Minneapolis and St Paul area home owners continue to see an upward climb in the value of their homes. The median sales price soared up 17.5 percent over last year. According to the Minneapolis Area Association of REALTORS®, the June 2013 average value was $210,000, the highest it’s been since December 2007, just as the market was starting to crash. By the way, mortgage interest rates at the time were about 6.10%.
Less homes for sale than what we’d like to see, combined with fewer foreclosures, and low mortgage rates continue to fuel these price increases. New listings were up in June by over 20% from last year, but still there are more buyers than sellers, sparking competition amongst buyers.
While mortgage interest rates are still historically low, they have increased about 1% from the lows back in May 2013 to around 4.50% today. This increase has put more pressure on the home prices as those who were sitting on the fence are jumping into the water before rates go even higher.
In the sub $250,000 price range, considered the “most affordable”, many homes are selling very quickly with multiple offers just days on the market. Therefore all prospective buyers need to be fully lender pre-approved and ready to make an offer the moment they see a house they love.
Rising home prices and higher mortgage rates caused housing affordability to decrease by 15.9 percent from last year. However, home prices remain well below pre-housing-crisis levels and mortgage rates remain historically low, even after the rate increase.