It’s shaping up to be another hypercompetitive spring market for Twin Cities home buyers, especially for first-time buyers like Brandon Chheoun.
With a budget of $205,000 and a desire to buy a single-family house in the north and western suburbs, the competition is fierce. He and his girlfriend, Gina Solt, looked at nearly 30 houses, made offers on a half dozen and have yet to be the winning bidders.
“It’s not even funny,” he said, lamenting that several of the offers were for more than the sellers were asking. “It’s very exhausting.”
During February, sellers listed just 4,355 properties across the metro, 14 percent fewer than last February, according to a monthly report from the Minneapolis Area Realtors.
The shortage of listings means buyers this spring are facing another market with even fewer options than last year. At the current sales pace, there are now only enough listings to last about a month and a half.
“It is really hard for entry-level buyers right now,” said Chheoun’s agent, Clay Lowen of Lakes Area Realty in Minneapolis. Lowen said the last offer he made on behalf of Chheoun was on a property priced at $189,000. They offered full price, but included an “escalation clause” that said he would beat the next highest offer by $1,000, but no more than $205,000.
They were outbid.
Lowen said that such stories aren’t unusual. On Monday he listed a house in Richfield for $299,000. So far there have been 15 showing requests, and he expects it to sell in a couple of days.
“I think a lot of people would consider moving, but they don’t know where they would go — and they don’t want to compete,” he said.
With rising rents pushing many renters into homeownership and mortgage rates near all-time lows, a house payment is often more affordable than renting. At the same time, the cost of construction has made most new houses unaffordable to entry-level buyers, pushing demand for the least expensive existing houses off the charts. There’s a much better balance between supply and demand for move-up houses in the Twin Cities.
Despite what’s become a market that’s increasingly segmented by price, the median price of all closings in the metro during February was $265,500, 6 percent higher than last year and a record for February.
Pending sales, an indication of future closings, were down 2 percent, while closings increased 4 percent.
Todd Urbanski, president of Minneapolis Area Realtors and an agent for Fazendin Realtors in Wayzata, attributes the February dip in pending sales in part to the weather. “The cold and snow in February was certainly an impediment,” he said in a statement. “The March numbers will offer more clarity on market direction.”
Chheoun is taking it all in stride.
“It is all a learning experience,” he said. “I’ve learned so much. I know exactly how I should be approaching the next home.”