By Nick Leyendecker, Co-Founder | Broker | REALTOR

(Data Sources: You can track Twin Cities housing market trends here. You can track mortgage rates here. You can track home builder confidence here. You can track lumber prices here. You can track showing volume here.)

Despite the new interest rate regime and the challenges that has presented to the market, home prices in the Twin Cities held on to their bullish trend during the winter correction phase. The higher interest rate environment has so far been significantly impacting both supply and demand as many current owners either can't afford to trade out of a 3% mortgage in exchange for a 6% mortgage or are just resistant to it for obvious reasons, limiting the market to the most motivated and qualified of the movers. With inventory levels back down near record lows, the stage is set for another spring rise in Twin Cities' home prices.

The Median Home Price: The Twin Cities' median home price in February was flat MOM and flat YOY. The higher interest rate regime which began in January of 2022, has caused a significant contraction in sales volume which has put a dampening on this 11 year, bull market trend but with record low inventory, prices have held within that trend. With spring demand starting to take off and with only 5,500 homes on the market, prices are going to be moving up this spring but I'm not convinced we will take out the highs from 2022.

Home Inventory: The home inventory level in the Twin Cities fell 6.6% in February to 5,549 units (homes, condos and townhouses). That level is only 11.5% above last year's all-time low which is bullish for housing prices this spring despite the higher interest rate headwinds.

Pending Home Sales: 2,926 homes came under contract in the Twin Cities in February. That is up 13.2% MOM and marks the beginning of the rising spring demand curve.

New Listings: 3,463 new listings hit the Twin Cities market in February which is up 3.7% MOM but down 23.3% YOY.

Mortgage Rates: The average 30-year fixed mortgage rate (for the week of March 23rd) of 6.42% is down 1.2% MOM and up 45% YOY. The cycle peak thus far for 30-year fixed rate was 7.08% back on October 27th of 2022 and long term rates have been in a correction since.

Home Builder Confidence: “The NAHB/Wells Fargo Housing Market index in the US increased for a third month to 44 in March of 2023, a new high since September of 2022 and beating market forecasts of 40. The gauge for current sales conditions rose to 49 from an upwardly revised 47, and traffic of prospective buyers edged 3 points higher to 31, hitting a 6-month high. On the other hand, sales expectations in the next six months fell slightly to 47 from 48. “While financial system stress has recently reduced long-term interest rates, which will help housing demand in the coming weeks, the cost and availability of housing inventory remains a critical constraint for prospective home buyers,” Robert Dietz, NAHB chief economist, said.” -National Association of Home Builders

This concludes my Twin Cities housing market insight for March of 2023. Please don't hesitate to call us at 952-222-SOLD if you would like to go more in depth on a particular market segment or dive into the current fair market value of a property that you currently own or manage.

Sources: NorthstarMLS, Infosparks Data, Hedgeeye Risk Management, FreddieMac.com, Nasdaq.com, TradingEconomics.com, fred.stlouisfed.org, The National Association of Home Builders

Under Contract | List Price: $489,900
Midtown Lofts' Premier Corner Unit

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Description: Midtown Lofts | Beds: 3 | Baths: 2 | Sq Ft: 1,600+ | Garage: 2 | As one of Midtown Lofts’ premier corner condos, this unit is in mint condition and loaded with high end features. Abundant windows allow natural light to pour into the living spaces which feature high ceilings, an open floor plan, hardwood floors, a gas fireplace and an updated kitchen with high-end finishes and stainless appliances. The main floor offers 2 bedrooms including a primary suite with a custom closet system & private access to the updated walk-thru bath. The spacious, upper loft is flex space which could serve as a primary suite with all four sun exposures, a ¾ bath, walk-in closet and access to the large, private rooftop terrace with expansive views of the city. Two heated, secured parking spots are included along with additional storage, a bike rack and a car washing station. Enjoy the courtyard with a water fountain & organic herb garden, direct access to the Greenway and prime walk-ability. Rentals are allowed for specific reasons, see association docs for detail.

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Active | List Price: $2,800,000
Frank Lloyd Wright Inspired, Mid-Century Modern on a 10+ Acre, Lakefront Estate

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Pine Tree Lake | Acres: 10.4 | Beds: 5 | Baths: 6 | Sq Ft: 7,700+ | Garage: 4-Car | Shoreline: 1,000+ ft

As one of Mahtomedi School's premier estates, this recently restored, Frank Lloyd Wright inspired, mid-century modern masterfully integrates with its 10+ acre setting along the shores of a private, recreational lake (known for its privacy and great fishing). The rare, dynamic plot of land features a range of usable elevations with incredible views, more than 1,000' of waterfront, its own private lagoon for fishing in the spring, its own private beach, multiple outdoor patio spaces, and limestone roads to transport you to it all by ATV. Having took 5 years to complete, the sprawling, walkout rambler is a thoughtful marriage of art and science that captures sunlight and expansive lake views from almost every room. The home is loaded with high end finishes and architectural features (see supplements and images for more detail). A former workshop has been converted into a main floor guest suite with its own kitchen, bedroom and full bath. The 4-car garage is insulated, heated and cooled.

Nick Leyendecker
Luxury Real Estate Advisor
Call or Text: 952.900.2082
nick@leyendeckerrealty.com

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For more information or to arrange a private showing of this listing, email or call us today at 612.888.HOME (4663).

(Data Sources: You can track Twin Cities housing market trends here. You can track mortgage rates here. You can track home builder confidence here. You can track lumber prices here. You can track showing volume here.)

Pending home sales in the Twin Cities just fell to their lowest level since December of 2007, as rising interest rates in the face of declining corporate profits continue to promote wealth destruction and housing demand destruction across U.S. markets.

When housing demand last collapsed to this extent, back in December of 2007, that particular collapse in demand signaled the beginning of a housing crash and financial crisis that would affect housing markets across the entire country and would last through 2012 (5 years). The biggest fundamental difference in the set up then vs. now, is that new and existing home inventory, both locally and nationally, was much higher on both a relative basis and on an absolute basis (28,500 units in the Twin Cities in December of 2007 vs. 6,000 units today). The biggest fundamental similarity in the set up to then vs. now, is that we were in the midst of the last meaningful tightening cycle (of money and credit) by the Federal Reserve following what was arguably the loosest monetary policy in U.S. history, to date, which is essentially the same scenario we face now.

Collapsing demand aside, in order for a meaningful crash in housing prices to set in, we believe that home inventory would first have to rise significantly from current levels, which makes home inventory a key data point to watch this year. Absent a fast and major pivot in monetary policy and a positive shift in the pending economic data (which are typically contradictory), we are expecting home inventory to rise more this year than it has in recent years, into the spring and to ultimately make new cycle highs by the late summer of 2023.

The Median Home Price: The median home price fell 1.9% in December to $348,000 as the seasonal market correction continues in most segments of the Twin Cities housing market. $348,000 is still up 4.9% YOY so the broader bullish trend in home prices has yet to be broken. Dramatic rises in mortgage rates has caused demand to collapse to its lowest level since December of 2007, but near record low housing inventory is helping to hold prices within the broader bullish trend, despite the significant rise in the cost of capital. We expect the median home price to continue to correct through January of 2023 before turning back bullish in February of 2023.

Home Inventory: The home inventory level in the Twin Cities fell 24% in December to 6,014 units (homes, condos and townhouses). That level is also up 15% YOY but remains very low, historically. High interest rates have put downward pressure on new listings as move up or move down prospects have been hesitant to trade out of a 3% mortgage for a 6%+ mortgage. The potential risk factors that could contribute to a rise in inventory down the road are 1) persistent inflation continuing to eat away at disposable income making mortgage payments harder to make or 2) the job market collapsing, which so far has been holding up, despite shrinking corporate profits. Inventory is sort of the key to the current housing market dynamic, if inventory stays low, prices are not likely to crash despite rising rates but if inventory breaks out to the upside, that would change the game.

Pending Home Sales: 2,388 homes came under contract in the Twin Cities in December. That is down 16.7% MOM, down 27% YOY, and is the lowest level of demand in housing since December of 2007, which signaled a 5 year subsequent housing crash. Higher interest rates along with higher prices continue to put strain on demand and overall sales volume. We expect pending sales to continue to stay pretty flat through January before turning back up into the spring of 2023.

New Listings: 2,294 new listings hit the Twin Cities market in December which is down 33.8% MOM and down 11% YOY. Collapsing affordability is primarily impacting demand but it is also impacting new listings as some move up and move down buyers are deciding to stay in their current homes in the face of the higher prices and rates. With that said, pending sales have been falling at a higher rate than new listings which appears to be contributing to a larger seasonal correction in home prices than is typical.

Mortgage Rates: The dramatic rise in mortgage rates has cooled off again with rates remaining flat through January but rates remain up a whopping 86% YOY. If the Fed remains committed to fighting inflation regardless of declining economic data, interest rate volatility is likely to continue into 2023.

Lumber Prices: Lumber prices have stabilized back to within a pre-pandemic range after having more than quadrupled during the pandemic and the price of lumber's impact on the housing market has resolved. Going forward, we will discontinue reporting this data unless unusual volatility in lumber prices returns.

Home Builder Confidence: The NAHB housing market index in the US increased to 35 in January of 2023 from 31 in December of 2022, which was a fresh low since 2012 excluding the immediate onset of the pandemic. It is the first rise in the index since December of 2021, beating market forecasts of 31. The gauge for current sales conditions rose to 40 from 36, sales expectations in the next six months went up to 37 from 35, and traffic of prospective buyers edged 3 points higher to 23. "It appears the low point for builder sentiment in this cycle was registered in December, even as many builders continue to use a variety of incentives, including price reductions, to bolster sales. The rise in builder sentiment also means that cycle lows for permits and starts are likely near, and a rebound for home building could be underway later in 2023", ” said NAHB Chairman Jerry Konter. Source: National Association of Home Builders

This concludes my Twin Cities housing market insight for January of 2023. Please don't hesitate to call us at 952-222-SOLD if you would like to go more in depth on a particular market segment or dive into the current fair market value of a property that you currently own or manage.

Sources: NorthstarMLS, Infosparks Data, Hedgeeye Risk Management, FreddieMac.com, Nasdaq.com, TradingEconomics.com, fred.stlouisfed.org, The National Association of Home Builders

By Nick Leyendecker, Co-Founder | Broker | REALTOR

Under Contract | List Price: $499,900
Beautiful 5 Acre Hobby Farm in Oak Grove

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Description: Acres: 4.8 | Beds: 3 | Baths: 3 | Sq Ft: 2,500+ | Garage: 3 | Welcome home to nearly 5 acres of dry, wooded privacy featuring a well maintained home and a 60x30 pole building. The main floor offers a primary suite with private bathroom, new flooring, a renovated kitchen with center island storage, beautiful granite countertops, new appliances and a 1/2 bathroom. The grand family room has a vaulted ceiling, a floor to ceiling brick fireplace and walks out to the bright and open sunroom and large cedar deck. The 2 upper level bedrooms and generous loft style family room are serviced by a full bathroom. The lower level walks out to the garage and offers tons of additional space awaiting your finishing touches. Additional features include new carpet, a new water heater, maintenance-free siding, a new roof, Anderson windows, storage sheds, an oversized heated and insulated 3-car garage with bonus storage attached and more. Enjoy the maturely wooded surroundings offering abundant wildlife, privacy, plenty of open flat space and perennial gardens.

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For more information or to arrange a private showing of this listing, email or call us today at 612.888.HOME (4663).

SOLD | List Price: $899,900
Resort Style Living in a Fully Renovated, Walkout Rambler on a Private Lot at the end of a Quiet Cul-de-sac

We represented the seller of this property which sold in 12 days for $900,000 (100% of list price) and closed on 11-23-22.

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Description: Acres: .6 | Beds: 6 | Baths: 5 | Sq Ft: 3,900+ | Garage: 3 | Welcome home to resort style living at this custom, walkout rambler set on a serene, maturely wooded lot in a quiet cul-de-sac, just 2 blocks from the Medicine Lake Regional Trail & Harty's boat slips. The property has been completely renovated from top to bottom, inside & out. The main floor is bright, open, flooded with natural light and has private nature views out of almost every window. The primary suite, living and family rooms are all centered around a large sun room with skylights & heated, Tuscan tile floors, overlooking the private, backyard oasis. The lower level set up for multi-generational living includes a separate garage entry & 2nd laundry. All that is needed for a 2nd unit, is a driveway to the lower garage & a kitchenette at the north wall of the lower family room, which is pre-wired for a future fridge & stove. The backyard is a thoughtfully landscaped retreat surrounded by nature & wild life & centered around a 20' x 40' in-ground pool with a 12' deep end.

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To schedule your free equity analysis email or call us today at 952.222.SOLD (7653).

SOLD | List Price: 349,900
Turn-key, One-level Living on a Gorgeous Setting

We represented the seller of this property which sold for $355,000 (101% of list price) and closed on 12-06-22.

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Description: Beds: 2 | Baths: 2 | Sq Ft: 1,600+ | Garage: 2 | Welcome to one of premier villas of Shamrock's Alexandra Cove. This turn-key home is set on one of the best lots in the community with beautiful, private, expansive nature views from inside the living room, from the large sun-room, from the primary suite and from the private, outdoor patio. The home has been well maintained by the current owners and with fresh paint and new carpet, you can move right in with a quick close possible. Features include a large kitchen with center island, vaulted ceilings, easily accessible laundry and generous closets for storage. The spacious primary suite features a large window with nature views, a walk-in closet and a private bath with a tub, a shower and double vanities. There are no stairs to navigate inside, outside, front to back. The oversized, backyard patio opens up to a spacious lawn. If you're looking for turn-key, one-level living on a gorgeous setting, this is a must see.

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SOLD | List Price: $650,000
Beautiful, Contemporary Home on Quiet Cul-de-sac

We represented the buyer of this property which sold for $665,000 and closed on 11-17-22.

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Description: Acres: .5 | Beds: 5 | Baths: 3 | Sq Ft: 3,500+ | Garage: 3

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SOLD| List Price: $424,900
Updated, Turn-key Home Set on a Maturely Wooded Cul-de-sac

We represented the seller of this property which sold in 9 days for $440,000 (104% of list price) and closed on 12-07-22.

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Description: Acres: .22 | Beds: 5 | Baths: 3 | Sq Ft: 2,600+ | Garage: 2 | This updated, turn-key home is set on a maturely wooded cul-de-sac in a charming neighborhood, walk-able to Girard Lake Park, Nine Mile Trail and other paths and parks. The main floor is bright and open featuring three bedrooms up, including a primary suite with a private bath. The updated kitchen, featuring CraftMaid Cabinetry, hardwood floors, granite tops, tile backsplash, recessed lighting, a large island and more, opens up to dining, living and the sun-room. The sun-room walks down to an outdoor patio set inside the fully fenced backyard with sufficient green space. The lower level features lookout windows, access to the garage, a large family room with a fireplace and two more spacious bedrooms, all serviced by an updated bathroom. Enjoy easy access to freeways and close proximity to restaurants, coffee shops and shopping amenities.

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SOLD | List Price: $384,900
Turn-Key Bridgewater Lofts Condo Adjacent to Gold Medal Park

We represented the seller of this property which sold and closed for $375,000 on 11-21-22. That is 7.1% ($25K) higher than what unit 630 closed at, just 60 days earlier.

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Description: Bridgewater Lofts | Beds: 2 | Baths: 2 | Sq Ft: 1,100+ | Garage: 1 | Welcome to Unit 533 of the Mill District’s Bridgewater Lofts building. Hardwood floors span the open floorplan featuring tall ceilings and floor to ceiling windows. The unit is filled with high end features including granite countertops, stainless steel appliances, a gas range, a Murphy bed in the second bedroom and more! The primary suite features a massive walk through closet and a luxurious private bathroom with a double vanity, separate shower and jetted tub. There is 1 garage stall and storage included in the underground, secure garage. Enjoy your private balcony or venture to the common spaces including a rooftop pool & hot tub, patio space with a bonfire area, totally renovated community room or state of the art fitness center, all offering fantastic views of the city. The building is completely secure, has on-site management and is within walking distance to the Vikings stadium, Trader Joe’s, Guthrie Theater, walking paths, many restaurants and sits across from Gold Medal Park.

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To schedule your free equity analysis email or call us today at 952.222.SOLD (7653).