End-of-Year Twin Cities Market Update

As we wrap up a rollercoaster of a 2023 real estate market, let's take a look at where the market currently stands and what it could mean for you if you're contemplating buying or selling before the year's end (or heading into spring 2024).

While it might seem like the real estate market has slowed, the slowdown is more of a seasonal nature than one necessarily attributed to interest rates or other factors. Year over year, active and pending home sales remain steady compared to this time last year. We continue to experience a seller's market, with the median days on the market down by two days compared to last year (19 DOM in 2023 vs. 21 DOM in 2022).

Across the seven-county metro area, the median home price remains resilient when adjusted for seasonality, indicating an increase of +1.5%, or approximately $6,000 compared to 2022 ($365,000 in 2023 vs. $359,000 in 2022).

The positive news is that in the past week, interest rates have decreased by 0.75%. A drop in interest rates this substantial in a one-week span has occurred only twice in the past decade.

In the seven-county metro area, buyers are currently waiving inspections in 22% of accepted offers, meaning they are forgoing the inspection contingency and their right to inspect their new home.

On the flip side, the average list-to-purchase price has decreased to 98.5%, and sellers' contributions towards a buyer's closing costs currently stand at 31% of accepted offers. This implies that sellers are not only accepting a lower purchase price than the list price on their homes but are also contributing at least a portion towards a buyer's closing costs in a third of all home purchase transactions.

As you can see, homes are still very much selling, but the level of competition in the market is not as pronounced as in the spring and summer. If you are a seller and your home has been on the market for a while, a price adjustment or a condition adjustment (or both) may be necessary to attract a buyer.

Keep in mind that the real estate market can vary significantly from neighborhood to neighborhood. If you seek specific information for a particular area, please feel free to reach out!