Buying a house is a big decision, and the process can be quite scary. Investing so much of your hard-earned money in one place can feel overwhelming. Beyond just price, you will spend a significant amount of time in your home, so you want it to be a good one.
You will often hear the terms “buyer’s market” or “seller’s market” in the real estate industry. What are these terms and what do they mean to you? The US housing market can be a fickle monster, and the trends are ever changing. Plus, the housing market differs regionally, so it can be hard to know what you are going to get.
TwinCity Lending is a Minnesota-based lending company that specializes in low-interest home purchases and refinance loans. We like to keep things simple. The goal is to keep overhead costs low, so our clients have to spend less. We know the local and national housing markets, and can help you navigate the sometimes murky waters of buying a home.
What is the Housing Market?
The Housing Market, in general, is the availability of houses compared to the demand for those houses. Often, it is broken down by country or region. The US housing market is entirely different from the Chinese housing market, just as the Minnesota housing market differs greatly from the San Francisco housing market.
A housing market is based mostly on the average price of homes in that area as well as where the prices are trending. In a “buyer’s market,” there is a greater supply of homes than demand for them. This imbalance gives buyers an advantage over sellers because sellers have to compete for buyers. A buyer’s market can result in lower prices for homes as sellers accept a below-list price offer in order to get the sale.
On the contrary, a “seller’s market” is when there is a higher demand for homes than supply. In this market, house prices typically increase as there are more buyers than sellers. Houses will often sell incredibly quickly in a seller’s market.
How is the US Housing Market?
Most of us have heard the term “housing bubble,” and the subsequent pop of that bubble in 2006. This event was particularly devastating because it led to a nationwide recession. Between 2006 and 2012 home prices fluctuated but many had significant drops. A slump in the housing market affects just about every area of our economy.
Since then, policies regarding lending and home buying have changed. The market is not back to where it was, but the national economy, in general, is in a better place. According to US News, the housing market is seeing the highest interest rates since 2011, evidence of this stronger economy. Interest rates rose three separate times in 2018 and are expected to rise at least once in 2019.
Though these rising interest rates are a good sign for the overall economy, they can make many buyers hesitant to dive into the housing market. The good news is that these rising rates should not add much to your monthly mortgage payment. However, even an extra $100 a month could cause some people to hold off buying.
Due to the decline in buyers because of rising interest rates, home prices are growing slowly, if at all. Homeowners who are interested in selling might reconsider putting their home up for sale.
The potentially lower selling price of their current home, plus the necessity to buy in this higher-interest market might make sellers hold off if they can. Many current homeowners will keep their home and build equity by paying down their mortgage.
Data put out by Realtor.com corroborates this trend. The US housing market is experiencing a slower start in 2019 than in previous years. About 15 percent of home listings in the United States received a price cut this month to try to stimulate sales.
In the US overall, residential construction still hasn’t rebounded to where it was before the bubble burst. Builders are more cautious because if there were to be another recession, housing prices would dip, and they might not be able to recover their investment.
Due to this caution, there are not enough housing starts to meet the current demand for homes nationally. Most new construction has focused on high-end, luxury homes, rather than affordable housing.
How is the Housing Market in Minneapolis?
Real estate agents and economists in the Twin Cities have seen some of the effects of these national trends. However, many experts have pointed out that the housing slowdown isn’t as noticeable in Minneapolis and Minnesota as other parts of the country.
David Arbit, the director of research and economics at Minneapolis Area Association of Realtors, believes that while the local housing market is not gearing up, it isn’t necessarily declining, either.
To make things more interesting, home prices in Minneapolis are not falling. Homes across the area are continuing to sell for close to their asking price. Strong sales are an indicator that the market is still beneficial for sellers.
Even in Minnesota, mortgage rates have risen to an average of more than 5% for a 30-year fixed loan. While this is the highest rate in years, it is still low in the historical view. Minneapolis is an incredible place to call home. Even though nationally the housing market is slowing, there are still plenty of homes on the market in the Twin Cities.
The average house in Minneapolis sells for about $245,000. The average local buyer puts down 13.6% of the selling price. All of these aspects show how affordable Minneapolis is, and why everyone should consider buying a house here. In particular, young professionals and first-time buyers can benefit from buying now.
Call TwinCity Lending Today
At TwinCity Lending, we want to help people get into their dream home. We spend a significant amount of time analyzing the housing market. We work hard to ensure that you are buying your home at the best rate possible.
Furthermore, we make sure you don’t end up paying a hefty amount in fees. We know you don’t have time for that.
Check us out online and browse our tools to help you understand what you can afford, and what your mortgage payment might be. We will even help you decide if you should buy or rent! We will help see if you qualify for a mortgage, and calculate your tax savings. Call us today and see how soon you could be moving into your dream house.