Real estates are ever-changing, and the Minnesota housing market is no exception. But now that we’ve made it to mid-2018, what kind of trends are emerging as we continue on through the summer and into the fall?
A Super Seller’s Market
It’s no surprise to anyone who’s been looking at buying a property, but the Minneapolis – St. Paul is currently facing what we’d define as beyond a simple seller’s market. Inventory is often clearing the market in just days after it’s posted, and it’s tough to find anything that’s been out there for a couple months or more.
The average amount of days a property spends on the market is roughly 47. Just for reference, we’d consider a seller’s market to be one that moves properties in 180 days or less – we’re far past that.
This “super seller’s market” has essentially defined the Minnesota housing market in 2018. Currently, the average home sells for 99.9% of what it was listed for.
There are very few “steals” in this market and it’s getting increasingly rare to see a property owner take a penny less than exactly what they were asking for. In many cases, we’re seeing homes and multi-family properties go for thousands of dollars over their original listing price.
In some ways, it can feel like there’s no ceiling in terms of price.
Because of this, buyers in this market are often forced to move quickly in order to seal deals.
Sellers, on the other hand, have to prepare for quick transitions. At the same time, they have to ensure that their agent is pricing their home properly in accordance with the market. While a home might have been worth $200,000 just two years ago, that same property could easily be worth $250,000 in today’s market.
Don’t believe us? The median listing price in Minneapolis was $249,900 in April of 2016 and $285,000 in April of 2018, according to realtor.com.
Potential for Appreciation
Upon observing this market, it might seem like Minnesota is sitting in a bubble that’s waiting to be popped – 2008 all over again. However, many experts agree that Minnesota doesn’t appear to be in any sort of bubble at this time.
How can that be?
Jason Reed – team leader here at The Duplex Doctors – has observed one potential reason being the room that this market has for potential appreciation.
If you were to look at California or New York, you’d immediately notice the famously higher housing prices. What might not be as apparent is that the average California or New York resident makes only pennies more than the average Minnesota resident.
What does that mean for the real estate market?
That Minnesotans have the financial margin to pay more for housing – whether we’d like to or not. So instead of assuming that we’re in a market bubble, it could be that we’re seeing the beginning of an upward momentum in the Minnesota housing market that will last for years to come.
Skip to the 2 minute mark in this video to hear more about Jason’s thoughts on the Minnesota Housing Market Vs. California and New York’s.
As the video here summarizes, Jason’s study concluded that Californians and New Yorkers pay an average of 250% more for their properties while making an average of just $200 more per year.
The amount of discretionary income Minnesotans have, then, is sky high compared to Californians and New Yorkers. Our housing market could afford some price increases before topping off.
Lots of Multi-Family Construction
Wondering if there’s any real demand for multi-family properties? Real estate investors and developers seem to think so – multi-family construction is booming so far in 2018 with thousands of new units going in that are expected to be added into the rental real estate market.
Lately, rental property owners have enjoyed extremely low vacancy rates in both Minneapolis and St. Paul. With this shortage of supply and increase in demand, the Twin Cities were likely to face either a housing shortage or a new construction boom.
Thankfully, it appears as though the new construction boom is what we’re going to be seeing.
You might think that now is a bad time to buy, but the fact of the matter is that great deals do exist in this market. Work with us and we’ll help you to steer clear of the bad deals that will put you underwater and will instead navigate you towards the ones where the numbers work.
We’re multi-family home specialists dealing with duplexes, triplexes, four-plexes and more. If you’re looking to buy a single-family home and have never considered the benefits of living mortgage-free in a duplex, consider clicking the article below to read more about them,
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