T
he Twin Cities' housing market is undergoing a subtle yet significant shift, with buyers finally gaining an upper hand in the long-standing seller's market. For the first time this decade, house hunters are enjoying slightly more time and less competition to make their dream purchases, a welcome respite from the harsh realities of higher mortgage rates, scarce listings, and record-breaking home prices.
The numbers tell the story: homes in the metro area sold at an average pace of 69 days in February, a 10-day increase from last year and the slowest in at least seven years. Nationally, there were enough listings to last 3.7 months at the current sales pace, the most in six years. While buyers still outnumber sellers in much of the Twin Cities, the market dynamics are changing, with parts of Florida and Texas experiencing a significant slowdown.
The Higgins family knows this shift all too well. After selling their Houston home and buying a new abode in the Twin Cities, they found that housing shopping was easier than house selling. Their 3,000-square-foot Minnesota home had been on the market for nearly a year before they paid $415,000 – $65,000 less than the list price.
The shift towards buyers is not a sign of a balanced market just yet, but rather a correction in the long-standing seller's market. Many sellers have continued to list their homes at elevated prices, assuming buyers would pay anything like they did during the pandemic. However, with mortgage rates nearly doubling since the beginning of the pandemic and insurance costs skyrocketing, buyers are no longer willing to overpay or take on fixer-uppers.
The cost of insurance is a significant factor, with typical payments on median-priced homes in the metro area increasing by $700 per month compared to four years ago. This waning affordability is affecting first-time buyers and bargain shoppers the most, causing market times for the least-expensive houses to increase significantly. Houses priced at less than $120,000 took 80 days to sell in February, a 20% longer period than last year.
The pursuit of perfection is also driving the shift towards buyers. Today's homebuyers – even wealthy ones – are unwilling to overpay if the house isn't professionally staged and move-in ready. Sales agents like Debbie McNally report that buyers want perfection, and it's selling quickly. In contrast, houses in the Twin Cities sold the fastest in North St. Paul, Carver, and Columbia Heights, where there is an abundance of houses priced from $350,000 to $500,000.
For the Higgins family, the stress of trying to sell in Texas only made their move more challenging. They couldn't buy a house in the Twin Cities until they sold the one they owned in Houston, and they were shopping remotely. When a listing that met their criteria came on the market, they quickly scheduled a Facebook video walk-through tour and pounced on it without ever seeing it in person.
The shift towards buyers is a welcome change for many, but it's still far from a balanced market. As one sales agent noted, "Prices, incomes, and rates all matter. That hasn't changed." The pursuit of perfection may be driving the shift, but it's also creating new challenges for sellers who are struggling to adapt to the changing market dynamics.
