Barb Jandric, president, Edina Realty
As president of Edina Realty, Barb Jandric provides guidance and direction to the company's 60+ sales offices and 2,300 REALTORS®.
This past year has seen more moderate but steady improvements for many market indicators in the 13-county Twin Cities metro. Some areas have finally seen a return to "normal" market conditions, with median sales prices nearing where they were before the market correction.
One measure ripe for continued improvement is the inventory of homes for sale. Buyers faced stiff competition this past year, especially in popular areas and price points. It was not uncommon to see homes sell within days — or even hours in high demand neighborhoods — of coming on the market.
In 2016, we expect to see continued moderation in market growth. Let's examine what you can expect if buying or selling a home is on your list of New Year's resolutions.
Home buying trends to watch for in 2016
- Even after rents have risen at twice the level of salary increases, rents will continue to rise this year. It will continue to be cheaper to own than rent in Minnesota.
- We should see higher inventory of existing homes for sale, and moderate increases in new construction starts — both of which will ease some strain on the inventory of existing homes.
- As expected, the Federal Reserve raised its key interest rate by 25 basis points, from a range of 0 - 0.25 percent to a range of 0.25 to 0.50 percent on Dec. 16. Consequently, rates for mortgage loans will rise slowly and incrementally, but should have a minimal impact on buyers.
- Low down payment mortgage options are now available, which will help buyers whose ever-increasing rental costs make it hard to save up.
- Sales activity for local luxury properties priced at $1 million and above has reached all-time highs, according to the Minneapolis Area Association of Realtors.
Expectations for home sellers in 2016
- Appreciation will rise more slowly than in recent years — about 3.5 percent — which is healthy and on-par with the 18-year historical average.
- Expect a more traditional seasonal market, with a sellers' market in spring, a more balanced market in summer and a buyers' market in the fall and winter.
- Homeowners who have struggled with underwater mortgages should see increasing equity as the economy and home prices continue to improve.
Trends in homeownership
- Minnesota has the highest homeownership rate in the nation; expect our region to continue to be a leader.
- Household formation has been on the rise, increasing the need for rental housing and contributing to increasing rents. Nationwide, millennials have been the largest segment of homebuyers since 2014 and locally, this population is approaching readiness to own.
- After the housing bubble and great recession, homebuyers are more realistic in their reasons for buying. They are looking for a good place to live and a stable payment structure, rather than a quick return on their investment.
Our local economy
- The Minneapolis-St. Paul metropolitan area has the lowest unemployment rate of all large metro areas: 3.1 percent.
- U.S. Census data show that Minnesota has the seventh-highest median household income in the country at $67,244, but recent reports have found large income gaps for black Minnesotans, which limits the attainability of homeownership for those communities.
- Minnesota was the top state for business in 2015, according to CNBC. You can expect our region to continue to be a business leader.
Ready to put these insights to use?
Whether you're buying or selling in 2016, we can help. Edina Realty has local market experts working nearly every neighborhood across Minnesota and western Wisconsin. Call, email or chat today to be put in touch with a REALTOR® who can help you buy or sell a home next year.