Regional Dynamics
Market activity always varies across areas, price points, and property types. The Alexandria, Detroit Lakes, and Willmar regions saw gains in pending sales, though prices rose the most in the Duluth/North Shore region as well as the Mankato, Bemidji, and Brainerd regions. The most balanced markets were Bemidji and Detroit Lakes, while the most undersupplied markets were St Cloud, the Twin Cities metro, and Rochester. Homes took the longest to sell in the Hibbing/Virginia and Mankato regions.
Agents across the state report multiple offer situations are less common compared to the last few years but still occurring. Some properties are selling in a few days or even a few hours for well over asking price. But overall, buyers are being more selective and cautious when choosing which listings to view and make offers on. At just 2.6 months of supply, it’s still a seller’s market, just not to the same degree as over the last few years. Typically, 4-6 months of supply are needed to have a balanced, neutral market.
Minnesota Economy
Home sales and prices sometimes fluctuate with the business or interest rate cycle, but long-term, steady job growth with well-paying jobs is a key ingredient to a healthy and sustainable housing market. The state’s unemployment rate is 3.1%, which is below the national average. Businesses are still having a hard time finding and keeping workers. Minnesota is fortunate to have a diverse economy spanning health care, finance and insurance, manufacturing, retail, professional services as well as arts and entertainment. Building a sufficient number of homes to house workers across the spectrum has proven difficult. A few challenges facing our state (as well as others) include tax competitiveness, regulatory reform, environmental concerns, and addressing an aging population. While inflation has cooled notably from its peak, the rising cost of living is impacting Minnesotans in every neighborhood and zip code throughout the state.
Twin Cities Metro Overview
Metro home prices rose at a slower 2.2% pace. Sales declines were nearly identical at both the metro and state levels. Homes sold in 34 days in the metro versus 32 days statewide. There’s a shortage of homes—particularly affordable units—across the entire state. With 2.3 months of supply compared to 2.6, the metro market was a bit tighter than in the state as a whole. Inventory levels contracted more in the metro than in the state. While earnings are higher in the metro, so are home prices and mortgage payments. Whether a remote place off the North Shore, one-level townhome, downtown condo or suburban single-family home, a lake cabin, farmstead or one of many friendly small towns, Minnesota offers something for everyone.