2024 may be the year for some to buy a home, experts explain how
MINNEAPOLIS — Are you in the market to buy home?
With interest rates expected to drop and new construction expected to rise 2024 may be your year.
"There was a collective pause, a big breath. It had been a really frenzied market for a few years," said Mike Smith, owner of Anderson Realty. "A lot of pressure on the market, exacerbated by the really low interest rates we had in 2020-2021. When the interest rates went up, the market kind of slowed down greatly."
But over the last few weeks, buyers and sellers who hit the brakes are now hitting the gas.
"Based on how we finish 2023, the demand for homeownership and new housing has never left," said James Vagle with Housing First MN. "In the Twin Cities region, we're 60 to 90,000 housing units under supplied. So the need and the demand for housing is very strong. But the interest rates provided a challenge and a hurdle."
Some relief from those rates are in sight.
This week, the average mortage rate was about 6.6, down from the 7.8 percent in October...but still nowhere near the 2.6 percent rates seen three years ago.
"Between Thanksgiving and Christmas, my phone started going crazy people are making plans for this year 2024," said Mike Smith, owner of Anderson Realty. "We're already seeing sales going up number of mortgage applications is going up. The folks that had kind of come to a pause and 2023 are starting up now in 2024."
New home build permits are also firing up again as the year starts...but the lack of inventory will likely continue to put pressure on buyers and sellers looking to make a move this year.
"The under supply is a much larger structural issue. It's something that legislature is looking at. And the bottom line is we need to build more homes of all types in Minnesota to get our housing market back to a balanced state. And that's going to take several years," said James Vagle with Housing First MN.
According to Housing First Minnesota, building permits for multi-family homes dropped more than 50% last month, potentially showing a shift in priorities for developers this year.