The past two years of the real estate market here in the Twin Cities have been dramatic, to say the least. It’s been intense bidding wars, appraisal gap coverages, all-cash offers, forgoing inspections, and much more.
As interest rates started to creep up a few months ago we started to see a real-time shift here in the Twin Cities as the average buyer’s buying power decreased.
Currently, we are in the thick of still-rising rates. So what has been happening to the local market? Is it a good time to sell, to buy, to wait?
First, it is definitely true that interest rates have doubled since about this time last year, and there is no denying that having a higher interest rate, in many cases, will affect how much house you can afford. For someone looking to buy a home, a higher interest rate will mean a higher monthly payment.
With the stronger interest rate increase over the past month, we are now seeing home prices even out. People are selling their homes for an average of 98.2% percent of its original list price, a number we have not seen since February 2020! For the past 2 years, the Twin Cities market as a whole was averaging over 100% of the original list price, at times dabbling into the 104%+ range, something that had never happened before! Now you are probably asking, Mariah, what does this mean? It means that people out shopping right now are getting their homes for under list price fairly regularly.
As the market continues to shift and balance out, the importance of a good Realtor is going to go a long way. In the past few weeks alone I have submitted offers for my clients that were substantially under list price and my clients ended up having their offers accepted. But, within that same week, I had submitted offers substantially over list price and had folks not be the highest priced offer. So, while the general tone is that the market is chilling out, it truly all depends on the home and the situation.
If a home is priced competitively, staged well, has great marketing/photography, and has a thorough REALTOR®, you can still, typically, expect to receive a lot of interest and perhaps multiple offers!
But on the flip side, if a home is even slightly overpriced, has poor-quality photography, and/or has a not as involved real estate agent, you can typically expect the home to sit longer on the market and to sell for under its original list price.
With all of that information, I still get a lot of folks asking me if it’s a good time to buy or sell a home. As always, it needs to make sense for you and your situation, but if you are looking to sell your home now is still a good time, as long as you have a reputable REALTOR® that knows your market well and will go the extra mile.
The same goes for someone looking to buy a home! There is much less competition right now. Chances are you can get a substantially better deal on a home compared to a year ago, have a home inspection, negotiate repairs, and more, BUT you will have to be okay with a higher interest rate until you can refinance down the road.