This Week In One Sentence
The Twin Cities 7-County Metro Area median sale price has checked in at $381,000 for 2024, appreciating a modest 3% from $370,000 in 2023.
The median sale price hit a Spring-market high of $392,500 before declining throughout the second half of the year, consistent with typical seasonal declines. Adjusted for seasonality, since higher interest rates began to set in 2 ½ years ago, the median sale price has appreciated 6%.
On the surface, our market has settled into a pattern of historically low transaction volume with moderating home values. Today’s American homeowners enjoy record-high home equity, and are staying in their homes longer than ever, in no small part because the majority of them are locked into mortgage rates that are at or below 4%.
We enter 2025 in a similar place to where we were a year ago. Low housing supply, low inventory of homes for sale, and a large pool of would-be buyers challenged by affordability concerns in a mortgage-rate environment that is significantly higher than the pandemic years and the decade preceding them.
On top of that, geopolitical uncertainy looms.
Yet, if this year is anything like the prior 12 years, we’re likely to soon see a spike in buyer activity that will drive prices up 10%-20% between now and July. Last year prices shot up 11% between January and June, and that spike was the weakest we had in the last decade-plus.
The Spring Market rarely fails to fire, and I’m ready for it!
Seller’s Market Meter*
The market meter stays at 75 this week, and based on what I’m seeing already the last 10 days, it feels like it’s poised to bump up a bit very soon. There are currently just 2.3 listings per buyer and showing activity is already outpacing last year.
Current Interest Rates**
-30-year conventional: 7.15%
-30-year FHA: 6.5%
-30-year jumbo (loans above $802,650): 7.375%
Median Payment Tracker***
The median principal & interest monthly payment on a median-priced home based on last month’s median closed sale price is $2,026.
*A Market Meter Score of 70-79…
This is a seller’s market for most, but not for all.
This market has a month’s supply of inventory in the 2- to 3 ½-month range. The math says it’s still a prominent seller’s market—you would have to double the number of listings to get to the balanced-market range of 5- to 6-month supply. But it feels a lot different than the markets we’ve grown used to in recent years. The last time the month’s supply of inventory was more than 2 ½ months for any kind of significantly extended period was 2016. You are still probably seeing YOY appreciation of 5- to 10%, and you are still seeing plenty of competition for the best properties. But properties that are merely average may not do well, and sellers who do not put in the work to prepare the house for showings or refuse to price according to the market face significant downside potential. A market sliding out of the 80s and into the 70s is a particularly dangerous one for agents who do not know the market well or are relying on dated sales data and are not regularly in conversation with peers that are active in the market. If they’re behind on the market buzz, they could get taken by surprise, especially if buyers begin to feel they have more leverage and become more selective. It is also a dangerous market for agents that do not excel at helping clients stage, and/or are not good at setting expectations and communicating shifts in the market to sellers.
**Estimate compiled from multiple sources and roughly based on a buyer with a mid-700s credit score, qualifying debt-to-income ratios and 45-day lock.
***Based on 20% down-payment on purchase of a home at the most recent month’s median sale price in the 7-County area, with Friday’s ‘average’ conventional mortgage rate. Payment does not include taxes and insurance.