On behalf of Chandler and Brown, Ltd. posted in real estate on Thursday, July 6, 2017.
Buying a home in the Twin Cities has become increasingly difficult. Some residents find that affordable homes are often in deplorable conditions, so those that have been well kept go quickly. In fact, the Minneapolis Area Association of Realtors has stated that the city is seeing a record low in the number of homes being sold. The median price for the sale of a house in June was $250,000.
One realtor from St. Louis Park has claimed that finding a “starter home” is difficult, especially if the buyer is looking to purchase a home for under $200,000. Homes in that price range tend to be in lower and moderate income areas of the city, and, even in those areas, home prices are increasing.
So, why is it that home prices are going up and there are fewer homes on the market? First of all, there are 1.4 million “millennials” in the state, and these individuals are looking to purchase their first home. However, the rate at which they are doing so is not as high as it was when their parents were looking to purchase their first home. Moreover, interest rates are on the rise, meaning that individuals looking to purchase a home are incentivized to find a home as soon as possible so they can secure a good rate before they go up.
However, the upswing in the demand for homes is overshadowed by the fact that houses for sale are in short supply. Baby boomers are staying in their homes rather than selling them. Moreover, younger homeowners are not finding new homes that are attractive enough to motivate them to sell their current homes. In addition, the construction of new homes is low, and the price of newly constructed homes is high. One representative from the Builders Association of the Twin Cities reports that 70 percent of newly constructed homes are being priced at more than $300,000.
Moreover, it used to be that multi-unit housing accounted for as much as 50 percent of new homes built. However, this has gone down as builders were concerned that they would be sued by homeowners associations.
In the end, potential homeowners in Minnesota may face an uphill battle when it comes to purchasing residential property. Those who have questions about purchasing a home can speak to an attorney who can assist them with their real estate transaction.