If there’s one question about St. Cloud residential real estate that is posed more often than others it’s the one that’s hardest to answer: “What do you think? Are prices heading up or down?”  Usually, that question is an easy one to answer without really answering: “Short term, anyone’s guess. Long-term, history says, ‘almost certainly, up’!” It has a lot of history to back it up, so it sounds authoritative.

At this moment in St. Cloud’s history, the long-term portion of that answer still holds, but increasingly, the ‘anyone’s guess’ part seems unsatisfactory. Despite an abundance of published data on how markets have performed from the West Coast to the East, the trend lines seem more scrambled than usual. Last week, Fortune magazine provided an unblinking analysis of the forces currently driving home prices—one that included a martial metaphor that explains the difficulty of predicting what’s next.

According to analyst author Lance Lambert, the U.S. market finds itself embroiled in a fierce battle. Put simply, there’s a conflict going on between opposing forces, and neither side seems to have an edge. On one side, something close to a traditional market spike is the direct aftermath of a “Pandemic Housing Boom”—one which under other circumstances would almost always be followed by the correction economists call a “reversion to the mean.” That would point to a drop in housing values. Add to that the effect of another “spike” (the surge in mortgage rates from 3% to more than 6%), and you have a powerful one-two punch—more than enough to drive prices down.

But wait! The inventory of houses for sale is very, very low, and seemingly stuck there. In most markets, St. Cloud residential real estate listings would start to correct the shortage because homeowners would decide to cash in on their gains. As inventories swelled, that would drive prices down, too, as owners compete with one another for the few prospects who could afford to buy.

Yet such a surge is not present, in the main because of what Lambert calls “the lock-in effect.” Many homeowners, faced with the prospect of abandoning their current 2%-3% mortgages to trade for rates in the 6%-7% range, are simply standing pat. Since 91% of outstanding mortgages have a rate below 5%, the standoff is widespread.

The resulting “clash of opposing forces” makes calling a market direction more problematic than usual. But despite that, locally, homes are still being listed, offers made, and sales closed. The national volume of transactions is down due to the “fight” between waning affordability and low inventories, but when personal matters dictate, there will always be buyers and sellers whose timetables dictate a move. It’s a situation that certainly calls for professional help when it's time for you to take advantage of today’s St. Cloud market. I hope you’ll call!  

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