Market activity always varies across areas, price points, and property types. The Mankato, Willmar, and Alexandria regions saw the largest gains in listing activity, while sales rose the most in the Fergus Falls, Rochester, and Willmar regions. The most balanced markets were Bemidji and Detroit Lakes, while the most undersupplied markets were St. Cloud, the Twin Cities, and Rochester. Homes took the longest to sell in the Hibbing/Virginia and Mankato regions.
Insights and Anecdotes
Agents across the state report that activity is slower compared to the last few years and buyers are more selective. Some listings are still in multiple offer situations and sell for over asking price. Luxury market activity remains fairly strong. Cash sales have also risen, indicating a desire to avoid higher interest rates. At just 2.6 months of supply, we’re still in a seller’s market, just not to the same degree as the last several years. Typically, 4-6 months of supply are needed to have a balanced, neutral market.
Interest rates and the business cycle can impact the housing market in the short- or mid-term, but the key to a healthy, sustainable market—in addition to much needed supply—is steady job growth with well-paying jobs. The state’s unemployment rate remains at 3.1%, which is below the national average. The labor shortage continues to weigh on employers. Minnesota is fortunate to have a diverse economy spanning health care, finance and insurance, manufacturing, retail, professional services as well as government, arts, and entertainment. A powerful economic driver, real estate accounts for $69.5 billion or 15.6% of the gross state product according to NAR. But the rising cost of living is impacting Minnesotans in every area of the state, including their ability to achieve homeownership.
Twin Cities Metro Overview
Metro home prices rose at a slower 2.4% pace. The metro area also saw a larger sales decline. Sellers accepted around 98.4% of their list price after 37 days on market in the metro compared to 97.5% in 37 days statewide. At 2.3 and 2.6 months of supply in the metro and state respectively, the supply shortage is still affecting every region. Inventory levels contracted more in the metro than the state, partly reflecting a small bump in listings statewide. Even though incomes are higher in the metro, higher home prices and payments still hinder too many would-be buyers. Whether a cabin off the North Shore, a downtown condo, townhome or suburban single-family home, a farmstead or one of our many beautiful small towns, Minnesota offers something for everyone.