How latest interest rate hikes are impacting the Twin Cities housing market
MINNEAPOLIS -- It will cost you more to borrow money for credit cards, car loans and home mortgages after the federal government raised interest rates again.
The federal reserve raised its key interest rate by a quarter of a percentage point Wednesday.
This interest hike comes after national numbers show the demand for homes is dropping, but it remains to be seen what will happen in the Twin Cities housing market.
The winter months are generally slow for buying and selling homes in Minnesota. Sales start picking up in the spring, but Rae Madkour with Sail Real Estate in Minneapolis said things have already started getting busy in the last few weeks which is much earlier than in years past.
Madkour said we could once again see a busy year for home buying as the temperature warms up but that doesn't necessarily mean it will be as busy as what we saw last summer with homes sold as soon as they hit the market.
She said things are now normalizing a bit and homes are currently staying on the market on average for just under 30 days in the Twin Cities and adds it's becoming more of a fair game between buyers and sellers.
"We are seeing seller concessions, closing costs being paid half or even all by sellers [and] there's negotiations that are happening that are benefitting your buyers," Madkour said. "We didn't see that a year and a half ago."
The latest rate hike also comes as mortgage rates dipped a bit early on in the year. It's now roughly 6.2%, but even so some buyers said they are really thinking carefully before making an offer.
Kassi Maher of Mounds View said she, her husband and their four kids started looking for a new home in the summer of 2021.
Maher said they did everything to make their offer more attractive - waived inspections, offered to pay all closing costs, offered as high as $35,000 over the asking price, but nearly two years and four offers later they're still looking for their perfect home.
She said last fall when interest rates more than doubled what they were at the beginning of her search, they took a step back from house hunting.
Maher added she'd be more comfortable if the rate was below 5%, but even then they'd really have to make sure it's the house for them.
"Gas prices have gone up and groceries have gone up, so you're just trying to figure out what's the smartest thing to do," Maher said. "Do we take more of our money to put it down on a house or do we just stay put where we are just for a little bit. You're just always trying to think of what's the smartest thing to do financially."
Experts caution even if the interest rates went back down below 5% the prices on homes could go back up and that could mean buyers would have to offer more over the asking price.
They encourage anyone thinking of buying a home to talk to a lender first to determine how much their monthly payments will be. They also recommend to do what's best for you in your situation.