As Median Twin City Homes Surpass $350,000, More Renters Are Giving Up Owning
For some in the home buying market, today’s tight housing supply means there is more urgency to navigate. For others, it means putting their plans on hold.
MINNEAPOLIS — With the median home price in the Twin Cities now above $350,000 for the first time, more renters are losing faith that they will ever own a home.
An annual Federal Reserve Bank survey found that on average, only 43.3% of renters expect to own a home at some point in the future, down from 51.6% in 2021. That’s the level the lowest since the Fed started asking the question. in 2015.
Local real estate agents say the Fed’s decision to raise interest rates to fight inflation is the latest blow to a market that was already extremely tight.
“In 29 years, I’ve never seen the market this tight before,” said Denise Mazone, president of Minneapolis Area Realtors. “I mean, I’ve seen it where it’s a seller’s market or a buyer’s market, whatever, but never to that extreme.”
Although it’s usually a very busy time of year, the latest report from Minneapolis-area real estate agents shows only a month’s supply of homes. Mazone says that’s up slightly from February.
“It won’t bring a balanced market until there’s maybe four or five months of supply,” Mazone said. “It’s across the subway. I’ve shown properties in Ramsey, St. Francis, Cambridge, Anoka, everywhere, and it’s exactly the same wherever you go.”
Kent Erdahl: “Is it tight across the board, or are there certain price points that everyone wants, but no one can find right now?”
Denise Mazon: “That’s general, but if you’re a first-time home buyer, the $250,000 and under range is even worse.”
The Fed’s decision to raise interest rates in an effort to slow inflation further complicates matters for many buying in this price range.
“Maybe they could afford a $240,000 house and now they’re only entitled to $215,000 or $220,000 – depending on their credit – they just won’t be able to buy that much,” said Mazon. “And then there are the cash buyers. I just lost a deal today because it was a cash buyer and they were going to close next week. You can’t compete with that, even though my offer was nearly 20% above list price.
And with another rate hike slated to come, the concern isn’t just for buyers.
Erdahl: “Is there a concern that with higher interest rates now, people are less likely to want to sell their homes or get out of mortgages they have locked in?”
Mazon: “Oh indeed, absolutely, because when they sell, they’re going to have to buy somewhere. You’re going to pay the same or more when you move to another property.”
Erdahl: “Are there people, at this point, who just say, ‘We’ve been trying it for a while, I’m just going to sit on the sidelines?'”
Mazon: “Oh, absolutely. All the time. I just had a family, we made ten offers and they finally said, ‘We’re done. It’s too much for us emotionally, so we’ll just take a break. ‘ They ended up only taking a week off and came back, and we finally got one.”
Despite all the discouraging news, Mazone says she and other real estate agents are still making deals, and with prices and mortgage rates continuing to climb, she says it’s still a good idea for buyers to keep going. to seek, to stick to a plan and to remain patient.
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