Trying to find a house in the Rochester area in 2020 for around $250,000 was “really rough” for a young couple shopping for their first home.
“Coltan and I tried our hardest to find something in Byron or Rochester . . . It was really hard to find something in our price range,” said 28-year-old Marianne Aras.
Eventually, the couple broadened their search to houses in Chatfield, Zumbrota, Pine Island and Oronoco until they found the perfect place in Kasson. That culminated a four-month search, where they looked at more than 30 houses and made three failed offers.
“It’s crazy how much more we got for our money in Kasson,” said Coltan Stein-Tronnier. “We got really lucky. It’s a really good town. We’re not far from the new Hy-Vee grocery.”
The young couple say their search took them to some rough houses, one of which their Realtor wouldn’t let them in after he opened the door. Another they looked at was inexplicably a house literally built around another house.
Their experience was not unusual for 2020 home shoppers.
While the pandemic added new elements, such as face masks, more virtual showings and not being able to touch light switches during home tours, the 2020 real estate market in southeastern Minnesota was not very different from 2019 .
“There was a low amount of inventory and a high number of buyers looking in Rochester,” said Realtor Adam Howell, who is president of Southeast Minnesota Realtors. “Buyers looking in Rochester shifted to the surrounding communities, where they could get more house for their money.”
The numbers in SEMR’s annual report about its seven-county region for 2020 follow the same seller’s market trajectory as in 2019. However, 2020 did take the seller’s market to a new level.
At the end of 2019, Rochester had 277 houses on the market, a historically low number. That number plunged to 142 by the end of 2020.
The median house price for a house in Rochester increased by 6.2 percent to $259,900 compared to $244,500 in 2019. Rochester’s home prices have increased by 44.38 percent in the past five years from $180,000 in 2015.
In Byron, the median sale price climbed 8 percent to $275,300 from $255,000 in 2019. Byron had 162 homes sold in 2020, up from 138 in 2019.
In the seven-county area, the overall median price went up 10.5 percent to $233,000 in 2020. SEMR recorded a total of 6,587 home sales for the region, up 5.8 percent from 2019.
Kasson, which had 154 houses sold in 2020, had its median sale price go up to $250,00 from $220,100 in 2019. Kasson had 126 homes sold in 2019.
Realtors say the shortage of houses on the market, combined with low interest rates is driving the trend. Many homeowners considering selling are hesitant due to the scarcity of options for them to buy as well as concerns about the pandemic-damaged economy.
That resulted in some houses selling within hours and others having multiple escalating bids. First-time buyers, like Aras and Stein-Tronnier, found themselves competing with not only other hopeful home shoppers, but also investors looking for houses to lease or flip.
“Buyers just have to be ready to be aggressive in a market like this,” said Realtor Kat Rasmussen, SEMR’s president-elect.
Working from home during the pandemic has pushed some homeowners to look for houses with more office space, said Howell. Being able to work remotely also means some people in urban areas are looking at smaller cities, such as Rochester and the surrounding communities.
Factoring in the uncertainty surrounding the COVID-19 pandemic, what should home buyers and sellers expect in 2021?
“It looks like it will be more of the same we have seen in the past few years,” said Howell.