Record Year for Metro Home Sales in 2020
At the outset of a Tuesday morning press conference surveying the year in Twin Cities housing sales, T.J. Simon, president of Minnesota Realtors, opened with this simple statement: “2020. Wow.”
That just about covers it.
After a short blip in spring when the pandemic first hit, the housing market soared like a rocket in 2020.
In a year where just about nothing increased by 8.9 percent, the median sales price for homes in the 16-county metro area climbed 8.9 percent to $305,000. The metro saw 64,479 closed sales, the highest number on record going back to 2003 and even higher than the 2004-2005 boom years for housing.
The median sales price has climbed 32.6 percent since 2016, when the number stood at $230,000.
The average sale price for 2020 was even higher at $353,470.
The number of closed sales marked a 7.7 percent increase compared to 2019, according to the latest data from the Minneapolis Area Realtors (MAR). In 2017 and 2019, closed sales increased by less than 1 percent; and in 2018 closed sales dropped by 3.3 percent.
Sellers received an average of 99.8 percent of their original list price when selling homes, another new record.
What the heck is going on? There’s no shortage of economic uncertainty, but home sales are booming.
Tracy Baglio, president of the St. Paul Area Association of Realtors, suggested that the pandemic has shifted priorities for many people.
“They’re spending less on things like travel, entertainment, and even child care. They’re re-focusing those dollars on their homes,” said Baglio.
Money is also cheaper than ever.
“Another big factor is historically low interest rates,” said Baglio. “Rates on 30-year conventional mortgages are below 3 percent, which is the lowest they’ve been in at least 50 years.”
Another part of the current market dynamic is that the inventory of homes for sale remains low, which means more competition for fewer properties.
“Demand continues to outpace supply and that drives prices higher,” said David Arbit, director of research and economics for MAR. “The demand is so relentless out there.”
Historical numbers show the almost perpetual climb of home prices over the years. During the Great Recession, many were stunned by an unprecedented phenomenon: Home prices actually dropped. Metro home prices did not return to 2008 levels until 2013.
The average home sale price didn’t crack $100,000 until 1992. Since then, it’s more than tripled.
Average sale price: