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Where is the Twin Cities market heading in 2016? Last year was another wonderful year in our market, but will this be a year of change? Today, we take a look at the numbers to find out!
Overall, 2015 was the best year in the Twin Cities market since 2005. Housing demand has reached a 10-year high, and home prices have fully recovered in most of the area. In 2015, the amount of closed sales increased by over 1%, median sales prices increased by 7%, and inventory was reduced by close to 18%. This is terrific news considering where the market was just a few years ago.
One of the trends that will continue this year is the low inventory -- there just is not a lot to choose from out there. This will likely result in suburban growth, as the low inventory drives people to the edges of the city. A lot of the new communities we see popping up are more walk-able than what we've seen in the past. There are more grocery stores, coffee shops, and dry cleaners nearby, which is indicative of these more walk-able urban communities.
Another thing we'll probably see continue to change is the condo and town-home market. It's starting to rebound from the hit it took during the downturn. The low inventory of single-family homes is driving more people into this market, so much so that builders are starting to build more of them. Again, this is all fantastic news for the health of our market.
The one thing on everybody's mind is mortgage rates. What's going to happen with them? The most recent increase in the federal funds rate didn't make a huge impact on mortgage rates because, for the most part, investors had already priced that into the market. One thing to keep in mind is that mortgage rates are more tied to mortgage-backed securities than they are to the short-term interest rates the Fed sets. This means that we typically see -- in an economy that is becoming stronger -- interest rates rise over time. So, expect to see rates rise a bit in the coming year, but remember that the rise is indicative of a growing, healthy market.
If you have any questions about our predictions for the 2016 market, or if you need real estate assistance of any kind, please don't hesitate to reach out to us. We would love to hear from you!