House hunting in the Twin Cities is even harder than it was last year
Remember the tight housing market of 2020? It was only half as tight as it is this spring.
State of play: A year ago there were 10,000 homes on the market in the Twin Cities. Today there are only 5,200, according to Minneapolis Area Realtors data.
Why it matters: The lack of supply and robust demand is driving up prices and making it hard for people to buy homes — especially starter homes.
- The median sales price of a Twin Cities home reached $328,000 in March, a staggering $53,000 jump from just two years ago, when the median home sale price was $275,000.
Home hunters have been demoralized by losing out on bidding wars. Realtor Nate Pentz of Keller Williams/Pentz Homes said he's had to help clients set these expectations:
- The home inspection will likely be a simple pass/fail. There won't be negotiations on repairs.
- If his buyers bid 5% to 10% above list price, they must be prepared to stay in the house for 5 to 10 years if they don't want to risk losing money on a sale.
- Flexibility: Clients may need to consider buying in the winter when there's less competition, or open their mind to buying a house that has been on the market a while and might need some work.
New single family home construction in the Twin Cities reached 9,906 units in 2020, which is up 12% over 2018 and 4% over 2019, according to U.S. HUD data.
Yes, but: New home construction still isn't keeping up with population growth.
- Skyrocketing lumber prices, material scarcity and labor shortages could be slowing home construction or making it more expensive, said Grace Keliher, executive vice president of Builder's Association of Minnesota.
- Plus: The median sales price of a new single family home was $440,000 in March, which is nowhere near affordable for many first-time buyers.
Bottom line: "We are so short on houses it's going to take a few years to get balanced again," Pentz said.
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