3 Things to Watch for in 2022 Twin Cities Real Estate
Lake of the Isles, Minneapolis
2022 real estate in the Twin Cities can be summarized by 3 factors: prices, home inventory, and mortgage rates.
From my reading of myriad articles on these topics, I found Brenda Richardson’s Forbes feature, “Experts Predict What the Housing Market Will Look Like in 2022,” to offer the most balanced forecast, thanks to its compilation of views from 50 professional real estate forecasters. Based on the real estate concerns noted above, common themes emerge:
Prices: The Twin Cities experienced an approximate 12% increase in home prices last year, about 2 percentage points less than the national average. That means the average home price added about $30,000 over 2020. (And if you’re a homeowner, you may have gained that much in equity.) Most economists don’t believe we’ll see double-digit increases in home prices again this year. But prices likely won’t stay flat or drop either. The general consensus? Look for single-digit increases.
Home inventory: It’s expected that new home builds will begin again in spring, as supply chain bottlenecks begin to ease. However, the building industry can only work so fast. Here’s an interesting comparison: Since 2005, according to Northstar MLS, the Twin Cities has had an average of about 17,000 homes for sales at any given time. For some of those years, we’ve had up to 28,000 homes for sale. To start 2022, only 5,000 or so homes are listed for sale!
Mortgage rates: Thirty-year mortgages hover around 3.5% today. That’s amazingly low. Remember the early 1980s when we hit 16%? Prevailing wisdom says that by the end of 2022, rates will land at around 3.5% to 3.9%. If you’re a buyer, you have time: The difference in a monthly mortgage payment between a 3.25% rate and a 3.75% is about $100.
Given all of these conditions, it’s easy to feel pressured to move quickly—whether as a buyer, a seller, or both. But it’s important to act prudently, and make sure you’re well prepared to buy or sell real estate in today’s market.