LOCAL REAL ESTATE REPORT
One of the most interesting facts about the local real estate market is that
the Covid virus has been a boon to our real estate pricing.
While being an awful time of stress and worry - pricing for single family homes has gone steadly up.
Perhaps this is driven by our need for more space, and for places in which to office at home...
But Home Value Appreciation, particularly in the City of Minneapolis and most particularly in
Southwest Minneapolis, has also been driven by one fact of demographics:
The City of Minneapolis population is dramatically increasing.
This population growth was the reason for the creation of the Minneapolis 2040 Plan.
It was predicted by the census of 2010 and 2020.
City's response has been to encourage the construction of more and more rental housing. This increase in rentals lead immediately to a demand for Single Family Homes. As I have been saying for many
years, we are underpriced in Minneapolis relative to other North American cultural hubs.
The Current LOCAL Real Estate Market –
Two important things to know, as evidenced by these two graphs:
1 -- Southwest Minneapolis Home Values have been rising steadily for ten years.
2 -- Pricing is seasonal.
Comparing the details in these two graphs, we see a steady rise in Average Price Per-Square-Foot:
$163 in December 2011 >> $210 in December 2016 >> $265 in December 2021.
Yet in each year, you see pricing peaks in March/April/May and pricing dips in Sept/Oct/Nov
Note: these pricing stats are for closed properties in Southwest Minneapolis. The graph on the left shows data-points averaged over 12 months, while the graph on the right shows data averaged over six month intervals.
One obvious follow up question: Will values continue to rise?
My answer is YES. Why? Read This!
One thing happening RIGHT NOW is that inventory is on a steep downward trajectory, and of course, that has resulted in steeply upward pricing.
Obviously, Supply and Demand is in the center of this story. The steep rise may be connected to this lasted New Listing Shortage, but are values inflated? We've had a steady decline in Days On Market over the last two and a half years...
Meanwhile, look at the increase in actual number of sales.
My opinion -- Prices will continue to rise until we find some equilibrium between the large number of young people moving to the Twin Cities and the shortage of single family homes awaiting them...
You can build more high-rise rentals, but you can't build more land.
Affordability is not just about prices.
With low interest rates, homes may actually be more affordable now than they were in years past.
We're not going to large scale negative pricing for a long time.
for more on that, read this: