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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