Lack of inventory and high mortgage rates are sidelining some would-be sellers and buyers.
MINNEAPOLIS — As the weather warms up, the housing market usually does too. But soaring interest rates and the collapse of two banks could make for a unique season.
“I expect this to be a robust spring market,” says Minnesota Realtors Association President Emily Green, who says once things pick up, it likely won’t be the frenzy from a few years ago.
The key, Green says, is to be flexible.
“Gone are the days where we can line everything up to the same closing date,” said Green. “That does happen, but it’s not something you can count on.”
The market slowed over winter as high prices and even higher mortgage rates sidelined buyers. Now, inventory is the biggest roadblock.
There aren’t nearly enough homes to go around right now, just 1,000 listings in Minneapolis — three times less than a saturated market.
“You can’t buy what’s not for sale,” said Deputy Chief Economist for First American Financial Corp. Odeta Kushi.
Nationally, Kushi says a lot of people are reluctant to sell now that they’re locked into low rates from the pandemic. The most recent rate is around 6%, but it’s still well below historic averages.
It will also take time for home prices to flatten out, but it means some sellers could be sitting on a lot of equity and that could help.
“All of that equity, you could potentially bring a bigger down payment to your next home that could mitigate the impact of higher mortgage rates,” said Kushi.
And remember these three things if you’re planning on buying: Know your budget; how long you plan to live there; and start looking sooner rather than later, as Green says this year’s outlook is anything but normal.
“I don’t say ‘normal’ anymore because I’ve forgotten what that is,” said Green. “It’s really more about time in the market than it is about timing.”
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