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Personal Perspective:

Here's our quick hot take on what is currently happening in the real estate market here in Minnesota and the trends we observed from August into September. As usual, summer sadly came to an end, leading many buyers and sellers to focus on other life events, such as the new school year starting. With many people's schedules changing, a shift became noticeable from our personal experience with our clients. The listings we had available received fewer showing requests, but definitely attracted serious buyers.

For example, a home we had for sale in Minneapolis had a total of 10 showings and received two offers in just a few days. We would consider this strong showing activity for the season. However, as we work with buyers, we are noticing that they are exploring their options for a longer period. Therefore, days on the market seem to be inching slightly higher for sellers' homes compared to the mad rush some of us have been used to over the past few years. We've also scheduled more listing appointments than ever before for interested sellers who are planning ahead for 2024. Conversations are happening about people wanting to move, but they also want to make a smart move, considering the higher interest rates we are currently dealing with.

Data from Minnesota Realtors®:

According to new data from Minnesota Realtors®, sales continued to soften in August, but home prices showed their largest year-over-year gain in over 12 months.

Home prices statewide were down just slightly in March, April, and May but up in June, July, and August. In fact, August prices rose the most in over 12 months. Home prices are up 5.5% from last August, up 10.6% from August 2021, and up 23.1% from August 2020. During the month, sellers brought 9,124 new listings online—which was just 0.4% fewer than last year. Inventory levels slipped 4.7%. Many would-be sellers are choosing to stay put for now. Most sellers are also buyers, and higher mortgage rates combined with higher prices have truly harmed affordability.

“People used to move every five to seven years either with a life or job change,” said Emily Green, President of Minnesota Realtors®. “But we’re seeing people stay in their homes longer, particularly if they have an attractive mortgage rate. Some call this the ‘lock-in effect’ and it’s preventing needed inventory from hitting the market.” Sellers were still getting offers close to their list price, on average (99.2%) despite an 11.8% decline in sales. Though still occurring, multiple offer situations on listings have become less common compared to the last few years.

Despite the sales slowdown, some properties are selling in a few days or less for well over asking price. Market times were up 6.9% over last year, but that pace remains fairly quick in a historical context. The current environment is, however, forcing buyers to be more selective and cautious about going over asking price. Surprisingly, this market still favors sellers, just not to the same degree as recent years. August months’ supply of inventory was up an even 25%. At 2.5 months of supply, it’s still a seller’s market, just not to the same degree as we saw recently. Typically, 4-6 months of supply are needed to reach a balanced, neutral market.

As always, we are here if you ever have any questions or just want to chat about the right time that works for you to make the next move!

Cheers!

Adam & Brit

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