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At $353,000, median Twin Cities home sale prices break record

The silver lining may be that the rate of increase has slowed compared to a year prior.

For sale sign
(Photo courtesy of thinkstock.com)
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For the first time, median home sales prices in the Twin Cities have broken the $350,000 threshold, and some experts say limited inventory will quickly push prices higher.

The record median sales price of $353,000 was reached in March “during the worst inventory shortage in decades,” according to a statement from the Minneapolis Area Realtors and the St. Paul Area Association of Realtors. That’s up 7.5 percent from a year ago at this time.

The silver lining may be that the rate of increase has slowed compared to a year prior. Sellers listed 6,400 homes on the market last month, or 4.8 percent fewer than in March 2021, but 4.2 percent greater than in March 2019.

“Some aging empty nesters are staying put and aging in place while others have chosen to remodel or expand their current home instead of listing it,” reads the joint statement from the Realtors associations. “Many homeowners are ‘married’ to their interest rates and are reluctant to give up their monthly payments given rising rates.”

For perspective, monthly payments on a $350,000 home with 10 percent down would increase by $187 when rates move from 4 to 5 percent, they noted, while encouraging homeowners to consider that equity gains over time are likely to outpace the higher payments.

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The associations reported that home prices in the Twin Cities are expected to continue rising “given a chronically undersupplied market with strong demand,” but perhaps at a slower rate of increase.

The Twin Cities have about a four week’s supply of housing inventory on hand, far below what experts would call a balanced market, which would have four to six months of inventory.

“A decade of underbuilding has meant steep competition for most listings,” according to the associations, at the same time as the millennial generation ages into prime homeownership years, with a desire for more space while working and learning from home.

Sellers last month accepted offers 2.7 percent higher than their list price, on average, and average prices exceeded $409,000, or $200 per square foot.

Related Topics: HOUSING
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