After 2 years, experts say the housing market is cooling down
MINNEAPOLIS -- After two years of record sales, the housing market is starting to cool down.
New data shows home sales in Minnesota are down nearly 20% from a year ago with the National Association of Realtors declaring a "housing recession."
"We're starting to see decreases as the market starts to stabilize and that's because interest rates are up a little so sellers now recognize that they're going to have to lower their price so people can afford homes again," said Chris Galler, CEO of Minnesota Realtors.
People who had qualified for a mortgage at 3% can no longer qualify at 5.5%, which is why there's a reduction in home sales, according to Dr. Lawrence Yun, Chief Economist at the National Association of Realtors.
He says this housing recession is about the people in the industry. Some of the mortgage lenders might be losing jobs, and home builders are cutting back on production.
The slow down on the housing industry could be good news overall for consumers.
"Slowing down the market has helped. People have inspections now. There might be multiple offers but instead of 20 people it's maybe two, three people," said Galler.
Yun says that for homebuyers, the market is still a little tough.
"Maybe there's a little better negotiating, price negotiation opportunities, and home sellers have accumulated a sizable housing wealth," he said.
Realtors say how long the market cool-down lasts depends partly on the Federal Reserve, which is expected to meet again next month and potentially raise interest rates again.
