What mortgage rates mean for Twin Cities home buyers this spring
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Lower mortgage rates won't make buying a home much easier or cheaper, Axios' Emily Peck reports.
- They could actually drive up home prices in the Twin Cities and nationwide if demand surges and inventory remains tight.
Why it matters: Steep borrowing costs are just one piece of the housing affordability crisis.
State of play: 30-year mortgage rates are down from 20-year highs, but have crossed 7% again.
- Experts don't expect the Fed to make interest rate cuts until May or June.
Zoom in: Mike Smith, owner of Minneapolis-based Anderson Realty, is already seeing a flood of buyer activity, with most listings getting multiple offers.
- "I was hoping to see a more balanced and healthy market in 2024," Smith tells Axios.
Yes, but: Spring tends to be when the local housing market is busiest, regardless of rates, according to Edina Realty agent Cassie Frick.
- While more buyers are coming out of the woodwork, "it's difficult to pin the cause directly to interest rates," Frick says.
Flashback: In 2021, when rates hovered below 3.5%, bidding wars were rampant and home prices surged by double-digit percentages.
Twin Cities home prices jumped when mortgage rates dropped below 3%.
- As mortgage rate hikes locked current homeowners in place, prices remained elevated.
Yes, but: Home prices here didn't swing as far as they did on the coasts.
By the numbers: The typical Twin Cities sales price — around $355,000 in December — is still much higher than pre-pandemic, per Redfin data.
- That's below the national median of roughly $404,000.
Reality check: Mortgage rates aren't guaranteed to fall. But if they do, and curbing inflation is the primary motivation, home values and competition likely won't cool, Matt Graham of Mortgage News Daily says.
The bottom line: Many potential homebuyers still can't catch a break.