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February 2022 Housing Report

Inventory Shrinks as Prices and Interest Rates Rise

Closed sales and new listings were down in February
MINNEAPOLIS (March 10, 2022) — Shrinking inventory and increasing prices pushed closed sales down 12.9% over the previous February. New listings were down 8.5% compared to last year, with just 5,801 homes added to the market. Despite this, consumer demand remained high, with the median sales price rising 7.8% to $304,500, and the average price hitting $353,409, up 10.3% over last year. Sellers were receiving 99.7% of their asking price as the statewide supply of homes plummeted 21% to just 6,606 units. As inflation nudged interest rates up to 4.45% for a 30-year fixed-rate mortgage, the affordability index—which measures whether an average family earns enough to qualify for a loan on a typical home—sank 11.6% over last year.

“We simply don’t have the inventory levels necessary to meet demand,” said Chris Galler, CEO of Minnesota Realtors. “The combination of a falling Affordability Index and rising interest rates is causing significant problems for first-time homebuyers who have been counting pennies and waiting anxiously to purchase a home of their own. Realtors across the state are working to help counsel home purchasers and make them aware of these unique market dynamics.”

February year-over-year summary of key market indicators:

  • Closed sales decreased 12.9% to 3,919
  • Median sales price increased 7.8% to $304,500
  • Average sales price increased 10.3% to $353,409
  • New listings decreased 8.5% to 5,801
  • Pending sales decreased 10.2% to 5,237
  • Days on the market decreased 6.3% to 45 days
  • Homes for sale decreased 21.0% to 6,606background_53_1643815.jpg

Closed Home Sales Across Minnesota by Region

In February, closed sales declined in 10 regions compared to a year ago, bringing Minnesota’s average number of closed home sales down 12.9% year over year. Three regions reported increases, with Southwest Central marking double-digit gains, at 11.1%Southeast at 5.9%, and Southwest at 1.6%. Eight regions saw double-digit declines in closed home sales. The largest of these were West Central, down 27.4%, East Central, down 18.1%, and Northwest, down 17.6%. See the chart below for more details comparing closed home sales for February 2022 to February 2021.

The seven-county Twin Cities region comprises Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington counties. The official Minneapolis-St. Paul-Bloomington metropolitan statistical area recognized by the Census Bureau consists of 16 counties, on
which MAR & SPAAR local associations report
.View full regional and county reports here.

View statewide report here.

About Minnesota Realtors®

Minnesota Realtors® (MNR) is the membership organization supporting all 22,000 Realtors® in the state of Minnesota. MNR is dedicated to helping Realtors® succeed in providing comprehensive and informed guidance to their customers seeking to buy or sell a home. MNR provides Realtors® with a code of ethics, continuing education, real estate transaction forms, legal services and dispute resolution, as well as lobbying and advocating for homeownership rights and the real estate industry. MNR works in partnership with the National Association of Realtors, as well as more than 15 affiliate regional associations within Minnesota. MNR is a non-profit organization founded in 1919, with headquarters in Minnetonka, Minnesota, and a branch office in St. Paul, Minnesota.

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2020 vs 2021 Housing Market

The 2021 real estate market was seen as a continuation of the 2020 seller’s market, with less availability and higher prices.

Compared to 2020 inventory, the number of homes sold in 2021 decreased ever so slightly. The median sale price in 2021 of $339,900 grew compared to 2020 median sale price of $305,000. That’s  an increase of 11.4% in sales price in 2021  compared to 2020 of just 8.9%.

Sellers also saw an increase in the percentage of their home’s list price in 2021, averaging 101.9% of their asking list price (compared to 99.8 for 2020).

With less inventory on the market (compared to year over year), there was less 1 months inventory (.8 of a month) on the market, compared to 2021 of 1.1 months of inventory.

To find out what the local conditions are like within your city, feel free to reach out to us as Cushman Realty for a complimentary market analysis of your home.

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Home Warranty Pros and Cons

 

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Should you include a home warranty with your new home? Home warranties have changed over the years, and there is not a one size fits all for all homeowners. It’s best to compare the pros and cons prior to purchasing one. Here are a few things to keep in mind when comparing home warranties:

Pro
Home warranties are designed to give the homeowner peace of mind in the event of something breaking down or damaged in your home. This is great option for those homeowners that are not not familiar with household repairs. A plus for home warranties is the flat cost for the repair. You are aware of the cost up front, rather than having sticker shock when an appliance breaks down. This could also be very handy in the event of buying a home with older appliances with limited life. This avoids having to purchase a new appliance, and just repairing the appliance you have.

Con
One issue with home warranties are that an an item may not be covered for repair. You need to read the fine print as to what types of repairs are covered for certain appliances. Another issue is that the home warranty company controls who does the repairs, or that the repair personnel may have several other repairs before they can get your your item needing service.

When looking at home warranties, the bottom line is making sure you find the right plan for your home and your situation.

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Happy Holidays!!

On behalf of all of us at Cushman Realty, we wish you a joyful holiday season!!

May your celebrations be filled with peace, love, and joy!!