Q1 2022 Twin Cities Real Estate Market Update
Updated: Oct 23, 2022
Recapping the 2020-2021 Real Estate Market:
The Real Estate market has seen some dramatic changes over the past 2 years. In early 2020, we saw a sharp drop in buyers searching for homes followed by a fairly rapid recovery by 2021. Between relaxed regulations & an increase in monetary initiatives, the housing market was one of the first industries to rebound from the pandemic. In fact, the housing market in 2021 managed to hit 16-year highs nationally!
Important Market Factors
With 45 million millennials nationwide in their prime first-time home buying ages, the demand for housing is expected to remain strong for the foreseeable future. Millennials are people aged 26 to 35, often in the early stages of a successful career & increasing their buying power.
In contrast, seniors in the “Baby Boomer” generation are now fully in the 55+ age range leading to a shift in homeownership for them as well. Although some seniors will live in their homes until they pursue senior living communities, some will opt to down-size their family homes for more cost-effective households in order to preserve their lifestyles.
As the economy continues to recover & grow, unemployment rates continue to decline which inevitably will lead to additional buyers entering the market. Despite the average mortgage interest rates beginning to climb again, these rates still remain near historically low levels further fueling significant buyer demand. It’s tough to say how quickly the mortgage rates will climb & how high they will get, however, we currently aren’t expecting any drastic increases through 2022.
When reviewing the Real Estate Market over the past 2 years, inventory has been probably the biggest factor for discussing market conditions. With inventory reaching historically low levels prior to the end of 2021, buyers often had to hold off buying until more homes were available in their market. Although inventory is expected to grow 0.3% on average in 2022, supply will continue to be a factor in the Real Estate Market through the rest of the year.
Another factor to consider is the rising prices of rent. Renting prices are expected to continue outgrowing Home prices, further fueling a demand to purchase as it is becoming more affordable to own than rent for the majority of people. Nationwide, the growth in rental prices went from minimal increases to nearly double digits in 2021 as many people took advantage of remote work by relocating to different areas.
Key Housing Trends & Demographics for 2022
As indicated early in the pandemic, homeowners' needs shifted from the hustle & bustle of dense metro areas to the suburban areas best suited for space & versatility. Suburban life offered an opportunity to face less competition in a low inventory market throughout 2020 & into 2021 but that advantage has become less pertinent in 2022. That said, suburban areas are usually more affordably priced which is becoming more top of mind for buyers as rates begin to increase & home prices continue to rise.
Current trends indicate that there is a growing share of Hispanic Homebuyers nationwide comprising of more than 1 in 10 recent homebuyers, although they represent 1 in 5 people in the U.S. These buyers are most notably younger than the population of all recent home buyers & a majority were first-time buyers.
With the needs of homeownership shifting over the past 2 years, 51% of home buyers indicated that they desired different features to suit their needs while 23% said it had a major impact on their home search. As affordability becomes a bigger factor due to increasing rates & average prices, many first-time homebuyers may be limited to additional features.
Current Market Insights
With low inventory on the forecast, buying a home will continue to be a bit of a challenge for a majority of people. Buyers may need to trade off some of the additional features that they desire in order to remain within their budget. As prices continue to rise, this may end up slowing the market later in the year but will likely mean buyers look to purchase prior to the increased mortgage rates that are being forecasted. To see statistics for each of the 50 most populous metro areas in the U.S., visit the Realtor.com article: February 2022 Housing Market Trends Report. For a more in-depth analysis of the market, please reach out to schedule some time to chat about your home buying or selling needs.
For more information on the 2022 Real Estate Market Predictions, visit the Realtor.com article HERE.
Realtor.com: 2022 Real Estate Market Predictions
Realtor.com: February 2022 Housing Market Trends Report
Have a question about your home buying or selling options or the Real Estate market in general? You can schedule a Zoom Meeting with Grimm Realty Group to discuss your housing needs, lifestyles, & future goals!
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