It’s a new year in real estate, which means many people are looking ahead to the 2025 housing forecast. However, with 2024 now behind us, we are taking a moment to look back at some of the trends we saw in Minnesota real estate this past year. Here were a few things worth noting.

Low Inventory

This past year was in favor of sellers, which made it more difficult for those who were looking to buy. According to an analysis from Zillow, the U.S. was 4.5 million homes short of a healthy housing supply. With fewer homes for sale across the market, this meant that there was more competition between buyers.

High Interest Rates

2024 was another year of high interest rates, following the record-low rates that we saw during the pandemic. While they shifted slightly throughout the year, interest rates settled at around 6.7% by December on average for a 30-year mortgage. These rates made some people reconsider purchasing a home in 2024.

Difficulty for New Buyers

The combination of low inventory with high interest rates and housing costs made it difficult for first-time buyers looking to purchase their first home. Many people opted to continue renting and wait for interest rates to lower before purchasing a home. Others settled for purchasing smaller homes or homes in more affordable areas.

Short-Term Rental Popularity

Many people this past year turned to short-term rentals as a way to make a bit of extra income. Whether it was by renting out their own cabin or purchasing an investment property, many people listed their homes on sites like Airbnb and VRBO. These sites have grown in popularity in recent years, and cabins or lake houses have been especially popular options for those looking to rent a vacation home.

While 2024 wasn’t an optimal time to buy, it was a good year for those who were selling. This year, we’re predicting a shift in more housing supply and interest rates slowly continuing to trend downward. Whether you’re considering selling or buying a property Up North in 2025, our team at Bill Hansen Realty is here to help you make the best decision for your Minnesota vacation home.