MINNEAPOLIS (WCCO) — As the United States economy experienced its worst quarter on record, the housing market continues to boom.
According to the Minneapolis Area REALTORS® (MAR) and the Saint Paul Area Association of REALTORS®, July had to highest pending sales figure in the 16-county metro area compared to any other July since 2003, perhaps earlier.
So, why is the housing market doing so well? WCCO spoke with realtor Lyndon Smith with Edina Realty, and MAR research director David Arbit.
“That’s a multi-faceted answer, and I guess the first one is we’re short on inventory,” Smith said.
Homebuilders aren’t keeping up with demand, and in the wake of the 2008 recession, there’s still fear from sellers about making any changes, according to Arbit. He also says there’s pent-up demand from earlier this spring due to COVID-19.
“Activity that would have occurred in May or June is happening in July,” Arbit said.
Experts also point to record low-interest rates also pushing people to make a move.
“The consensus is that buyers that have been sitting on the fence, so to speak, they’re coming off it,” Smith said.
Low mortgage rates were just one reason Billy and Nova Hill decided to move from their condo in Minneapolis to their home in Brooklyn Park. They also wanted more space for their grandchildren to visit.
After losing five other homes in bidding wars, the Hills finally got their home by offering $20,000 above asking price.
“We’ve had homes before. Never have I experienced this,” Nova Hill said.
Smith says his clients are moving all over the metro area — city and suburbs. In July, Minneapolis sellers were getting average offers of 100.8% of their original list price. In St. Paul, it was 101.3%.
Suburbs like Maple Grove, St. Louis Park and Brooklyn Park are seeing above-asking-price-average offers as well.
“They’re coming back to the city, they’re going to the suburbs. People are just trying to find houses,” Smith said.