A realtor's straight take on where we are and where we're headed
Here's what I'm seeing in the trenches right now and what I expect moving forward.
Where We Are in 2025
Interest rates settled around 6.5-7%, way up from the 3% days but stabilized from the chaos of 2022-2023. This created a weird market—lots of people stuck in their low-rate mortgages not wanting to move, which means limited inventory.
Home prices stayed strong. Twin Cities metro averaging $425K, up 4-5% year-over-year. Not the crazy 15-20% annual increases we saw during COVID, but steady appreciation. Quality homes still getting multiple offers, sitting on market 25-35 days.
Luxury market ($750K+) actually doing well—buyers at that level less rate-sensitive, more focused on finding the right property. Lakefront and premium properties moving consistently.
Under $500K? Still competitive as hell. Limited inventory, lots of buyers, multiple offers common.
What's Coming
2025-2026: Stability, Not Excitement Expect continued modest appreciation—3-5% annually. Rates probably stay in the 6-7% range unless something major changes economically. Inventory will loosen slightly as life events force moves (job changes, downsizing, growing families), but we're not getting flooded with listings.
The Lock-In Effect Persists People with 3% mortgages aren't moving unless they have to. This keeps inventory tight for years. New construction helps but can't fill the gap completely.
Geographic Shifts Outer-ring suburbs and exurbs continue growing as buyers chase affordability. Close-in neighborhoods with character stay premium. The middle—standard inner-ring suburbs without special appeal—might see slower appreciation.
Generational Transfer Coming Baby Boomers sitting on valuable homes will eventually downsize or pass properties to heirs. This creates opportunities over next 5-10 years, but it's gradual, not sudden flood.
What This Means for Buyers
Don't wait for rates to drop to 3-4%—that was historic anomaly, not normal. Current rates are actually closer to historical averages. If you can afford the payment and find the right house, buy it. You can refinance later if rates drop.
Be ready to act fast on good properties. Days of leisurely deciding are over.
Get pre-approved with solid lender before shopping. Sellers want qualified buyers who can close.
What This Means for Sellers
Price right from the start. Overpriced homes sit and get stale. Well-priced homes still move quickly.
Condition matters more now. Buyers are pickier when rates are higher—they want move-in ready or priced accordingly for needed work.
Spring market (March-June) still strongest, but good homes sell year-round.
Bottom Line
We're not getting dramatic price drops or return to pandemic craziness. This is the new normal—modest appreciation, competitive but not insane market, rates in the 6-7% range.
Real estate remains solid long-term investment. Short-term timing the market is foolish. If you need to buy or sell, now's fine. If you're waiting for perfect conditions, you'll wait forever.
Ornell Group
Brokered by Real Broker | Real Luxury
Northern Suburbs Lake Real Estate Specialist
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Content and insights provided by Ornell Group. Real estate services brokered by Real Broker. Luxury lake properties marketed through Ornell Group | Real Luxury. Content enhanced and transformed with AI assistance by our team. All market data, pricing, and property information subject to change.
