Affordability Hits 18 Year Low as Home Prices and Rate Rise
The median home price in the Twin Cities rose 10.0 percent to reach a new record of $370,000 in April.
Low housing inventory in the Twin Cities continues to send home prices higher even as rising interest rates discourage homebuyers. According to the Minneapolis Area REALTORS and the Saint Paul Area Association of Realtors the median home price rose 10.0 percent to reach a new record of $370,000 in April.
Up until this spring, low-interest rates been offsetting the effect of rising prices on monthly mortgage payments. That’s quickly changing as the Federal Reserve raises rates to combat inflation. The rising mortgage rates have sent the housing affordability index to 95, which marks the first time since 2004 it’s been below 100.
The REALTORS note that despite the affordability concerns the supply-demand unbalance in the Twin Cities housing market will likely keep prices firm. It is more likely that we will see buyers re-evaluate their target price range to keep their monthly payments in check.
“Even with several justifiable concerns, this market continues to outperform,” according to Mark Mason, President of the Saint Paul Area Association of REALTORS®
At the end of April there were just 5,758 homes on the market, a 9.2 percent drop from April 2021 and the twenty-fifth straight month of year-over-year inventory declines. This amounts to just 1.1 months’ supply of inventory, giving sellers the upper hand (a balanced market has four to six months’ supply).
APRIL 2022 BY THE NUMBERS (COMPARED TO A YEAR AGO)
Sellers listed 7,046 properties on the market, a 7.0 percent decrease from last April
Buyers signed 5,693 purchase agreements, down 9.2 percent (4,706 closed sales, down 9.0 percent)
Inventory levels fell 9.2 percent to 5,758 units
Month’s Supply of Inventory remained level at 1.1 month (4-6 months is balanced)
The Median Sales Price rose 10.0 percent to $370,000
Days on Market fell 9.7 percent to 28 days, on average (median of 8 days, same as April 2021)
Changes in Sales activity varied by market segment
Single family sales decreased 8.3 percent; Condo sales rose 1.5 percent & townhouse sales declined 10.9 percent
Traditional sales were down 7.8 percent; foreclosure sales fell 24.2 percent; short sales were up 25.0 percent (from 4 to 5)
Previously owned sales declined 8.0 percent; new construction sales fell 3.5 percent
Source: MAR and SPAAR
