Year-over-year home sales in July fell 25% in St. Paul, but values remain high – Twin Cities
Not too long ago, Justin DuChemin could almost guarantee a rush of offers well above asking prices to home sellers looking to list properties, even older homes that could use a little TLC.
DuChemin, a real estate agent at Re/Max, said several attractive offers continue to arrive for homes that have been carefully prepared for the market, but demand has slowed as interest rates have risen. Sellers are more and more surprised, and sometimes disappointed.
“We don’t seem to be selling things like $40,000 or $50,000 above list price, with deals like ‘You can name my first child,'” DuChemin joked, recalling the binge eating that made the big shots. unusual domestic headlines as recently as March.
“Overall, home sales are definitely down,” said DuChemin, who is helping sell his neighbor’s house in Maplewood. Buyers “are not gangbusters to move on to the next phase. There is currently a disparity between the price at which sellers want to sell their homes and what buyers are willing to pay. »
His outlook is echoed both locally and nationally by new home sales reports from agencies such as Re/Max, the St. Paul Area Realtors Association and Minneapolis Area Realtors.
In July, year-over-year home sales fell 25% in St. Paul and 17.5% in Minneapolis, according to the St. Paul and Minneapolis Realtor Associations. Towns such as Monticello, Golden Valley and Orono saw gains, while Stillwater, Chanhassen and Fridley saw weaker demand than a year ago.
That doesn’t mean house prices are down, but they might finally be stabilizing a bit.
HOME SALES AT $375,000, UP — AND DOWN
According to Re/Max, the median selling price of homes in the Minneapolis-St. The Paul-Bloomington statistical area was $375,000 in July, down from $380,000 in June, but still up significantly from $350,000 in July 2021.
Overall, “sales are down but values are up,” said Tracy Baglio, Keller Williams real estate agent in the Stillwater/St. Croix Valley area and past president of the St. Paul Area Association of Realtors. . “Interest rates have slowed things down. They stopped the 10 or 20 bid frenzy. We haven’t had a sale yet that hasn’t had multiple offers, but now we have three or four offers. They’ve always topped list price, but they’re not nearly as wild.
That’s not necessarily bad news, Baglio said. “It really gives first-time home buyers a better chance to compete and win, just because there’s less competition,” she said. “It’s always a seller’s market.”
Buyers who remembered the near-catastrophic collapse of the housing market during the Great Recession of 2008 may have balked and paused when they saw interest rates soar from near-record lows during of the last few months. Would a newly purchased property lose 30% or more of its value in a matter of months, much like many Twin Towns homes did just over a decade ago? If so, some thought waiting for a stock market crash might be a good time to find deals.
Except that many experts think the housing market is unlikely to collapse, given the amount of housing needed that simply never got built during the Great Recession. In the St. Paul market, even a 25% drop in sales has yet to fundamentally reduce prices. DuChemin noted that the 2008 crash was fueled in part by corrupt lending practices and variable-rate mortgages given to inexperienced buyers with unforgiving terms. The industry has since matured.
“We are returning to this more balanced market between sellers and buyers, which is a good thing for buyers. But it’s still a good time to sell,” DuChemin said. “There will be no opportunity to buy at a discount in the next six to twelve months. Many buyers have been waiting for this crash, because many buyers are being shut out of the first-time homebuyer market. I just don’t think you’re going to see that.
Baglio, who is in his fifth house, said he has received the following advice, which has served him well.
“We marry the house and we set the interest rate date,” Baglio said. “Go in the house and refinance when you see an opening later. There is always an opportunity.
IN FIGURES: FALL IN SALES, INCREASE IN PRICES
Re/Max’s “National Housing Report”, released Wednesday and focusing on 53 metropolitan areas, found a double-digit decline in home sales from June to July, as well as a double-digit increase in homes for sale. The two trends triggered the first decline in the national median selling price since January.
Median selling prices hit $415,000, down 2.9% from June, but still up 8% from July 2021. Year-over-year sales were down 26.3% compared to a year ago.
According to Re/Max, there were 13.3% more homes for sale nationally in July than in June, and 30.4% more than a year ago. Inventory, or months of supply, is now at 1.8 months nationwide, double what it was in May.
The overall picture – price up, sales down – is a little more nuanced than what many buyers and sellers have grown accustomed to over the past couple of years. Re/Max found that the Twin Cities Metro experienced a similar trend, with home sales down year-over-year despite rising inventory, and prices up 7% in July from a year ago, but down 1.3% from June. .
The St. Paul and Minneapolis Realtors Associations found pending home sales in the subway were down 23.3% in July from a year earlier and down 12.8% from July 2019 .
“Buyers have been hampered by rising mortgage rates, still-low inventory, high home prices and some economic uncertainty,” reads their latest joint advisory. “Buyer activity has slowed for 11 of the past 12 months as most recognize that the frenzied demand of 2020 and 2021 could not last.”
Nonetheless, they found Metro homes selling for a median of $375,000 last month, up 7.1% from July 2021.