Making real estate moves? Here’s why Twin Cities should be on your radar for 2019.
Steady recovery, soaring home values
Minneapolis real estate is alive and well. A decade after the housing crisis, which is still fresh in the minds of buyers and investors, home prices are at an all time high.
According to the Minneapolis Area Association of Realtors, the median price of all closings reached $242,000 in June 2018, which is 5.3% higher than June 2017 and almost 2% higher than June 2006, when the previous all-time high for median closings peaked at $238,000. Closing times are also shorter, with buyers rushing to seal the deal.
The housing market was already gaining massive momentum as far back as 2016, outperforming national averages in multiple indicators.
The new record is a milestone, but it might be ominous for property owners who saw their home equity plummet when prices crashed in 2008 and 2009. Luckily, experts believe that a similar scenario is unlikely to take place.
For one, the association’s data hasn’t been adjusted for inflation – a home worth $238,000 a decade ago would cost around $285,000 today. It would take roughly three years for home values in Twin Cities to hit an inflation-adjusted peak based on the present rate of increase.
Moreover, single-family homes are outperforming their multi-family counterparts, with prices increasing by 6.5% and inventory decreasing by 16.5%. The number of available condo units fell by 14.4%.
High demand, limited inventory
The high demand for housing can be attributed to millennials who are now enjoying long-lasting, well-paid careers and entering their home buying years. They have also been moving to Twin Cities in droves – Forbes named Minneapolis as among the best 10 cities for millennials and Generation Z, the generation that comes after millennials.
PayScale found that Minneapolis rated highly in terms of job satisfaction and a high median income. Trendy offices, better salaries, and a vibrant downtown scene have gotten this discerning group of buyers to pay attention to the housing market.
A study by LendingTree found that this tech-savvy demographic was more likely to pursue homeownership in Minneapolis than any other major metro area in the United States. The JLL – Minneapolis-St. Paul Snapshot likewise reported that the city ranked number one for millennial homeownership.
This trend has resulted in a competitive housing market, where buyers have to act fast and outbid each other in order to land the home of their dreams.
This isn’t just good news for sellers – it’s also an advantage for property investors. Housing and living costs will play a huge factor among job seekers relocating to Twin Cities.
The rental housing market in metropolitan Minneapolis is still considered relatively affordable for millennials and couples with young families when compared to other metro areas.
Singles and small families looking to relocate will rent single-family homes as a cost-saving option. Renting will also be an attractive option for tenants who want the flexibility to pack up and leave for other cities with higher-paying jobs without having to sell the property and buy a new one before making the big move.
Aside from higher demand for rentals, stable housing prices make local real estate appealing to investors.
And while home prices are on the rise, inventory has decreased – total inventory for all properties in Twin Cities fell by 15.5% between September 2015 and September 2016.
Place your bets on Twin Cities’ bright real estate prospects. You’ll be glad you did. Let me, Adam Fonda, help you locate your next investment. Call me at 612-308-5008 or send an email to Adam(dotted)Fonda(at)LakesMN(dotted)com.