Local Market Conditions & home prices

The most common question I get from homeowners is: “How long will it take to sell my house”.  I pulled up some numbers from the Multiple Listing Service and the average amount of time it takes to sell a house in the Twin Cities metro area is about 30 days. Houses that are in the 250,000 to 350,000 price range sell the fastest and houses that are priced over 500K take a couple of days longer to sell.

There are a lot of variables. I suppose the numbers refer to the “average” house. The house needs to be priced right. Typically it takes a little longer to sell a house in December than it takes in March.

I decided to look at data from the last ten years for some perspective. It used to be pretty normal to have a house on the market for six months or more. In the last couple of years, most of our listings have gotten offers after a day or two on the market.

Here are some home sales and prices data by St. Paul neighborhood for November 2022. The number of homes that went on the market is the lowest we have seen since 2017. The number of home sales is was pretty average for a November. There are usually fewer home sales in the winter than in the spring and summer.

Median days on market was a low 19 days. Fewer sellers got more than the asking price which is also typical for November. Median sales prices remained strong and were up from October.

There has been a shortage of houses for sale for a few years now and the demand for housing has been strong which is why we are seeing a strange seller’s market even though interest rates are higher.

Downtown St. Paul looks a bit more like a buyer’s market.

The data used to make the table was extracted from the NorthstarMLS which is deemed reliable but not guaranteed. The data was gently sorted, never shaken or stirred, in an MS Excell spreadsheet.

For more local home sale data check out Local Market Conditions & Home Prices. 

If you would like to know how much your home will sell for and about how long it will take contact me for a free no-obligation consultation.

A 250,000 dollar house will cost more than half a million dollars and it will take most people most of a lifetime to pay for it. This is what a 30-year mortgage looks like these days:

Principal	$250,000.00
Interest	$323,604.54
Total Cost	$573,604.54

 

It is true the house costs more than twice as much as the amount borrowed to pay for it. Sure most people will have a down payment so let’s assume that the buyers paid $275,000 for the house and had $25,000 for a down payment.  That house of course is below the median for the area.

The monthly payment on the loan is close to 1,600 without including property taxes which in St. Paul will add up to a few hundred dollars a month or homeowners insurance which will also add a couple hundred dollars a month to the payment. Go ahead and add $500 to the payment.

There all also monthly utility costs and maintenance expenses. Houses do have to be heated this time of year. The smaller the house the lower the heating and cooling costs and maybe the maintenance costs too.

Renting is often even more expensive if we compare comparable properties. Generally speaking, the owner needs to make a profit. It is becoming harder to pay the rent and save up to buy a house. We call it “rent trapping”.

Housing is expensive. There really isn’t any other way of looking at the numbers.

Home buying is definitely slowing down. Some of it is because of the season and some is due to the interest rates that have gone down but are still more than 6.5%. First-time home buyers in particular are facing a brutal market.

Let’s hope that rates start going down or that wages go way up or that we find a way to create affordable housing. There is an urgent need for more housing in all price ranges.

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.

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.

 

 

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.

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