A Very Interesting Real Estate Market
By Bob Cross, Realtor
Today’s real estate market is very interesting.
It’s being affected by high unemployment due to COVID-19, political unrest, historically low interest rates, extremely low housing inventories…the list goes on. And yet, the real estate market in central and southcentral Minnesota remains strong.
If you are a buyer in today’s market, you may have experienced the disappointment of losing a home due to multiple offers. If you are a seller, you may be enjoying a real estate market rarely seen – homes selling within a week or, in many cases, before they even hit the Multiple Listing Service (MLS – an association made up of licensed real estate brokers and agents).
This current market is reflecting a push for home ownership. If you’re looking to sell a home, this is great news for you. Buyers are vigorously competing with other buyers. Home values have gone up and up. If you are looking to buy a home, this could mean some difficulty. Couple home value increases with a lack of affordable housing ($200,000 or less in this area), and purchasing a home may be out of reach for many.
Markets in Northfield, Faribault, Cannon Falls, Lonsdale and surrounding areas are experiencing a migration of sorts, away from the Twin Cities/South Metro, due to many factors such as the uneasy political atmosphere and the fact that there are statistically more homes available outside the metro. However, inventory is low. As an example, consider homes for sale in various price ranges in the Northfield School District (Northstar MLS, as of July 7, 2020).
Home List Price / Available Homes
$100-200,000 / 6
$200-300,000 / 5
$300-400,000 / 13
$400-500,000 / 6
$500-600,000 / 4
$600-700,000 / 1
$700-800,000 / 1
$800-900,000 / 1
$900-1,000,000 / 1
$1 mil-4 mil+ / 3
Total 41 available homes
Of the 41 available homes, only 11 could be considered affordable housing. This is important to understand for those trying to decide whether to purchase or rent their next home. The average home rental for a three-bedroom, two-bath home in Northfield ranges from $1,300 to $1,600 a month. The approximate principal, interest, taxes and insurance (PITI) on a home with a mortgage of $225,000 within the city limits of Northfield would be around $1,700 (based on four percent interest, $4,500 for taxes/year and $70/month for private mortgage insurance).
Difficulty in finding and renting a home in the Northfield area is made harder by the low number of licensed rental units available, which also drives up rental prices. The reason for the rental shortage can be explained, but that is for another article.
How do you find the home of your dreams or sell your current home and find another in today’s current real estate environment? The first step is to talk to a person who has knowledge and understanding of the market. A Realtor is a great source to start with. They have the expert knowledge of local markets and are privy to the comings and goings of the people within their market.
At this point, I feel it’s important to share an unfortunate trend going on right now. Zillow is, for many, the go-to source for real estate information. A little secret, though, is that some agents pay to “own the access” of an area. They pay Zillow to place their names next to a Zillow listing as the contact for more information about homes that they are not the Realtor for. They may not even live in the area or know the market. They’ve simply purchased your attention. This happens with other on-line services as well.
Just know the Realtor listed on these websites is likely someone who has no relation to the home seller or the real estate company listing the home. The listing agent, who actually would know the ins and outs of the property, is bypassed and the buyer may be missing out because of it. Buyers and sellers alike are best served by Realtors who work and/or live within the community.
Word to the wise, if you are buying or selling a home, seek a local professional, a trustworthy real estate agent, to help your transaction close in a smooth and timely manner.
Bob Cross, Realtor with Professional Pride Realty in Northfield, can be reached at BobCross@ProfessionalPrideRealty.com or 507/321-1060.
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