Twin Cities New Construction Homes For Sale - Destiny Homes Reports On Twin Cities Months Supply Of Inventory
The Minnesota Association of Realtors (MAAR) recently released the Twin Cities Housing Market 2012 Report that helps Minneaolis home builders posture themselves to meet the growing demand for new construction homes in the Twin Cities. Home Remodelers and builders have contributed to the economy and the steadily improving Twin Cities housing market recovery.
Low Supply Of Twin Cities New Conctrustion Homes
The years end months supply of Twin Cities new construction homes sits at 5.2 months, down from 7.4 in 2011 and 8.1 in 2010. The even lower inventory levels for previously-owned homes available to sale in the Minneapolis / St Paul metro add to the demand for more new construction. According to the reports 2012 housing market summary, the months supply of previously owned home is a mere 2.7, down from 4.9 in 2011 and 7.2 in 2010. Minnesota rates second in the nation, with 72% of its residents owning the American Dream Of Homeownership.
"We’re very encouraged by the recovery we saw in 2012. We clearly saw behavior (among buyers) change from the start of 2012 to the end of 2012." ~ Andy Fazendin, president of MAAR
Private Residential Construction Spending
Private residential construction spending edged up 2.2% on a month-to-month basis during December 2012. The original estimate of a 0.4% gain for November was adjusted upward to a 0.6% increase, but the October number was pushed higher with strengths from 1.3% to 3.2%. Spending has registered nine uninterrupted months of growth, as well as improving in 16 out of the last 17 months.
Some Minneapolis homeowners are investing more in home renovations and deciding to stay in their home longer. In 2012, homeowners who chose to sell their homes added to 129,793 new properties to the Twin Cities marketplace, an 8.3 percent decrease or 11,684 units fewer than 2011.
Construction Spending Rises 59 Percent
Spending on residential construction of new single-family homes decelerated to its slowest pace of month-to-month growth since Q1 of 2012, rising 0.8% versus November. On a year-over-year basis, the nominal value of spending on new homes has risen over 28%. After hitting its low point half way through 2009, construction spending has steamed ahead a full 59%. The National Association of Home Builders (NAR) predicts we will see single-family housing starts continue to rise in all of 2013, however, at a more modest pace of growth is expected during Q1 of 2013. The forecasts seem mutual across multiple housing experts that we can anticipate a better clip over the remainder of 2013.
NEW RESIDENTIAL CONSTRUCTION IN DECEMBER 2012 - CENSUS BUREAU - Current Inventory Levels
Activity shows fewer homes entering the housing market in comparisons to prior years; with fewer homes for potential home buyers to view, there are fewer showings and home prices are pushed higher.
Building permits in December 2012 were at a seasonally adjusted annual rate of 903,000, up 0.3 percent from the revised November rate and up 28.8 percent from December 2011. For 2012 overall, building permits increased 30.3 percent and starts grew 28.1 percent.
Housing starts in December 2012 were at a seasonally adjusted annual rate of 954,000, up 12.1 percent from the revised November estimate and up 36.9 percent from December 2011.
Privately-owned housing completions in December were at a seasonally adjusted annual rate of 686,000. This is 1.6 percent (±14.7%)* above the revised November estimate of 675,000 and is 13.2 percent (±13.4%)* above the December 2011 rate of 606,000.
Minnesota Economy - Mid-America Business Conditions Index from Creighton University
Since the peak of Twin Cities new construction inventory in February 200, we have a 3,354 drop in new construction inventory.
The monthly Mid-America Business Conditions Index from Creighton University, released February 1, 2013, was surprising in showing just how strong home builders have bolstered up the Minnesota economy with the surge in Minneapolis home improvement projects and new construction. Minnesota vaulted upward to 57.2 in Creighton's index, sky rocketing from 48.4 in November, signaling substantial economic growth. it is worthy to note that when an index rises above 50, it signals economic expansion; when it falls below 50, it signals contraction.
TWIN CITIES MARKET CONDITIONS - HOW MARKET CONDITIONS ARE DETERMINED
Buyer’s Market = More than 7 Months of Inventory
Balanced Market = 5 – 7 Months of Inventory
Seller’s Market = Less than 5 Months of Inventory
The Absorption Rate is trending down at 3.76 Months of Inventory, which is considered a Seller’s Market.
Predictions for the Twin Cities Housing Market trend in the decline of new construction homes for sale will continue to decline given the rate of home buyers snapping up inventory. The housing market is poised to get stronger for Sellers in 2013.
"Improvements in the housing and automobile sectors along with avoiding falling off the ‘fiscal cliff’ pushed the economic outlook higher. It was surprising that Minnesota numbers were so strong." ~ Ernie Goss, director of Creighton University’s Economic Forecasting Group and the Jack A. MacAllister Chair in Regional Economics.
Year to year, construction spending gained substantially.
MAAR Rankings include geographies with 15 sales or more. Counties, townships and Minneapolis neighborhoods are not included, which could push the Twin Cities level of new constuction slightly higher. Minneapolis residential realtors are asking home builders to start building more homes to meet buyer demand. The Twin Cities 7 County Region reports show top marks for leading Minnesota's housing markret.
Minneapolis Is A National Leader In New Construction And Contributing To Economy
Construction spending is now in the fourteenth month of year-over-year spending expansion. Inventories of available homes on the Twin Cities housing market are so low, sellers may be encouraged to step out and sell their homes.
"It is worthy to note that when an index rises above 50, it signals economic expansion; when it falls below 50, it signals contraction. Another new report substantiates Minnesota as a national housing leader of economic expansion." comments Sprenger. Low mortgage rates, affordable home prices and rising rents are giving Twin Cities investors reason to have bolstered consumer confidence. Many are buying up mid-range homes for sale on the market with the intention to buy and renovate them to gain rental income. We have had a dramatic and clear turn-a-round. Construction spending was declining year-over-year for 48 straight months until November 2011. Many call it "four years of headwinds for GDP". Construction spending is now in the fourteenth month of year-over-year spending expansion.
New Construction Investors And Their Tax Benefits
Homeowners have immediate benefits for tax incentives in 2013. Here is a snapshop of new construction invesotors:
The profile of a new construction investors who follow the "buy and hold" strategy approach is most likely a property investor for tax purposes.
Some are investing in new construction with the "buy and flick" strategy. This approach is more often used by property speculators or dealers for tax purposes.
Builders seeking to take advantage of new tax laws that help accelerate the time for recovery of investment costs. Additional first-year deductions for new investment lower the after-tax costs of capital purchases encourage new investment and promotes economic recovery.
Single-family residential homeowners who are not primarily motivated for the temporary purposes of tax incentives; they are investing in building the home of their dreams. Deciding to build a new construction home permits the owners to scale and build to their unique specifications with plans to enjoy their home and its increasing value for a long time.
NOTE: Currently there is no set number of new construction home you can have before they become taxable. In some cases the first home built and sold may be taxable if you had it built for resale. In other cases there could be a number of factors to take into consideration, such as having a regular pattern of building and selling homes, before a property is taxable. Be sure to check with your tax accountant.
Contact Destiny Homes to plan your residential newly built home or to begin a major home renovation project in the Minneapolis and St Paul housing market. If you are considering a move to the Minneapolis / St Paul area, you will find an exciting and positive housing market for your home investment choices. Call 952-923-5706.
Download the Minneapolis Area Association of Realtors Twin Cities Housing Market 2012 Summary Report
Download the Minnesota Housing Market Annual Report
Download the Census Bureau Residential New Construction Spending Report for December 2012
Download the Census Bureau Residential New Construction Spending Report for November 2012
Butch and Liz Sprenger, owners of Destiny Homes Remodeling And Renovation Services Home page: www.destiny-homes.com. Service the entire Twin Cites Metro, from our main office in Deephaven, MN working as home Remodeler and owner of Destiny Homes.