Minnesota Housing Market Predictions for 2024

After more than a year of rising interest rates and thousands of buyers and sellers sitting on the sidelines, 2024 will see a big return of buyers, which is going to affect home prices and inventory in the Minnesota Twin Cities market. Here are you Minnesota Housing Market Predictions for 2024!

Minnesota Home Buyers

Demand from first time buyers and move up buyers is going to make the market a little more competitive especially in the busy spring and summer months. This means more homes will be sold over asking price. Traditionally it’s 30% – 40 % of homes sell over list price, but even last year when activity was really low, it was 50%. I think you’ll see that again in 2024. That number is much lower (30% or less) in the slower fall and winter months.

Mortgage Interest Rates

Most economist think lower rates are in store, but not until later in 2024. Those rate predictions have been revised upward. Rates will be lower, but not that low; 6.5% – 7%. Personally, I wouldn’t hold my breath for the Fed to cut rates anytime soon. The fed usually holds rates steady for at least a year or so before they start cutting rates, which is usually a result of a full blown recession.

Buyers will start accepting the higher rates and get off the fence to buy, which also includes sellers. However, there are still a lot of people that are never going to move because of their super low rate, but some will because they just want a nicer house, in a particular school district, or need more space regardless of the rate.

Minnesota Housing Prices 2024

Especially because that house that you really want is going to be more expensive next year. Housing prices are expected to increase by 2.6% in 2024 according to the National Association of Realtors.. Which shouldn’t be a surprise since the Case Shiller home price index in Minnesota was up by 2.37% in 2023  even in the face of 22 year high mortgage rates.

Minnesota usually follows those trends. We aren’t what you call a hot spot like a sunbelt state and we’re no slouch either. We lose about as many people to other states as we gain so you can expect our home values to grow close to 2%.

Either way, if you’re one of those people who thinks the market’s going to crash, I think we’re past that right? If we haven’t crashed at 8% we’re not crashing at 7% with no economic recession, it’s just not in the cards.

Minnesota Housing Affordability

Affordability is still a big challenge for many people and high prices and rates aren’t helping, but here’s what you can do about it. If you’re a buyer, you need to talk to a lender first, get pre-approved and work out your budget from there.

A lender can help you with low down payment options, restructuring your debt using your cash or help you refinance things like car loans or other installment loans to help absorb the potential shock of a higher mortgage payment.

Or maybe you’re totally comfortable with your mortgage payment and budget. Getting pre approval letter ready makes you a more prepared and more competitive buyer. If i have a solid pre approval, seller’s are going to work with you over the not so solid buyer, giving you the power to negotiate, ask for price reductions, or seller paid closing costs. At the very least, it’ll help get your offer accepted in a multiple offer situation.

This is especially true if you are building a new home, using a one-time construction loan, using your equity as a down payment on the next purchase, need bridge financing, or want to make non contingent offers.

New Construction Financing

Speaking of building or buying new construction, a lot of the more affordable new construction is going to be kind of on the outskirts, like Lakeville, Farmington, Rosemount south of the river. Or places like Hanover, Dayton, Ham Lake in the north, for example. Big builders are still giving low rate incentives or rate buy down options, but only in the communities where they’re struggling to move inventory. You can also get a custom loan for your dream home.

If something’s sitting on the market, or you get into the fall and winter months, you need to be making offers in your favor. I wouldn’t be afraid of hurting anyone’s feelings in this market.

I’m also seeing a lot more contract for deep options out there, if seller’s don’t want to take the tax hit from the sale, they’re sometimes willing to essentially act as the bank and you make monthly payments to them. The benefit to this is you can negotiate anything, including a low down payment and or lower than market interest rates.

If you’re someone who’s been sitting on the sidelines, is this going to be your year to buy? If you have questions let me know in the comments or reach out to me directly or If you want information on first time buyer programs or mortgage rate predictions, check out my website for mor information.