VOL. 4 ISSUE 5, OCT. 2020
THE MINNESOTA HOUSING INDUSTRY NEWS SOURCE BY HOUSING FIRST MINNESOTA • HOUSINGINDUSTRYNEWS.ORG
According to data supplied by the Minnesota REALTORS®, just 14,875 homes were listed for sale in the month of August, down 36% when compared to last August.
Home prices soar, inventory drops to historic levels Concerns grow over housing afforability crisis across the state As summer faded into fall, the region’s housing market continued its remarkable surge. Buttressed by low interest rates and strong demand, Minnesota’s housing market has produced historically low home inventory rates, record-setting price increases in existing homes, and an increase in new home construction and remodeling projects. The pace of activity and market changes are a surprise to many industry leaders, exceeding even the most optimistic projections following the onset of the COVID-19 pandemic in the first quarter of 2020. Grabbing the attention of buyers and sellers alike, home prices have surged. Minneapolis Area REALTORS® data shows that the median sales price of existing homes in August was $315,000, nearly 10% higher than the same month last year. Statewide data from the Minnesota REALTORS® shows that the median sales
price was just over $283,000 in August, roughly 9% higher than the same point last year. Looking back two years to 2018, the current home price median has increased by more than 17%. Connected closely to the surging prices is a severe shortage of homes on the market. According to data supplied by the Minnesota REALTORS®, just 14,875 homes were listed for sale in the month of August, down 36% when compared to last August. In the Minneapolis-St. Paul region, the Minneapolis Area REALTORS® reported that 12,948 homes were listed for sale in August, down 32% from the same month last year. For many current homeowners, the inventory shortage and price increases can be seen favorably, driving the rapid sale of their current home and strong value appreciation. However, the historic imbalance
between the demand for housing and the ability of the housing industry to supply an adequate number of homes has the attention of industry leaders and policymakers who are concerned with the current trends. The growing consensus among industry observers is that building more homes is the foundation of not only a market rebalance in the short term, but the long-term health of the housing industry and more broadly, Minnesota’s economy. On the supply side of the equation, homebuilding activity in the Twin Cities region increased in early fall with a surge in single-family construction permits that was 38% higher than the same period in 2019. This is welcome news for a housing market with few homes and rising prices, but industry leaders say that much more homebuilding activity is necessary to balance the housing market. CONTINUED >> PAGE 9
INSIDE THIS ISSUE
Sparks fly during electrical code judicial hearing PAGE 4
Minnesota’s 2020 election outlook PAGE 7
Builder confidence hits all-time high PAGE 12
Judge recommends no energy code 'update', commissioner to get final word Administrative Law Judge Eric Lipman has recommended not opening rulemaking on the Minnesota residential energy code. This nonbinding decision comes a year after the rest of the state’s building codes were finalized and six months into the new code cycle. Lipman’s recommendation is nonbinding, and
the commissioner of the Minnesota Department of Labor and Industry (DLI) will make the final decision on opening rulemaking for Chapter 1322. During the Aug. 3 hearing and subsequent comment period, two viewpoints were put forward by CONTINUED >> PAGE 5
HOUSING INDUSTRY NEWS
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