It is 2023, and we are sledding downhill just as fast as gravity will let us!
There is and will continue to be so much to cloud the mind as we look into the coming year for the real estate market. One thing to for sure mention is that national financial reports are rarely accurate and reflect what is happening in Minnesota. The 2023 predictions for the Twin Cities real estate market are far more positive than a number of metro area's around the US. So, my suggestion is to watch a little less "Bad News" TV, and explore the actual real, relevant, and local data before you make buying or selling decisions.
From the greater financial world, their opinions of the MSP market are overall stable-ish at the worst. The most pessimistic (backed up with data) forecasting was from "data guru" Marco Santarelli with Norada Real Estate. He does forecasting for investment bankers and trusts who invest large sums of money into residential real estate, and he predicts a slight appreciation of .6% in the Twin Cities Metro.
The most optimistic was the Twin Cities Business Journal and Realtor.com predicting a 5.6% average appreciation.
I spent the month of December in the Thursday emails that I send out reviewing the actual data from the SW metro, which for our statistical steadiness is defined as Eden Prairie, Minnetonka, Chanhassen, Victoria, and Chaska. Here are the two most interesting take away’s looking a the year of 2022.
The average closed home price per square foot buyers were willing to pay last year went up at a healthy 8.6% which was $184 per sq foot to $201.50 per square foot. This would include
The average price a seller received of their initial list price went up to as high as 104-105% of the list price in April and May, and has settled in significantly since then to end the year at sellers receiving an average of 96% of their initial asking price.
2022 saw continued a high demand but low availability. The number given in months, is the months supply of homes to satisfy all buyers currently in the buying process. The heavy demand has changed very little from the start of 2022 to the end. From 1.0 month(s) to 1.2 months which is only about a week difference. This is not adjusted based on the amount of sellers who simply chose not to list their home in 2022 that might have if the rates didn't spike and spook them. Regardless the "absorption power" of the buyer demand was and will remain impressive.
The single largest negative trend for sellers that came on strong in 2022, and will persist in 2023 is that the actual sale took much longer by comparison. Starting the year homes were selling in 13 days, by the end of the year it was 34 days.
To summarize, if the trends continue from 2022, then 2023 will be the year that…
- Homes will sell at a healthy pace. Selling will take longer to (some 2-3 months).
- Home sellers who want "top dollar" will still be rewarded if they cosmetically prepare their home well.
- Home buyers will have "power" to negotiate reasonable and justifiable seller concessions.
My live report and commentary is also on YouTube