2024 Housing Report
2024 was a year of continued growth in the Twin Cities housing market, despite headwinds from higher mortgage rates and continue low inventory of homes for sale across the metro. Price appreciation continued but at a slower pace than in previous years. And closed sales were down as the seller's market continued to have its impact. The 2024 Annual Housing Report highlights these and other important trends, along with some excellent charts on 2024 performance. As the report states,
The 2024 housing market started on a positive note: inventory was on the rise, mortgage rates had fallen from a 23-year high of 7.79% in October 2023 to the mid 6% range, and homebuyers had returned to the market, with U.S. existing-home sales posting back-to-back monthly increases for the first time in more than two years in January and February. But rates soon began to climb, topping 7% in April, and buyers
pulled back, causing sales to slump during the traditionally busy spring buying season. Summer arrived, and with it came a surge of new listings, pushing inventory to its highest level since 2020, according to the National Association of REALTORS®. Although buyers had more options to choose from in their home search, the additional supply did little to temper home prices, which continued to hit record highs nationwide, and sales remained slow. Eventually, mortgage rates began to ease, falling to a yearly low of 6.08% in September, and with inflation moving toward its 2% target, the Federal Reserve initiated a series of interest rate cuts, dropping the benchmark rate one full percentage point. Buyers took advantage of lower borrowing costs and a greater supply of homes on the market, leading sales of existing homes to surge in October and November, marking the first time since May that home sales exceeded four million units.
In addition to highlights from the year, the report also lists median price appreciation by city, starting on page 18. Here, you can see price performance in your individual market area, and a table showing the cumulative growth in your area since 2020. This is a great way to see how your real estate has appreciated since the Great Pandemic. Some areas, like North Oaks, have experienced appreciation of over 25% in just a few years due to demographic and work changes coming out of the pandemic.
READ FULL REPORT HERE
2025 Housing Outlook
With the dramatic changes in federal policy whiplashing the markets back and forth, it's difficult to predict exactly where the Twin Cities housing market will shake out in 2025. However, based on last year's trends and what we have seen through January, we feel confident in making some definite predictions. First, as always in Minnesota, take advantage of the spring market if you are a seller. The early spring market runs January-March, and the peak spring market runs April-June. After that, regardless of market conditions, home sales and demand slow down.
Second, we predict that mortgage rates will remain stable, without any major downward movement. This is because the markets (and consumers) are uncertain about what the new administration's economy will mean for them. If rates dropped even a half percent, it is predicted that about 10% of sellers who have been waiting to move (and holding up inventory) would put their homes on the market. However, at this point, there are more risks to rates rising than falling. We hope we're wrong!
Finally, housing supply will remain tight and probably close to the same 2.1 months of supply that we ended with in 2024, a seller's market. This will keep prices moving upwards, but at a reduced pace as in 2023 and 2024, coming off the high of 2022. In the graphic below, you can see predictions from MNAR economist, which are generally in line with our predictions.
As always, moving with the seasonal market and prepping your home for sale will be the best way to take advantage of the market if you are a seller. And if you are a buyer, take advantage of knowledgeable and connected local agents like us who can help find you pre-market inventory inside the brokerage, and off-market inventory with our network of local sellers. Buyers also need to be organized and prepared to move on homes quickly, with favorable financing and terms wherever possible. Cash is king in this market! We hope this helps you with your 2025 plans, and as always, CONTACT US for a more in-depth view of your local market and home value.
