Jan 29, 2022 - Real Estate

Twin Cities homebuyers brace for another hot season

Illustration of a front door to a house with a door knocker and the number 2022 on it.

Illustration: Brendan Lynch/Axios

The spring home-buying season is heating up early this year and hunters should expect an even tougher time finding a house.

The big picture: A year ago, the Twin Cities had a supply of homes for sale to last just 1.4 months.

  • That now seems like the good old days, because the supply is down to just 1.1 months, according to recent Minneapolis Area Association of Realtors data.

What's happening: Typically the spring season starts after Super Bowl Sunday, but it's picked up early again this year, said real estate agent Nate Pentz of Nate Pentz Homes. Desirable listings are moving fast.

  • One of his clients bid $400,000 for a home in Northeast Minneapolis that was listed for $355,000. The client and 19 other bidders lost out to a winner who also agreed to waive the inspection.
  • "We're saying [to clients] if you don't want to get into [bidding] $30,000 to $50,000 over asking, just wait until after a house has been on the market for five days, past the weekend," he said.

Plus: The time to get a deal on a condo might be running out.

  • While the condo market slowed dramatically when the downtowns went dark during the pandemic, demand is picking up.
  • December condo closings in downtown Minneapolis increased 23.7% year over year, though still down from 2019, condo sales data provided by Minneapolis Realtors shows.

Yes, but: Not all condos are hot commodities. Edina Realty agent Brady Kroll said there's a rising demand for layouts with less of an open concept because couples are looking for some privacy while they work from home.

  • "They want to be able to get away from each other for professional reasons, and frankly, probably personal reasons, too," he said.

What's next: The Federal Reserve will likely increase interest rates in March — and perhaps again later in the year. RE/MAX Professionals real estate agent Mark Mason doesn't expect that to significantly alter the trends here.

  • "I don't think it's going to make as big of an impact on new buyers entering the market because we still have such a low inventory of homes," said Mason, who's also the president of the St. Paul Area Realtors Association.

Yes, but: Some buyers might try to buy before the rates rise, making for an even busier season.

  • "I'd be looking to buy right now before interest rates go up and before the real spring market happens," said Stacy Lashinski, VP of sales and operations at Kris Lindahl Real Estate.

The bottom line: With no quick fix to the inventory crunch, competition will remain fierce.

  • "What I say to my first-time buyers is just be patient," Minneapolis Area Realtors president Denise Mazone said. "Something will come along eventually."
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