The chart below shows the value of homes in Minneapolis from 2012 through 2022, with projections for future years. Home values have consistently increased year over year, indicating a stable market with no signs of a repeat of the 2008 crash.
Several factors impact the demand and value of homes, including the 30-year mortgage rate. In 2021, mortgage rates rose gradually from 2.67% in January to 3.12% by mid-December, though they remained in the historically low 3% range until the start of 2022.
Forbes reports that the average APR for the benchmark 30-year fixed mortgage rose from 6.87% to 6.97%, making it more expensive to buy and own a home. Despite rising costs, there remains a high demand for homes, making it challenging for buyers to find affordable options.
As mentioned earlier, the rising home values result in an increase in prices. However, it's crucial to understand the factors driving home prices up, with demand being the primary factor. The higher the demand for homes, the higher the prices. Realtors and real estate agents assess market demand by observing the duration homes remain on the market before selling.
In Minnesota, the ideal time to sell a house is during the summer months, when the weather is warmer, and homebuyers are less likely to worry about moving their belongings in the cold. Generally, the best month to sell a house in June, with the average time a house spends on the market before receiving an offer being roughly 35 days. Afterward, you can expect another 35 days to conclude the closing process.
While there are many compelling reasons to purchase a home in 2022, there are also some significant challenges to consider. One of the most pressing issues facing home buyers is the limited inventory available on the market.
With homes selling quickly and fewer options to choose from, it can be challenging to find the right property in the desired location and price range. If you're in the market for a new home, here are a few potential scenarios to keep in mind:
You may have heard from real estate experts and agents that the current housing market strongly favors sellers. While this is true, it's important to consider your options carefully before deciding to sell your home. One common concern is where to move after the sale, which can be a significant factor to consider. Another important consideration is whether buying a home in this market is a wise decision. The answer may depend on the size of the home you're looking for and your individual circumstances. By evaluating the pros and cons of buying versus selling in this market, you can make an informed decision that best suits your needs.
If you're a newly married couple, a young family, or just starting out on your own, you may want to consider waiting before buying a home. According to Forbes, the current real estate market is too good to be true. While it's a great time for longtime homeowners to sell and profit from their investment, it can be difficult for first-time homebuyers to purchase a home at the current prices. For example, the price of $310,000 for a first home is quite steep.
However, those who are looking to upgrade to a larger home may have better luck finding a deal. Many of the homes that are selling quickly these days are small to medium-sized houses, which means that larger homes can take longer to sell but may also present an opportunity for buyers. As we mentioned earlier, the longer a home stays on the market, the more likely it is to sell at a lower price. So if you're in the market for a larger home, it may be worth keeping an eye out for listings that have been on the market for a while.
To make the right choices and ensure you're making an informed decision, it's always wise to discuss these questions with a realtor or financial advisor. Keep in mind that purchasing a house is a major decision and requires careful consideration and planning.
Keep in mind that purchasing a house is a major decision and requires careful consideration and planning.
