Median home sale prices reach $380,000 in the Twin Cities
In the last five years, Minnesota's median home sale prices have risen by $93,000 — or $18,000 annually — a huge boon for existing property owners poised to take advantage of equity in their houses but a major barrier to entry for prospective first-time homebuyers also saddled by high interest rates and tight supply.
The good news for first-time buyers?
The days of multiple offers for sight-unseen properties, waived home inspections and other frenzied buying activity appear to be largely over, though a seller might still receive some same-day offers 'if the home is priced competitively,' said Frank D'Angelo, president of the Minneapolis Area Realtors.
Generally speaking, 'buyers can breathe more freely while buying their home,' D'Angelo said. 'In some ways, 2023 and 2024 reflected a return of a more normal market.'
Leaders of the Minnesota Realtors, Minneapolis Area Realtors and St. Paul Area Association of Realtors released their annual year-in-review on Tuesday during a press event at the offices of nonprofit homebuilder Twin Cities Habitat for Humanity on University Avenue in St. Paul. They noted in a joint statement that charitable efforts are one strategy toward alleviating 'the thorny trifecta of rising prices, higher mortgage rates and a shortage of homes.'
New construction alone isn't a cure-all.
Jennifer Livingston, president of the St. Paul association, said that new home sales were largely flat last year, likely because they tend to run 35% more expensive than existing homes. Some suburbs and exurbs such as Dayton and Lonsdale have seen a sharp uptick in residential construction despite rising costs and a tough financing environment, as did part of St. Paul's West Seventh Street neighborhood.
'Minnesotans are still moving, just less so than four years ago,' she said. Realtors are keeping an eye on how companies calling workers back in person also may impact housing markets.
Coupled with high interest and insurance rates, as well as low inventory, rising values have created a bit of a dual effect, suppressing metro-wide home sales under $300,000 by 8.5% last year while paving the way for homeowners with sizable equity to make their move to bigger houses and higher-end properties.
Nowhere is the trend more apparent than in the super-luxury market, where sales of homes priced at $1 million or more rose 12.3% in the metro to their highest level on record, about four times the activity for that segment of the market than in 2005.
Those luxury sales represent a slim corner of the market — about 2% overall — but a striking contrast nonetheless.
Nationwide, the median-age first-time homebuyer may be showing some gray at 38 years old, and further proof that young families are being squeezed out of homeownership.
Overall home sales rose only 1.1% statewide and 1.8% in the Twin Cities metro from 2023, which had been one of the starkest sales seasons of the past 25 years. Sales of single-family homes fared better, increasing 3.7% last year across the metro, and sales of homes spanning four bedrooms or more rose 5.6%.
Median sales prices were up for the year 3.9% statewide to $345,000, and up 3.3% to $380,000 in the metro.
The sizable increase in median statewide sales prices — from $253,000 in 2019 to $345,000 in 2024 — tell only part of the story, as monthly mortgage payments for a median-priced home have jumped from about $1,600 to $2,700 after insurance and interest.
Patti Jo Fitzpatrick, president of the Minnesota Realtors, said the market suffers from a lack of availability, accessibility and affordability.
'We unfortunately are falling short on all three,' she said. 'We simply don't have enough homes available for people who are ready and willing to purchase.'
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