 2022

 

The local housing market November 2022

There are so many articles about home prices declining yet here in St. Paul and in the Metro area prices are rising. They just are not rising by as much as they did last year. No one is losing money. It takes less than 30 days to sell a house in St. Paul because the demand is still higher than the supply.

I have noticed that houses are getting multiple offers and on average they are selling for more than the asking price but the sale price seems to be getting closer to the asking price. When there are multiple offers it seems like there are fewer in the pile but since the sellers can only accept one offer we do our best to make it work.

Don’t be afraid to buy or sell a house right now if you need to move. It is going to be alright and if it isn’t alright in a distant state or city try not to notice.

If your agent says you have to sell now before prices go down. Your agent might be wrong. Prices will likely rise in the spring barring any unforeseen pandemics or wars or social unrest. Just the same panic selling will rarely work in your favor.

landmark plaza - lights and leaves
Landmark Plaza lighta and leaves – downtown St. Paul

I like the way some of the trees downtown are decorated with both lights and leaves.

The number of home sales from peak to peak

Normally I would be presenting some numbers for Home sales by St. Paul neighborhood for last month but I am going to hold off on that because I found some discrepancies in the data. I can say that the median home sale price in St. Paul was $275,500 which was $500 more than September 2022 median sale Price.

Median days on market were lower in October than in September. October’s median day on market was 15 days.  The average sales price was slightly higher than the average asking price. In general, the number of home sales in the metro area has been declining for months but prices are still going up. The number of homes being put on the market is trending downward and the number of homes on the market remains low but slowly rising.

I thought it would be interesting to compare home sales in 2021 with the last peak in home sales which was toward the end of 2005. These are rolling 12-month averages. The peak is taller this time and the decline in sales is greater.

Higher interest rates are slowing down the housing market. Ultimately when the housing market slows so does the rest of the economy.

Graph of home sale peaks
Home sales in the Twin Cities

Saint Paul Home prices up and down

I read a lot of real estate news and it is confusing at this point. We saw record appreciation in home values during the last couple of years and now values are going down from that. As a homeowner myself I don’t feel as though I have “lost” any money. If I had sold my house last year as some of my clients did I would have sold it at the peak. If I had purchased a home last year as some of my clients did I would have bought at the peak.

Home sale prices took a nose dive during what some call the financial crisis and what I call the housing market crash and great recession. Those very same houses regained all of their value and more since then.

Here is a snapshot of recent home sale prices in St. Paul. It is a screenshot from a report in RPR which is a database that tracks most of the real estate in the country.

Graphic with home sale prices
Home sale prices

Home sales data from September and October will show price declines from September but some of that is seasonal and the gains from the last two years will still be in the double digits.  They are going to start to go down from the peak.

It is hard to predict the future of home values. They seem to always go up eventually but they did go way down for a time before going back up. The pandemic kind of messed everything up or maybe a better way of saying it is that the pandemic changed things. It changed how some people work and where people want to live.

Rising inventory of houses on the market?

Nationally the number of houses on the market is rising at the same time that fewer houses are going on the market. Here in St. Paul, there are fewer houses on the market than there were last year at this time but more houses than there were a month ago.

2021 isn’t the best year for comparisons. It was an unusual year impacted by the pandemic.

It is still a really great time to sell a house.

graph that shows the number of houses for sale
Homes for sale in St. Paul