BIG Changes in AFFORDABILITY for Minnesota Home Buyers 

Hey David! To your first question - low rates have definitely helped keep homes more affordable to purchase, thus increasing demand which increases prices. It's worth noting that prices go up around +4% per year, averaged historically, so regardless of at which point you purchase, if kept long enough you're almost certain to come out ahead, often making a considerable profit on the investment of your home. To the second question - I do think that the high rates are a short term pain yes. Every indication I've seen is that they should start to slowly decline over the next couple of years. I've also heard many say that having the extreme high rates of the 70's will likely never happen again, and also that the extreme lows of a few years ago will also likely not return. Of course... who knows for certain. As far as the "market adjusting in line with affordability" - If you're hoping for prices to come down in any significant amount, I wouldn't hold your breathe. It's certainly possible they could come down slightly over the next couple of years. However, I don't think we'll see anything substantial averaged across the Twin Cities, or negative numbers in prices for a long length of time. I know quite little about the predictions for wage increases, but from what I've heard between minimum wages being raised, market pressure on companies to pay their employees more, and such a competitive environment around hiring and labor shortages, it certainly seems plausible to me. I think a substantive increase in wages is more likely to happen in a substantive drop in home prices in the Twin Cities, and that's what could/would improve out Affordability Index locally. Also, don't forget that more affordable things are, the more people spend, and the more the economy will inflate, which is what they're desperately trying to slow down. So in effect... we actually don't want things 'too' affordable, which has caused some of the pain we're in right now with inflation. If you want thoughts on what hopeful homebuyers/sellers can do about it, let me know.