Multiple Offers &  Housing Affordability

NEWS FLASH!  Multiple Offers:  

In every price range, appropriately-priced listings are selling in multiple offers.

 

  • A $900,000 home in Edina received ten offers last weekend.  

  • My recent $500,000 Linden Hills listing had five offers, and sold for more than $50,000 over the asking price.   

  • A home priced $300,000 is likely to generate 20 offers or more.

Why?  Here are two telling data points: 

  • January 2021 marked a 15-year low in “Number of Homes on the Market” in our area.* 

  • Our “Number of Closed Sales” for January was almost double the previous year.*

    • Jan 2021 – 67 closed sales

    • Jan 2020 – 37 closed sales

Homes are leaving the market at almost twice the rate of last year, and inventory is at a historic low.

High Demand + Low Supply = Higher Prices

So -- Are we in a housing bubble?  Will the higher values last?  

If you’ve followed my blog, you know I believe Single Family Minneapolis Homes are woefully

UNDER-priced relative to other Culturally Advanced Metropolitan Areas.  People are moving here in droves, and they don’t want apartments, they want houses.

But are the homes AFFORDABLE?  

Houses may be more affordable this year than in any year since the turn of the century.  Note the size of a mortgage you get with a $1500 Principle and Interest payment.  (The PI of PITI)

* As I define it, “our area” =

Nicollet to France  /  36th St. to 60th St.

·         2021 interest rate of 2.7%    360k

·         2019 interest rate of 4%        315k

·         2010 interest rate of 5%        279k

·         2000 interest rate of 7%        225k

In other words:

  • the same salary that in 2000 got you a $225,000 mortgage now gets you a $360,000 mortgage.  

  • At 20% down, that same salary that purchased a $280,000 house now buys a $450,000 house.   

  • Home values have roughly doubled since 2000…

    • In SW Mpls --  2000 $/sq.ft = ~135$

    • In SW Mpls -   2021 $/sq ft = ~ 270$

  • Therefore – the same salary buys almost the same house…

But salaries have gone up!   People make more money than they did 20 years ago!

Note this too -- this increase in Housing Affordability has increased drastically in the last 18 months, when rates fell again from the historic 4% low to below 3%...   

Despite the heat in this market, it’s still good to be a buyer in Minneapolis. 

And it is GREAT to be a seller.

Know this:  The population in Minneapolis is going up, and thus the demand for

Single Family Homes will continue to rise. 

Interest rates, however, will not always be this low.

Call me - anytime.     612.845.5273.    

I love to talk about this stuff.

Larry

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