Housing Affordability In Twin Cities Hits Lowest Level In 18 Years, Realtors Report

MINNEAPOLIS (WCCO) -- The difficult Twin Cities housing market is showing no sign of getting any easier for prospective home buyers, as the latest data from Minneapolis and St. Paul Realtors indicates home affordability has reached lows not seen since 2004.

The April figures release Monday show that both pending and closed home sales were down about 9% from April 2021.

Inventory is also down 9.2% to roughly 5,750 units. That figure has been on a decline for 25 consecutive months now. Currently, the Twin Cities has just over a month's supply of inventory, whereas a balanced market would boast from four to six months' worth.

And the median sale price reached a new record $370,000, up 10% from last year, and pushing the affordability index to 95. That means the median income is 95% of the necessary income needed to qualify for a median-priced home under current interest rates.

Earlier this month, Mortgage Banker Rick Fitzgerald told WCCO that, even though rates are at a 10-year high, if you look historically, it's a pretty good time to borrow money. He says local demand for houses still seems high, even though some are pausing to wait for the uncertainty in the market to pass.

Some perspective buyers have said the increase in interest rates is making them think twice. Experts said the interest rates are expected to go up even further this year, which could help cool things off.

"The reality is that people will need to buy and sell homes in any environment, but this really puts pressure on those who are on a budget," Denise Mazone, president of Minneapolis Area Realtors, said.