2024 Outlook for the Twin Cities Housing Market
We are seeing some improvements in the Twin Cities Housing Market. Below is a summary of the current conditions and what to anticipate in 2024.
Interest Rates:
Because inflation concerns have been easing, mortgage interest rates have come down and that trend is expected to continue in 2024. Rates got up to the 7% to 8% range in 2023 and really made monthly payments skyrocket. We are not expecting to see the low rates in the 3% range again. That was due to the extreme situation of a global pandemic, but we might see interest rates end up in the 6%, maybe even the 5% range. This would definitely help improve monthly payments.
Home Values:
Some people were speculating that there was going to be a crash in the housing market and home values would dramatically drop. This did not happen because of the basic economic rules of supply and demand. Buyer demand did decrease because of higher interest rates, but the home supply also remained low. This kept the supply / demand ratios in favor of sellers. There still are more buyers wanting to buy a home than there are homes available to buy. This caused the median sales price in the Twin Cities to rise 1.3% year over year. Home values are expected to continue to rise in 2024 especially as more demand comes back into the market with the lower interest rates.
Home Supply:
We have had a low supply of homes compared to the number of buyers who want to buy them for over a decade. There a many reasons for the shortage of homes like new construction under building for years, older people living longer and staying in their home, a huge wave of millennials in the phase of their lives where they are buying homes, people staying put in their home and not moving because they have a low interest rate around 3%, and big corporate money / hedge funds buying up single family homes for their investment portfolios to rent out.
During the pandemic years, the shortage of homes was exaggerated when a large number of buyers took advantage of the extremely low interest rates. There was fierce competition for very few homes. It was very common for a home to receive a dozen or more offers on the first day it hit the market. That fierce competition slowed when the mortgage rates increased. Home inventory levels have increased around 13% since they bottomed out in 2021. There are just under eight thousand properties available to buy in the Twin Cities. That may sound like a lot, but that number would need to more than double and be around twenty thousand properties to make it a balanced market instead of a seller’s market.
The number of homes for sale is expected to increase in 2024, but the supply / demand ratios will still favor the seller.
Helpful tips for 2024:
Buyer Tips:
- Get pre-approved right now so you know where you stand financially and what type of home you can afford. Then stay in continuous touch with your lender because the type of home you qualify for may changes as the rates adjust.
- Consider buying in the off-peak season. Traditionally the higher number of sales take place in the Spring / Summer months. Right now is the slower time of year. If you have flexibility, consider buying now and face less competition for the home you want.
Seller Tips:
- If you own a home, ask your lender if you qualify to purchase your next home without the contingency of selling your home first. If you can get a non-contingent loan approval it will strengthen your buying position and since we are in a seller’s market, there shouldn’t be an issue selling your current home once you find your next home.
- Start preparing your home now so that when you find your next home you are ready to quickly turn around and put it on the market.
I have been helping people buy and sell homes throughout the entire Twin Cities metro area for 23 years. Let my experience help you:
- Strategize and time the market
- Connect to a good lender
- Stage and prepare your home to sell
- Answer all your questions in a no pressure / no obligation way
