By Christie Vogt
The real estate market likely will remain in sellers’ favor this spring given low inventory, rising prices and higher interest rates.
“It’s still very much a seller’s market,” said Colleen Healy, a real estate agent with Keller Williams Integrity Realty in Roseville.
Adam Benedict, a St. Paul-based real estate agent with RE/MAX Advantage Plus and the founder of Agent Benedict Group, concurred.
Home prices are climbing significantly, Benedict said, which means that “for anyone who wants to sell, now is the time to do it.” Sellers are likely to receive multiple offers or at least generate a very strong, competitive offer, he added.
Over the past two to three years, Benedict has observed the spring market shifting earlier in the year. Whereas the traditional market would see strong activity from April to October, now the day after the Super Bowl seems to coincide with a surge in market movement.
“It truly felt like someone flipped a switch this spring,” Benedict said, noting that what felt like working in a “dead market” suddenly turned into seeing “multiple offers again on almost all property styles and types.”
This “new norm,” Benedict said, seems to hold steady through the Fourth of July when inventory tends to catch up with the buyer pool. Currently, inventory is “very low,” he said, noting that on March 24, for example, there were only 15 active home listings across Bugle neighborhoods.
Healy, who grew up in St. Anthony Park, also noted that inventory is down in St. Anthony Park, Como Park and Falcon Heights, while the price per square foot has increased in two of the areas.
Comparing February 2022 data to February 2023, St. Anthony Park is down to five listings from seven, and the price per square foot rose to $243, up from $209.
In Como Park, there were 11 listings compared to 20 a year ago, with the square footage price rising to $210 from $208.
In Falcon Heights, the number of sale listings was down to two from four, although the price per square foot decreased to $198 from $202.
“Because inventory is lower in all three of these locations, even though the interest rates are higher, the demand is still there,” Healy explained.
Across the Twin Cities, there is only a 1.3-month supply of inventory, the Saint Paul Area Association of Realtors (SPAAR) reported on March 15. That means if all prospective buyers stopped searching and bought a property, the market would be out of inventory in 1.3 months. Typically, four to six months of supply indicate a balanced market, according to SPAAR.
Looking at data from 2018 to 2022, median sales prices for the area have shown strong growth.
“On average, we’re seeing $80,000 to $90,000 swings in just a four-year span,” Benedict shared. “That is incredible. That’s a lot of equity for someone to have, too.”
In that period, the approximate median sales price for each area increased as follows: Falcon Heights to $389,000 from just under $300,000; St. Anthony Park to $368,000 from $284,000; Como Park to $320,000 from $240,000 and Lauderdale to $260,000 from $213,000.
Given the current climate, buyers will likely be compelled to make concessions and pay a premium for properties. Healy said she coaches buyers on strategies to succeed amid multiple offers, such as being flexible on move-in dates.
“It’s not always (about) throwing more money at the situation,” she said.
With 30-year fixed mortgage rates averaging around 6% as of March 30, some buyers are choosing to “wait out” the rates, Healy said. But she noted that economists are doubtful that rates will drop to the record 2 to 3% levels that were seen in recent years.
In Benedict’s experience, some buyers focus too heavily on interest rates. “In the grand scheme of things, they are still in a much better position buying now versus waiting and hoping that rates come down or hoping that prices come down,” he said, “because at the end of the day — yes, there will always be some corrections — but values have historically only gone up and never come back down.”
As for sellers, although they have the upper hand, Healy stressed that pricing is still important.
“During the COVID housing boom … it was crazy what houses would sell for,” she said. “Houses now really do need to be priced well to move.” Homes that sit tend to sell lower than if they were priced correctly at the outset, she added.
Whether buying or selling, Benedict said he encourages people to look at the big picture.
“There’s never a perfect time to buy. There’s never a perfect time to sell. Focus on your goals,” Benedict advised. “Focus on what you are after, what you’re trying to get out of this. The rest will kind of fall into place.”
Christie Vogt is a St. Paul-based freelance writer and a regular contributor to the Bugle.
