If you have been guilty of what I call the "zillow scroll," then this blog is for you. I will be digging into the housing market trends in the Twin Cities region for the month of January 2024, covering everything from sales prices & demand to market predictions over the next couple of months.
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Home Prices
Prices increased 2.3% year over year, sitting at $350,000 for the month of January across the 16-county metro. When we break apart the price ranges, homes under the $350,000 mark and above the $750,000 mark saw annual increases.
Historically speaking, January is our sales price low point every year. Here you can see in the red every January dating back to 2014. I do expect to see home prices grow headed into February & March as we kick into the spring market.
Inventory
Now we did see a very small increase in the total number of homes for sale as compared to January 2023. But overall, our inventory is extremely limited in comparison to previous years.
On the bright side though, we saw an increase of 18.1% in our NEW listings year over year. The bulk of the new homes added to the market were single family homes, but we did see increases for both townhomes and condos as well. Over 77% of new homes listed were under $550,000 in the metro.
Even New Construction had a spike up in their new listings in January 2024. However, a trend that we will want to keep our eye on as we go through the next couple of months is that new listings decline from January to February and then bounce back up in March in new construction.
Overall you may be wondering “Will we see more listings this spring?” New listings added to the market bottom out in the month of December, and then start to pick back up in January. So yes, options will start to grow for buyers this spring, but don’t get too excited because I project that total inventory will still be at historical lows. Feel free to watch my 2024 market predictions video or read my blog post for a deeper dive into WHY.
Buyer Demand
We also saw a slight shift in buyer demand in January as well. The number of showings per listing increased 1.8% year over year for the month. This data shows us that there were a handful of extra buyers added into the market this January compared to last year. The most amount of activity was found in listings that were $350,000 or less however we saw annual growth in showings for all home prices above $350,000.
Buyers held a little more power last month as well, even with lower inventory. Here you can see the percent of list price was at 97.7%, just below full market offers. Based on our historical patterns, I expect to see offers coming in at or above full price come March 2024.
Buyer's Market VS Seller's Market...
So all this being said - where are we on the Buyer vs Seller Market scale? While we did see an edge towards a more balanced market, our heels are really dug into the sellers market zone in most home categories. Remember a seller's market is 0-3 months of supply, a balanced market is 3-6 months and a buyers market is 6+ months.
Here you can see that the overall months supply did grow in all price ranges, but we are actually in a balanced market for homes that are listed for more than $750,000.
Interest Rates
Since the beginning of January, the average interest rate on a 30 year loan has hovered around 6.6% according to Freddie Mac. “The economy and labor market remain strong with wage growth outpacing inflation, which is keeping consumer spending robust.” There are talks about a federal rate cut in March 2024, but most professionals believe this cut will only bring us to the low 6% range.
Looking Ahead...
- Increased inventory as we enter the spring market, but not enough to swing us out of a Seller's Market
- New construction listings will likely dip in February, and come back up in March
- Buyer demand will grow stronger, and there will be heightened competition in the market
- Interest rates are likely to stay between 6.6% - 7.0%
