How Twin Cities homebuyers can score deals this winter
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Lindsey Bailey/Axios
It was a bad year to be a buyer, but the tail end of 2023 might offer some bright spots for Twin Cities house hunters.
Why it matters: Home shoppers are desperate for even a little more buying power.
- There's less competition among buyers now — thanks to still-high mortgage rates and the typical holiday season demand dip — which leaves room to find better deals.
The big picture: Buyers are also starting to accept that rates probably won't fall back to pandemic levels anytime soon, Jerry Moscowitz, Minneapolis Area Realtors president, tells Axios.
- Sales activity is expected to pick up as some of the steeper, near-8% rates trend down: "But, it still affects how much you can buy," Moscowitz says.
Zoom in: New construction can offer deals and continues to draw interest across the Twin Cities metro. Pending sales for new homes rose 31.6% in October compared to a year ago, while previously owned properties fell 8.8%, per the latest MAR data.
- Signed purchase agreements for townhomes, typically a more affordable option, are also up, the metro-wide data shows.
Between the lines: House hunters might find deals beyond the list price. More than one in three U.S. sellers gave concessions to buyers August-October 2023, according to a new Redfin report.
What's happening: Most sellers — sitting on record-low mortgage rates — are only moving if they have to. Desperate to close the deal, they might throw in cash for repairs, closing costs or mortgage rate buydowns.
- Sellers might pay cash toward a temporary lower mortgage rate for the buyer, instead of reducing the asking price, mortgage lender Donny Kirby tells Axios.
- It helps make "the payment palatable in the first couple of years," and most buyers are betting they can refinance later, he says.
What we're watching: After peaking above 8%, mortgage rates have fallen closer to 7% over the last month.
- A one percentage point drop in mortgage rates doesn't have a huge impact on a new homebuyer's monthly payment. But even a slight dip was enough to get some buyers off the sidelines.
State of play: A $400,000 home costs nearly $1,000 more per month than it did two years ago — in principal and interest alone.
Go deeper: How to interpret mortgage rates you see in headlines