What's happening in the Real Estate Market?

Twin Cities Housing Market Update March 2023

There’s some interesting stuff happening in the housing market this March. In this month’s update I talk about three of those things.

One, what’s happening with home prices in the Twin Cities 7-county metro; two, what’s happening the inventory of homes for sale; and, three, what’s happening with days on market—that’s realtor speak for how many days it taking to sell a home.

Home Prices Flattening

The big news here on home prices is that they are flattening for the first time in, literally, 5 years or more. Check out this graph. Since 2013, home prices have been on a steady upward trajectory. And from Feb 2020 to Feb 2022, the median average home price rose from $290,000 to $345,000, an average increase of $2,400 a month—every month.

Graph showing rising home prices in the Twin Cities from 2013 to 2023

But since November of last year, we’ve seen a flattening of home prices. The median average sale price last November was $365,000 and it edged up to $367,000 in January and stayed the same in February. So while home prices did increase year-over-year by about 6.4 percent, that trend seems to be changing.

And if you take new construction homes out of the mix and look just at existing home sales, that number has been essentially flat since September of last year.

The median average sales price for existing homes in the 7-county metro hit $349,900 last September, and it remained at $350,000 in February. So existing home prices have essentially been flat for six months. I’d say that’s a trend.

That slowdown in home price escalation is good news for buyers who have seen their purchasing power decline with rising interest rates. And if you’re thinking of selling and you’ve owned your home for a while, you are still going to realize the benefits of all that growth.

Over the past 10 years, the median average home price has risen from $173,000 to $367,000 or 112 percent. That’s 11 percent a year on average, That is a lot of equity growth

New Listings Down; Homes for Sale Growing

Moving on to the inventory of homes for sale. This is a good new bad new story.

First, take a look at the number of new listings last month compared to the previous two years. It’s not a pretty picture. New listing are down 28% over 2 years. Yikes!

The number of new homes for sale in February has dropped by 28 percent since 2021

But new listings don’t tell the whole story. If you look at active listings, the total number of homes for sale, the picture looks a little different. The number of homes for sale in the 7 county metro actually rose 6.4% year over year.

Number of homes for sale in the Twin Cities metro in February 2021-2023

That tells us that homes are staying on the market longer. But, if you look back to Feb 2021, you can see that February 2022 was kind of the low point for inventory. In fact, February 2022 is the lowest point for inventory in the last 10 years.

So if new listing are down, and but the number of homes for sale is rising, that indicates that homes are staying on the market longer, which is my third point.

Homes are Staying on the Market Longer

With rising interest rates causing slowdown in the buyers market, the median number of days on market—remember, that’s the number of days it takes to sell—has more than doubled year over year, from 17 days in Feb 2022 to 43 days last month.

Now, I know that sounds like a lot, but remember that Feb 2022 was pretty much the lowest point for inventory is since the beginning of the pandemic. I also want to note that 43 days on market is much closer to the norm for home sales in February over the past 5 years.

So just to recap. home prices are flattening, and that is good for buyers, and seller’s shouldn’t worry to much because years of rising prices have increase the value of their homes.

The number of new listings coming to market continues to dwindle, but the number of homes for sale has been growing, and that is because it is taking longer for homes to sell.

Sale time has double year-over-year, but is really not much different than before Covid and record low mortgage interest rates upended the housing market.

If you have questions about how these market trends may effect your plans to buy or sell a home, please reach out. I’m here to help.

Is Now a Good Time to Sell My Home? That question is the holy grail for home sellers, and even more important now that the market has begun to shift.

J Trout Lowen is a Minneapolis REALTOR® and an expert in helping homebuyers and sellers navigate the Twin Cities housing market.

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