Interest rates

Despite high interest rates, buying a home is more affordable as the housing market cools

MINNEAPOLIS– After two years of near-uninterrupted growth, the Minnesota real estate market is finally cooling off.

Minnesota Realtors’ new October housing report shows home sales are down 31% from a year ago.

WCCO’s Allen Henry has spoken to local agents who say the drop isn’t necessarily a bad thing, just a return to normal.

Shelly Montbriand Pomonis became a REMAX agent in June.

“A lot of people paid maybe $50,000 or $60,000 more than asked and sometimes there were 23 offers on the table,” Pomonis said.

Since then things have cooled off, which is typical for this time of year, but even more so with the impact of inflation and interest rates.

“Things have really changed and now we’re seeing properties that have been on the market for even a few months,” Pomonis said.

“The number of mortgage applications has dropped quite significantly. A number of buyers in the market were overvalued at one point and they are now overvalued,” said real estate agent Coral Kenyon.

Real estate agents say WCCO buyers are the ones benefiting from changes in the housing market.

Earlier this year, buyers might have had lower interest rates, but they had to bid above asking prices just to be competitive.

Now they may face higher interest rates, but they have time to explore their options, negotiate a better price, and not skip important things like inspections.

“You pay 6% for your interest rate – you can negotiate that and refinance your home. So I would say that’s actually a better option than paying $60,000 more than what was listed,” said Pomonis.

That means one of the biggest purchases of your life might actually be more affordable now.

“We’re seeing more open houses, we’re seeing more negotiations with buyers, we’re seeing sellers willing to negotiate and it’s been a long time since that happened,” Kenyon said.