If you’re entering the market to buy a home, you may wonder what the current market conditions are like. Buying a home in the fall is unlike any other time of year, so stay with us as we walk you through what to expect.
Interest rates are (still) low
Interest rates on mortgage loans have been historically low throughout the market correction. These rates remain low now, but prices are rising and experts believe the rates will begin increasing soon, too.
What this means is that you shouldn’t expect low rates to hold. By purchasing now, you can rest assured that you are getting the best house for your budget. When interest rates increase by even 1 percent, your buying power can be greatly affected.
The discount market is over
At the height of the market correction, in November 2009, 49 percent of pending sales in our 13-county market area were short sales or lender owned sales (NorthstarMLS). As of September 2014, that percentage had dwindled to just 18 percent.
What does this mean for buyers in Minnesota and western Wisconsin? In past years, bargains were plentiful, but many of the homes were in varying condition due to their status as a short sale or foreclosure. Today, prices have risen but so have the quality of homes for sale.
We’re headed for a balanced market
If you watch the housing market closely, you have likely noticed that price increases have leveled off in recent months. For example, our local market reported a staggering 17 percent increase in median sales price in August 2013 (Northstar MLS). This was at the height of the seller’s market. This year, the median sales price increased just 5 percent, showing that the seller’s market was leveling off.
Because the last eight years have seen us swing from one advantageous market to another, you may think these slowing prices are signs of an upcoming buyer’s market. The reality is that we are now headed toward a moderate, balanced market.
Buyers enjoying less competition
Our local market is enjoying its usual seasonal downturn, as many buyers and sellers exit the market to enjoy the holidays. Additionally, as foreclosures and short sales continue to dwindle across Minnesota and western Wisconsin, we are seeing fewer investors buying up homes in our area.
All this is to say there are fewer buyers in today’s local marketplace. If you are seriously considering buying a home in the next few months, you’ll enjoy a less competitive environment as you attend home showings and open houses.
Explains Lawrence Yun, the Chief Economist for the National Association of REALTORS®,“There was a marked decline in all-cash sales from investors. First-time buyers have a better chance of purchasing a home now that bidding wars are receding and supply constraints have significantly eased in many parts of the country.”
The bottom line
As a buyer, you have most likely missed the “lowest of the low” prices that came during the foreclosure buildup. But with the current low interest rates and home prices still low in comparison, buying a property in Minnesota or western Wisconsin is still a great investment.