Here are the highlights of what’s happening in real estate today.

As you’ve likely heard, ours is a crazy real estate market right now for a specific reason: There are very few homes for sale, but a lot of people are looking to buy.

If you’re on the seller’s side, that means you’re in the driver’s seat. Selling a home in the Twin Cities right now is an enjoyable experience, but there’s also an element of chaos to it. When you list a home, there’ll doubtless be between 30 and 50 people who will come in for a showing on the first day.

There are three principal reasons for inventory being this low:

1. COVID. We’ve been living with the pandemic for a full year now, which has impeded sellers’ ability to list their homes. Many don’t want others coming into their homes and risk spreading the virus; others don’t want to have to move across the city and country at this time, either. When COVID begins to dissipate as more and more people get vaccinated, I think we’ll see many more people begin to list their homes for sale. If that happens, it’ll definitely change supply and demand levels.

2. New foreclosure rules. During a traditional year, when people get behind on their mortgages, banks will begin to foreclose on properties. However, because of COVID, there are regulations in place that don’t allow for this. Right now, 15% of FHA mortgages in the Twin Cities are delinquent, and these new foreclosure rules prevent them from reentering the market. When the pandemic is over, all those loans will come due, so we may see a lot more inventory hitting the market in six or so months due to the economic shift.

3. People like their homes. Many people are also electing to stay in their homes because they love their properties and neighborhoods. Also, plenty of homeowners are taking advantage of our low interest rates to refinance their houses to a lower mortgage rate, or they’re taking money out to contribute to other things, like home updates and renovations. In previous years, rates were too high to divert home equity for these purposes, but now homeowners have enough to use to improve their experiences.

“In the coming months, I expect interest rates to gradually increase.”

You might think, given reduced inventory, that only sellers can benefit from our current market, but that’s not true—now is also a good time to buy a house. Why is that?

For one thing, homes are more affordable. Inventory levels may be low, but we have so many buyers in the marketplace trying to take advantage of our low interest rates. If you can lock in a 30-year mortgage at 3%, your money will go farther than ever. It’s also cheaper than renting. In many cases, it’s a lot less expensive to purchase a home than it is to rent a home. When you buy a home, your monthly payments go toward the equity of your home, rather than into your landlord’s pocket.

Millennial buyers make up more than 35% of all the buyers in our marketplace. We didn’t have those buyers just a few years ago, and because of increased affordability, we expect this trend to continue until rates increase.

So what can we expect from the market in the months to come? I don’t have a crystal ball, but I expect that interest rates will gradually rise—they never usually rise more than 1% in a six-month period, so there shouldn’t be any major change until 2022. When that happens, I think the market will begin to even out and we’ll have an easier time matching buyers up with new listings.

If you have any questions about buying or selling homes or the market in general, don’t hesitate to reach out to me. I’d love to be a resource for you.