GRAND FORKS — It’s been a wild 18 months in the real estate market — buoyed by low interest rates and boosted by a pandemic — and Grand Forks real estate agent Zach Finney says the upper Midwest is no exception.
He has seen expensive homes that were previously unsaleable find buyers to new heights. He’s seen buyers waive inspections. He’s seen “escalation clauses,” which allow a buyer to bid and then pay even more to outperform the competition. Normally, January could be a slump for home sales; but personally, he said, market activity is as strong as ever.
“We have a shortage of offers at this time of year,” Greenberg Realty’s Finney said. “This keeps prices going up. I think if you look at the projected rate hike, I think prices could stabilize over the long term and eventually fall.”
“I personally don’t think there will be a crash, but maybe a little adjustment,” he said.
It’s a testament to the staying power of one of the biggest house price increases in recent history. The New York Times reports that about 80% of America’s metro areas saw price increases of more than 10% in 2021, the highest since at least the early 1990s. In Fargo, prices have increased by more than 12% between the third quarter of 2020 and 2021, and in the Twin Cities by 11.5%, according to the National Association of Realtors.
Price increases were not so strong everywhere. The NAR puts Bismarck’s price hike closer to 5.9%. And while the NAR doesn’t include grand forks in its top-tier metro data, most available data shows its gains have been more muted — closer to Bismarck than Fargo.
That said, real estate website Zillow puts the price increase in the Grand Forks real estate market at 8.7%. Data from the Grand Forks Association of Realtors shows that the median home selling price has increased from about $245,000 in 2020 to $259,000 in 2021, an increase of about 5.7%.
But brokers say that regardless of the increases on paper, Grand Fork’s housing is in a heated seller’s market. Laurie Tweten, broker and owner of Coldwell Banker Forks Real Estate, said it’s been two notable sales years.
“Due to demand and low interest rates, we’ve had two of our best years in real estate – at least in my company,” she said. “The demand for single-family homes is still very high. My husband builds homes and still receives many, many requests to build custom homes. The issue he is currently dealing with is the supply chain and material costs, which have increased significantly during this pandemic season.”
This can be a major burden for builders of all stripes. According to the Federal Reserve Bank of St. Louis, prices for building materials and supplies are well above where they were at the start of the pandemic but have declined from a mid-2021 spike.
But Laurie’s husband, Cameron Tweten, said demand isn’t outweighing. When he took a call from a reporter this week, he was at a construction site for his Village Homes company — with all the jingling and crunching sounds of hard work in the background.
“I’ve built 15 houses a year for the last two years, which is more than ever before,” he said. “I think the market is fantastic.”
And construction records appear to be correct. 99 new single-family homes were approved in 2021, more than in 2020 or 2019 — and when you add in the 47 new townhouse approvals, it was a peak year for housing construction, with the sum of those two categories being the highest since 2015.
It’s hard to know what’s going to happen next. Will the market cool down soon? Interest rates are rising and the Federal Reserve has already brought them back to pre-pandemic levels. But at around 3.55% for a 30-year mortgage, they’re still historically low. Oxford Realty’s Michael McFarlane doesn’t have a crystal ball.
“We’re maybe back to where we were a few years ago,” he said, “and that wasn’t so bad.”