February 22, 2021
2021 Real Estate Market Update
We are now well into 2021 and the housing market’s growth continues to soar past 2020’s levels in the Twin Cities area. According to data from the Minneapolis Association of Realtors (MAAR) and the Saint Paul Area Association of Realtors, January 2021’s closed sales grew an astounding 14.6 percent, and new signed purchase agreements grew 5.6 percent. In turn, the median sales price rose 11.5 percent to an astonishing $301,000. January of 2021 is proving to be one of the strongest months in pending sales and closed sales since the early 2000s.
With mortgage rates being historically low buyers are eager to explore all that the market has to offer. On Thursday, February 18th, Freddie Mac reported that mortgage rates are at their highest point since mid-November averaging around 2.81% for a 30-year fixed-rate mortgage. Regardless of the increase, the current average is historically low and extremely attractive for buyers who are looking to take advantage of real estate opportunities.
Yet despite the strong sales figures, there is a classic supply versus demand imbalance. According to MAAR, the number of homes available on the market is down 42.6 percent in comparison to January 2020. The trend of low inventory levels has compelled buyers to make attractive offers to secure highly desired properties due to increased competition. According to MAAR, there have been three evident trends in the current housing market. These trends being an accelerated selling process, multitudes of strong offers accompanied with competitive bidding, and selling prices are rising rapidly despite a maintained level of income. These trends have put sellers into a unique position to where they are receiving offers extremely close to list price, and even above offering with first-time homebuyers (MAAR).
Interestingly, different market segments have seen changes in their sales activity already in 2021. According to MAAR, Single Family Homes grew 16.3%, condo sales soared to 18.3%, and townhome sales increased 7.8%. In comparison, traditional sales rose 16.2% and previously owned sales at 16%. Sales of luxury properties ($1M+) have increased at a staggering 75% from January of 2020 (MAAR).
2021 is proving to be a steady year of growth and continuing opportunities for the Twin Cities housing market. With the spring market fast approaching, buyers need to be well-prepared with their finances in order and a real estate agent in their court.