Are you planning to buy your first home in 2019? Congratulations! Homeownership is a goal for many people, and house hunting can be fun and exciting. But, like any other major purchase, it’s wise to do some homework before you start shopping. Are sale prices trending up or down? Are most houses selling quickly or staying on the market for a while? The answers may determine where you look for a house, and even what time of year you start shopping.
Understanding a Seller’s Market
For the past several years, the Minnesota housing market has favored sellers. Sale prices trended up, and houses tended to be sold in a short period of time. This trend is called a seller’s market because more buyers are interested in the same type of houses and sellers benefit from the competition.
A number of factors impact the real estate market, including inventory (the number of houses listed for sale), the number of buyers who are interested, and mortgage interest rates. In 2018, fewer home listings meant more people were bidding on the houses that were available for sale. Interest rates continued to rise, making the cost of ownership higher when you consider the life of a loan.
Over the summer, these factors led to bidding wars and buyers paying more than the asking price to get the houses they wanted. But experts don’t expect this to happen as much in 2019. They are predicting a general slowdown in the increase of sale prices in late 2019 going into 2020. If inventory increases, building costs decrease, and more construction occurs in rural areas during 2019, it could help make homes more affordable.
Looking at the Future
So, will 2019 continue to be a seller’s market in Minnesota? Most likely, the answer is still yes. From January to October of 2018 the median (or average) sale price rose 6.1%. As an example, that means the average home priced at $200,000 in January would have been priced at $212,200 in October, based on market trends.
Limited construction in years prior plays a role in the rising prices. With the decrease in supply of houses in the Twin Cities comes an increase in price of the available homes. Furthermore, according to RentCafé, the average rent for apartments in Minneapolis has risen 5% compared to 2018. All these signs point to a higher average cost of living for Twin Cities residents. However, the good news for buyers is that prices are starting to stabilize following this period of home price increases.
Although the seller’s market trend may mean it takes a little extra time to find the right home, your patience will pay off. Give yourself some extra time by starting your search earlier, and consider exploring neighborhoods with lower average home values.
That said, according to HousingWire.com, “the housing market is off to a slow start, as 15% of U.S. listings experienced a price cut in January. Realtor.com Chief Economist Danielle Hale said the U.S. housing market is off to a slower start this year in many markets, compared to the rapid acceleration seen in January 2018.” So, if you’re shopping now, this may be a good time to grab a house while it’s at a lower price point! Keep in mind that winter is typically the best time to buy a house in MN and once it thaws out, the market becomes more competitive for buyers.
The dream of homeownership is achievable, especially for those in the Habitat for Humanity Homeownership Program. No matter if the market favors buyers or sellers, you can reach your goal of owning a home by shopping smart—with patience and persistence.