Housing

Housing Housing from page 1

$257,000. Time on the market nudged up from 28 to 29 days. • Median sale price in West St. Paul increased 11.8%, from $262,500 to $293,500. Homes sold 17.9% faster, shrinking from 28 to 23 days. • Median sale price in Mendota Heights decreased by 12.6% and now sits at $441,500. Days on the market plummeted 42.9%, from 56 to 32 days. • Median sale price in South St. Paul increased by 5.8%, from $260,000 to $275,000. Homes have been on the market for 26.3% longer, increasing from 19 to 24 days.

Market trends and inventory

Buyers are sometimes paying about 50% more for the same home compared to a year ago. That diminishes buying power, especially when taking into account higher down payment costs, closing costs and the fact that inflation is at a 40-year high. Many people – especially first time buyers – are feeling the sting and are being forced to postpone their homebuying plans.

Isaac Contreras, realtor with Keller Williams Realty, said that millennial buyers are in the hottest competition right now.

“They are in their prime home-buying years and are the biggest segment of the first-time home buyers. With the historically low inventory, you are finding buyers who may have explored the single family home market first but found themselves moving over to townhomes and condos so they can put monthly housing payments towards building equity versus rising rent payments.”

He added that the increasing trend of sales of luxury properties is primarily due to out-of-state buyers who are relocating and getting a bigger bang for their buck in Minnesota compared to higher-cost markets like San Jose, Calif., Seattle, Wash., and others. He said that this influx of newcomers has been accentuated because many people are now able to work from home and don’t need to stay in those high cost markets.

Economists aren’t overly concerned about a crash in the housing market because of the high demand for houses among millennials and most lenders giving mortgages only to the most qualified borrowers. Currently, the Twin Cities has about three weeks’ supply of inventory; a balanced market would have four to six months’ worth. Inventory of existing properties has decreased 6% while inventory of new construction has increased a whopping 50.7%. Here’s how inventory and sales have changed metrowide in the past year: • There are 11.7% more single-family homes, 4.6% more townhomes and 22.2% fewer condos available. • Sales of single-family homes decreased 10.2%, sales of condos decreased .6%, sales of townhouses decreased 7.1% and sales of luxury properties ($1M+) rose 16.6%. • The median price for newly built single-family homes is $493,900; for previously owned single family homes $365,000; for condos $195,000; and townhouses $272,000.

Multifamily and affordable housing

Rent for apartments has stayed relatively consistent since last year. Median rent for 1-bedroom units stayed at $1,000; 2-bedroom units decreased 3%, to $1,300; and 3-bedroom units increased 8%, to $1,669.

In May, Ramsey County approved 18 affordable housing development projects, which will add roughly 450 new affordable housing units, with nearly half designated as “deeply affordable” units at 30% area medium income (AMI). The county is working toward its goal of adding 15,000 more affordable housing units. Two projects are on the West Side. Dunedin Homes, a $1.3 million project by St. Paul Public Housing Authority, will add four units. Stryker Senior Housing, a $750,000 project by Neighborhood Development Alliance that’s expected to open this fall, will have 57 units, 43 deemed affordable.

Buhl Investors, an Edinabased developer, plans to replace vacant warehouses along Water Street and Plato Boulevard on the West Side with at least two new residential buildings. The project, dubbed Farwell Yards, would include buildings that together offer 221 market-rate units, 56-70 affordable units and a mixed-use building.

Schafer Richardson, a Minneapolis-based developer, plans to replace the American Red Cross office building at Plato Boulevard and South Robert Street with a 5-story apartment building that has 174 affordable apartments and about 10,000 square feet of commercial and community space. Rents for the 1- to 4-bedroom units would be no more than 60% AMI and may include some that are as low as 30% AMI.

In West St. Paul, three multifamily units will open this year. Dominium Management Services will open the 146-unit The Hilltop in July, and Legacy Commons, a 247-unit complex for seniors, in September. Roers Companies will open the 200-unit Savor at 1571 S. Robert St. this fall.

The Yards, by Steven Scott Management, is a 154-unit apartment expected to open this fall at 205 Concord Exchange N. in South St. Paul.

Homebuying costs

• Most lenders require a 5% down payment for home purchases. For the Twin Cities median sales price of $370,000, a buyer would need about $18,500, plus closing costs, which adds up to about $10,000. • Buying an existing home can come with unexpected expenses. Homeowners should hire a professional home inspector before closing. Inspections costs start at around $500. Roofs and most mechanical systems such as water heaters, furnaces and air conditioning units often have a life span of about 20 years. Older homes may have harmful environmental issues such as asbestos, lead paint, and old wiring and piping. • First-time homeowners may save money by buying a home that doesn’t have a garage. However, if they choose to add one later, costs typically exceed $15,000 for a two-car garage.

Minnesota Housing, the state’s housing finance agency, has tips and financing options for homebuyers. For more information, visit www.mnhousing.gov.

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