Consumer anxiety hastens winter chill for Twin Cities housing market

As the weather turns toward winter, Twin Cities home sales generally stall. But this year, the chill is coming sooner — and with a slightly sharper decline.

Fewer people signed purchase agreements in October, even though more houses finally hit the market. Inspection and financing contingencies, which were virtually unheard of a couple years ago, are now much more common. And homes took longer to sell.

It’s not lost on real estate agents that the decline came as consumer confidence falters.

“Rates are not the major driver here. It’s jobs, income and inflation,” said Kris Lindahl, founder of Kris Lindahl Real Estate. “There is so much uncertainty in the world.”

To be sure, while professionals can see a shift, it’s still a sellers market. At the current sales pace, there were enough houses for sale to last 2.7 months. That’s slightly lower than last year and still half of what’s necessary in what’s considered a balanced market.

Lindahl and other agents say that, to a certain extent, the housing market is stuck as high expectations among sellers clash with the growing concern among buyers. Sellers are anticipating multiple offers, and shoppers are holding out for a deal.

“Buyers are being thoughtful,” said Abby Dean, an agent with Coldwell Banker Realty. ”They’re approaching homes more carefully.”

She suddenly got several offers, and the sale closed last month for about $17,500 more than the reduced price.

“Several people were circling,” she said. “When I adjusted the price, it nudged others to step up and make an offer.”

Dean said that while there’s no doubt buyers are being more cautious, houses in tip-top shape and competitively priced are still getting multiple offers or selling for the full ask price.

The high-end market remains strong, but Lindahl said sellers at all levels are offering concessions at a rate not seen in years. That includes paying the buyer’s closing costs and paying for repairs.

“The amount of deals that are falling apart or renegotiated upon inspection is way up,” Lindahl said.

Outside the metro, especially in rural parts of the state where jobs are less plentiful, there have been more dramatic declines in sales and prices.

Statewide, there was a bigger increase in closed sales than in the metro, but the median price of those sales was flat, according to the Minnesota Realtors, which said that more than half of all counties saw a year-over-year increase in new listings and sales.

There’s also a disparity in demand for different types of housing. For example, sales of existing homes kept pace with last year while new home sales were down. And while sales of single-family houses increased slightly, condominium sales plummeted double-digits.

Sales of townhomes, like the one Paul Gutterman was trying to sell in Eagan, also have weakened. He listed his 2,700-square-foot house for $485,000 in August, but didn’t get a single offer. By last month, the showings had evaporated.

This month, Gutterman took it off the market and headed south to Florida, where he took advantage of a down market to build his winter getaway. Like others, he expects an influx of buyers in the spring, so plans to relist in a few months.

In the metro, purchase agreements dipped 2.8% year over year to 3,866 in October, after several months of steady annual increases, according to a report from a trio of state and local Realtor groups.

The homes sold were on the market an average of 48 days, three days longer than last year at the same time.