Despite low-interest record rates, the housing market has had a breakthrough year, with the most significant annual gain in single-family house values and rentals, meager foreclosure rates, and the highest number of house purchases in fifteen years. Will the 2022 housing market, on the other hand, fall or grow?
Let’s take a look at the most recent trends and the Minnesota housing market forecast 2022. Homeowners in 2021 saw a marketplace in which their homes sold quickly and regularly for more than the listing price, as a large number of purchasers competed for the opportunity to purchase the property.
The most frequently held 2022 real estate market forecast is that inventory will stay short, but price growth will be slower than it was in 2021. Although listings are likely to grow in the spring and summer of 2022, it is unclear that there will be enough to meet demands.
Real Estate Investment: Housing Market 2022 Forecasts
2022 will continue to be a seller’s market, with property values rising by double-digit percent on average. While affordability issues remain, low mortgage rates, more significant savings, and a stronger job market help make homeownership more attainable to a broader range of prospective purchasers.
According to the latest housing market estimate, home price growth will drop even further in 2022 but will still climb. As a result, real estate investors will become more creative as house costs continue to take a larger amount of their paychecks.
Numerous people will take advantage of the continuous working flexibility to migrate to the suburbs, where they may still find a home for less per square foot than in surrounding towns. Along with this external drive, some purchasers will move entirely, and the prediction is sustained growth in the mountains west.
Following two consecutive quarters of declines, the housing market staged an incredible return in the final quarter of 2021. The growing trend continued in November 2021, with existing home sales increasing by 1.9% month over month.
Current house sales increased slightly in November, and after a dynamic year, the seasonally adjusted annualized sales rate is expected to end roughly where it started in 2021. Monthly growth decreased slightly more in November, which may entice more purchasers.
Now let’s see what the Minnesota housing market forecast 2022 holds for investors!
Minnesota Housing Market Forecast 2022: According to the Latest 2021 Data
According to new realtor statistics, days on the market dropped as the median price jumped due to a lack of inventory. However, housing demand continues to outpace availability in the whole state, and sales prices have hit all-time highs. According to October data from Minnesota Realtors, the state’s median sales price jumped 8.2% to $308,500.
The report depicts the residential real estate activity in Minnesota as a whole, including single-family homes, townhouses, and condos. Percentage changes are determined using rounded numbers. Affordability has also remained a driving force in the Minnesota housing market trends. The Affordability Index, a nationwide gauge of housing affordability, fell by 11.1% in October, owing to decreased mortgage interest rates.
The Minnesota real estate market slowed in October, with closed transactions down in 11 areas compared to October 2020. The Headwaters and Northwest regions witnessed single-digit rises, while the remainder of the state suffered double-digit reductions. Closed sales fell by more than 20% in three different areas.
- Arrowhead (-23.5%)
- North Central (-21.3%)
- Upper Minnesota Valley (-21.2%)
More information about our Minnesota housing market forecast 2022 can be found in the graphic below, which compares closed house sales in October 2021 to closed housing sales in October 2020.
Minnesota Housing Numbers That Have Improved Year Over Year
- Median Sales Price + 8.2%
- Avg. Sales Price + 5.8%
- Pct. of Orig. Price Received + 0.4%
Minnesota Housing Metrics That Fell Year By Year
- New Listings – 10.2%
- Pending Sales – 10.6%
- Closed Sales – 16.2%
- Days on Market – 23.1%
- Affordability Index – 11.1%
- Homes for Sale – 18.6%
- Months Supply – 21.1%
For the Minnesota housing market forecast 2022, we can see that according to the most recent report from the real estate group, closed sales in October fell 16.2% to 8,713 compared to October 2020. This, together with the 18.6% decrease in the number of homes for sale, represents a return to a more normal market than purchasers and sellers have experienced in recent months.
“The extraordinary number of closed sales we saw in October 2020 was really a historic outlier. This month’s numbers are more closely aligned with expectations for the fall. Buyers who are still in the market are highly motivated to close, and willing to pay more. Interest rates remain low, so if the overall rate of inflation in the economy at large is kept in check, we will likely see resurging closed sales in the spring.” – Minnesota Realtors CEO Chris Galler.
According to Minnesota Realtors, the market fell in 11 of the 13 regions in October, with only regions in northeastern Minnesota reporting single-digit growth, while closed housing prices in the seven-county Twin Cities metro fell 17.3% compared to October 2020.
Other insights from the statewide study that can help the Minnesota housing market forecast 2022 include:
- Median sales price increased 8.2% to $308,500
- Average sales price increased 5.8% to $354,686
- New listings decreased 10.2% to 8,428
- Pending sales fell 10.6% to 7,994
- Days on the market decreased 23.1% to 30 days
- Homes for sale decreased 18.6% to 11,696
Minneapolis Real Estate Trends: Saint Paul Housing Market Trends
We will now look at the more housing market trends in Minneapolis–St. Paul–Bloomington, MN-WI metro area. The area is popularly referred to as the Twin Cities after its two most populous towns, Minneapolis, the state’s most populated metropolis, and Saint Paul, the state’s capital, located to the east.
Purchaser activity has been extreme in 2021, thanks to a strong economy and low mortgage rates. As a result, prices rose as supply and demand maintained to favor sellers. As a result, the number of closed transactions in the 16-county metro area around the Twin Cities, where the housing market has been exceptionally popular, dropped 16.2% to 5,962 in October 2021 from October 2020.
- The number of new listings in the Twin Cities fell by 11.5% to 6,192 in October 2021.
- The average number of days on the market has dropped by 22.9% to 27 days.
- The price per square foot rose 8.9% to $159.
- The median sales price grew 7.9% to $340,000.
- The average selling price rose 5.8% to $394,681.
As for Minneapolis real estate trends, the median list price of homes in Minneapolis, MN, in October 2021 was $299,900, a -3.2% year-over-year decrease. The median listing price per square foot in this area was $215. The average sale price was $307,500. The Sale-to-List Amount Ratio is 100%, meaning that in October 2021, properties in Minneapolis, MN sold for close to the asking price on average. Minneapolis was a balanced market, which means that the supply and demand for housing were roughly equal.
Minnesota Housing Market Forecast 2022: Saint Paul
The St. Paul home market is highly competitive, according to Redfin, a real estate business. In October 2021, St. Paul home prices were up 12.0% from the previous year, with a median price of $275K. In addition, homes in St. Paul sell after 20 days on the market on average, compared to 18 days in October 2020. In October 2021, 395 properties were sold, dropping from 477.
Forecast for the Minneapolis Metro Area in 2022
The Minneapolis home market is expected to maintain its recent trend of being one of the top markets in the United States. It is also one of the trendiest real estate markets for rental property investment. So what are the real estate market forecasts for Minneapolis 2022?
House values in the Minneapolis metro area have risen by 13.6% in the last year alone. However, for investing in real estate, since there is a limited amount of homes in Minneapolis, purchasers are sometimes compelled to compete, leading to higher prices and faster sales, which benefit sellers. In other words, based on the previous month’s major housing market statistics, demand outnumbers supply, providing sellers a price bargaining edge over buyers. As a result, there are fewer available properties than engaged buyers in the market.
- The average home value in the Minneapolis-St. Paul-Bloomington Metro area is $349,595, a 13.6% increase over the previous year.
- According to Zillow, they will grow 11.4% in 2022.
- Minneapolis home values have increased by 6.5% (current value = $321,732) and will still rise.
- Home values in Saint Paul have increased 10.7% (current = $275,264) and will still rise.
When we talk about the Minnesota housing market forecast 2022, while the impacts of COVID-19 in the broader economy persist, real estate activity in many countries, including Minnesota, is starting to rebound. Mortgage rates have been below 3% since last year and are approaching all-time low points, fueling significant buyer demand. As a result, real estate activity in the Twin Cities region maintains strong during this peak home-buying season.
In a balanced real estate market, the supply would shrink to zero in around five to seven months. So in terms of months of supply, Minneapolis, or the entire Twin Cities housing market, can become a buyer’s market if the supply exceeds five months of inventory. That, in any event, is not going to occur, at least not in 2022.
For Minnesota Housing Market Forecast 2022, this region (and the entire state of Minnesota) is heavily tilted toward sellers due to a continual imbalance in supply and demand. As a result, home availability remains tight during what is supposed to be a busy summer selling season. That will cause property prices to rise at a higher rate.
Mortgage rates are at an all-time low for purchasers in Minneapolis and the whole Twin Cities metro area. As a result, this is a beautiful time for them to enter the market and acquire their preferred deals. If purchaser demand loosens, there can be a good impact on the Twin Cities region’s low inventory while witnessing a negative effect on sales.
Additionally, if listings remain on the market for a more extended period, purchasers will have a distinct advantage in negotiating sales pricing. Therefore, buyers who enter the market at this time should have a better variety of options than they would typically have when selecting a house.
Buyers should take advantage of the opportunity to take their perspective deals that seasoned investors might otherwise take away in price wars. Timing your local market is a vital component of real estate investment, whether you’re trying to purchase or sell.
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Minnesota Housing Market Forecast 2022: Best Cities for Investment
The cities are ranked based on their traditional/long-term return on investment based on Mashvisor data, which considers housing prices and mortgage payments that you are likely to pay. Based on these criteria, these are the top five cities in Minnesota for real estate investment.
Minneapolis, Anoka
- Daily rate: 141
- Occupancy: 68.97%
- Traditional listings: 1668
- Traditional rental income: $1818.76
- Traditional COC: 2.11%
- Median price: $399,812
- Walkscore: 61.82
- Price to rent: 18.32
- Days on market: 78
Otsego, Sherburne
- Daily rate: 126
- Occupancy: 71%
- Traditional listings: 2
- Traditional rental income: $2025.68
- Traditional COC: 3.79%
- Median price: $415,432
- Walkscore: 0
- Price to rent: 17.09
- Days on market: 37
Crystal, Hennepin
- Daily rate: 265
- Occupancy: 64.11%
- Traditional listings: 3
- Traditional rental income: $1916.36
- Traditional COC: 4.29%
- Median price: $301,714
- Walkscore: 59
- Price to rent: 13.12
- Days on market: 36
Zimmerman, Sherburne
- Daily rate: 188
- Occupancy: 56%
- Traditional listings: 2
- Traditional rental income: $1574.41
- Traditional COC: 2.8%
- Median price: $358,903
- Walkscore: 46
- Price to rent: 19
- Days on market: 62
Blaine, Anoka
- Daily rate: 297
- Occupancy: 65.18%
- Traditional listings: 8
- Traditional rental income: $2057.11
- Traditional COC: 3.01%
- Median price: $448,639
- Walkscore: 37
- Price to rent: 18.17
- Days on market: 70
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Conclusion
Finding an investment property in Minnesota at the beginning of 2022 is a wise and reasonable move. And with our Minnesota housing market forecast 2022, if you want to safeguard your future by purchasing an investment property in Minnesota, keep our list of the greatest cities for investing in the Minnesota housing market in mind.
So, when you’re ready to move on to the next phase of identifying an investment property to buy in your preferred market, use Mashvisor’s platform to help you find the ideal property for you based on real data predictions and smart analytic.