Housing Marketing Update: National and Local Minneapolis Insights

It’s no secret that the economy directly correlates with the housing market. While this trend is typical during a recession, what we are currently experiencing with the housing market could be considered unprecedented. As we come off the back of a global pandemic and interest rates continue to climb, many of us are feeling the pinch. 

Whether you’re selling a home or looking to get into the housing market, you might be concerned about what you see in the news rights now. So how does the current economic situation affect the real estate market? What does the remainder of 2023 hold in store? Let's dive into the national and local Minneapolis housing trends.

The Economic Downturn and Home Sales 

During 2022, the economic downturn significantly affected house pricing and home sales figures. In the U.S., existing home sales fell by a dramatic 35.4% last year and have continued this trend, falling an additional 7.7% since November. 

While this may be concerning, this trend is typical amid future uncertainty, already inflated housing prices, less money in circulation, and higher interest rates. With this set of circumstances, many buyers are less inclined to enter the market. 

Latest U.S. Housing Market Trends 

In December 2022, home prices across the U.S. continued to trend upward, rising 1.3% compared to 2021. In addition, the number of homes sold dropped by a whopping 37.4%, while the median sale price of a home in 2022 was $388,310, which shows a striking difference compared to the same median data in 2018 of $249,000. 

Average mortgage rates are currently at 6.87%, which equates to a considerable increase in monthly repayments for millions of America. However, there is light at the end of the tunnel. In a November 2022 interview, the chairman of the Federal Reserve, Jerome Powell, stated the fed would “ease off” on interest rate increases by the end of 2023. This is perhaps the only positive indication that house prices could fall to match. 

However, throughout the year, as fewer buyers enter the market, pressure continues to mount on homeowners to drop prices to sell their homes. We could see a massive shift in the real estate market come Q4 of 2023.

Housing Trends in Minneapolis, Minnesota 

So how is all this affecting Minneapolis

The Minnesota housing market correlates well with the rest of the nation. A steady increase in housing prices since 2018 leaves us with an average home value of $320,946 through January 2023, with values forecasted to rise through July 2023. 

So, while prices are rising and more homes are being constructed, what’s trending downwards? Pending sales in Minneapolis decreased by 19.5%, closed sales by 19.2%, and new listings fell by 14.2% during 2022. All of these trends align with the current state of the economy. 

However, an interesting point to note in Minnesota is that house prices have appreciated by 98% since 2013—a ten-year increase that will have homeowners rubbing their hands together. 

So while prices are at all-time highs, inflation does not seem to be slowing down anytime soon. Concern among current homeowners and eagerly awaiting buyers is whether this will lead to a housing market crash. 

Will the Housing Market Crash? 

In short, probably not. The current recession is part of a normal economic cycle based on supply and demand. It is primarily the result of an unprecedented increase in the volumes of money put into circulation during the pandemic, which ironically sparked the skyrocketing house prices in the first place. 

So while high prices may be concerning, we are in a different situation than what we saw in 2008. Bad lending practices caused the 2008 recession, and dodgy subprime mortgages led to a housing bubble, whereas now we have a more stable financial foundation. 

While we may see a significant drop in housing prices as interest rates stabilize and sellers are forced to lower prices, a housing real estate market crash is unlikely. 

Happy Couple In Front of Sold Real Estate Sign and Beautiful HouseIs Now a Good Time to Sell in Minneapolis? 

While the trends and predictions might offer a bleak outlook for the economy and housing market in 2023, things are looking up. As of this writing, we are passing through a low point of an economic cycle off the back of a global pandemic that has led to a massive increase in house pricing. 

However, as interest rates drop, the end of the year could see change and an opportunity to sell your home. 

As homebuying experts, we believe that it's still a good time to consider selling your home for cash. When working with a reputable cash buyer company like Homefield Homebuyers, we'll always give you a fair and fast offer that's appropriate for the market conditions while listening to your needs!

Get a Fair and Fast Offer to Sell Your House Fast

If you've thought about selling your home but you're not sure about the market, it never hurts to reach out to Homefield Homebuyers for a fast and free offer! We are a locally owned and operated home-buying company that helps you sell your house fast in Minneapolis. For more information, reach out to our team to learn how we help homeowners sell quickly. 

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