What does the real estate market have in store for home buyers, sellers and owners in Minnesota and Wisconsin this year? Many national real estate forecasts for 2021 have been published, but Minnesota and Wisconsin, like every part of the country, follow their own trends. We asked Corinne Shanahan, Draper and Kramer Mortgage’s Regional Manager for Minnesota and Wisconsin, four important questions about what’s ahead for real estate in the region. Here’s what she had to say.
What trends should homebuyers and sellers expect for the real estate market?
A: Inventory (or housing availability) will remain constrained in most segments of the market, while buyer activity will remain strong. According to MAAR (Minneapolis Area Realtors), “Market-wide, 2020 inventory levels were down 37.9 percent. The property type that gained the most inventory was the Condo segment, where it increased 40.1 percent. That amounts to 1.1 months supply for Single-Family homes, 1.0 months supply for Townhomes and 3.3 months supply for Condos.”
The first half of 2021 will see similar inventory trends as 2020, and buyers will need to be well-prepared and market-educated in advance of making offers.
Q: What predictions and advice on mortgages do you have for homebuyers and homeowners?
A: With very low housing inventory in 2021, buyers need to be ready with a preapproval letter from a lender. You’ll need to have a plan and know how much down payment you can afford and what contingencies, if any, you will request. When you make an offer, be prepared to make it your best because you are not likely to get a second chance in a highly competitive housing market.
Buyers and homeowners alike should take advantage of the historically low mortgage interest rates. For buyers, this can mean they could afford homes with higher purchase prices than they could afford when interest rates were higher. For current homeowners, refinancing in 2021 will still be a viable option, especially if there is opportunity to take cash out to pay off debt or complete home improvements.
Q: What opportunities should first-time homebuyers look for?
A: In addition to low interest rates, first-time homebuyers should consider looking in the existing or new construction condo market. Dollar for dollar, there will be more condo units available than single-family homes in the same price range. Condos can be a good starting point for first-time homebuyers as single-family inventory is scarce.
Q: What lasting changes do you think COVID-19 has had on home buying, selling and financing, and what has remained the same?
A: Home price appreciation in the Minneapolis market has remained strong, and Zillow predicts a price increase of 7.3% in the next year for this market.
Lasting changes due to COVID-19 are expected to be virtual home tours included on most listings online, since buyers are able to get a good feel for their prospective home as opposed to pictures alone. Closings may continue to include just the buyer or seller and the title company present in person. We may not go back to most closings in which Realtors and loan officers were present as well, since social-distanced closings worked this past year, and were quicker.
Are you planning to buy or refinance a home in Minnesota or Wisconsin in 2021? Contact us to get started with a free mortgage review from one of our local home financing experts.