A new Bloomberg article, titled “The U.S. Housing Market Looks Headed for Its Worst Slowdown in Years”, would answer that million dollar question with an emphatic “Yes!”. The article, however, is focused on the broader U.S. market, where some of the hottest national markets – think Seattle, San Francisco and New York – are seeing properties list for longer and the meteoric price gains slow. It points to data showing that overall home sales have fallen 3 months in a row while inventory is finally seeing a boost. And prices, while still experiencing gains, are at a much more moderate level. The article has many experts weigh-in, saying it’s likely the start of a slowdown due to rising mortgage rates and buyer fatigue. They are also clear in saying that a slowdown doesn’t mean crisis, rather a return to a balanced and hopefully healthy market.
While things may be balancing out elsewhere, the Twin Cities’ market still seems to be engaged in the same battle of low inventory, high demand and rising prices. At least that’s the case for the entry-level bracket, whereas higher priced homes will list longer and likely not get full asking price. This is the message of a recent Strib article, “Twin Cities housing market still smiling on sellers”. So far, there’s been no stop to the rising prices, with June’s median sales price hitting another record-high $271,900, which is almost 6% more than at the same time last year. The article points out that the extreme state of the local market has a down side: the number of closings has been down for seven straight months when compared to 2017 and total listings are lower by almost 16%. While mortgage rates have certainly risen from the last year, they are still very low from a historical perspective, and so plenty of buyers are still out there. We just need more sellers in that entry-level bracket to step forward in order to even imagine a more balanced local market. But if places like Seattle are seeing a shift, the same may very well be in the cards.
One thing of which there seems to be no shortage is developers willing to help add housing units and at the same time, transform the landscape of the Twin Cities. News of projects to build houses, apartments, and multi-purpose complexes are constantly shared. When comparing the Twin Cities to the likes of Seattle and Silicon Valley, we are younger with more space and future options. So, while those places have a more established cost-of-living to which the market is correcting, the Twin Cities may be on its way to a new normal and higher housing costs in general. Much depends on how the area can attract more businesses and new residents. Either way, we’ll be out there making deals happen.