Twin Cities Low Housing Inventory Tips Some Home Buyers Into Renovating Their Existing Homes
New home construction is driving inventory up, however, not at the clip many homebuyers want to see in order to capitalize on today's historic home affordability levels. As home owners become more assured that dollars spent on home renovations will hold their value, they are deciding to undertake projects to improve their comfort and quality of lifestyle at home.
Sellers Sparse as Twin Cities Housing Inventory Plunges To 10-year Low
Historic Lows In Residential Home Inventory
Job growth in the Twin Cities metro coupled with a historic low number of resale residential homes available for sale have fueled a significant increase in the inventory of new home starts, according to February's Metrostudy report. According to Metrostudy’s quarterly survey, the Twin Cities area started 1,344 new homes in 4Q12, up +57% from 4Q11, which had a mere 855 homes starts. "For the third straight quarter the Twin Cities housing market surpassed 1,000 new home starts for the quarter. This also marks the largest 4th quarter starts figure since 2007, piggybacking on the previous two quarters strong starts figure," said Ryan Jones, director of Metrostudy’s Twin Cities division.
Shortage Of Lots Effects Housing Inventory
While home builders seek quality lots to purchase and build on, there are currently 9 percent fewer vacant developed lots throughout the Twin Cities to choose from. “The recent uptick in new home demand has created a run on desirable vacant developed lots located throughout the metro,” Ryan Jones, director of Metrostudy’s Twin Cities division.
6 Quarters Of Twin Cities New Homes Starts
The rate of annual new home starts for single-family and townhome units across the Twin Cities area is 4,706 new units. This is an increase of 47% compared to 2011 and represents the highest number of annual home starts since 2008. The Twin Cities new constuction industry has sustained and consistent growth with annual increases in new home demand for all six of the last reporting quarters.
Low Housing Inventory Levels Vary From One Housing Region To Another
Lawrence Yun, chief economist of NAR commented on our housing inventory shortages and how they vary, from region to region. As housing inventories levels dip to a tipping point of concern, sending a strong message to home builders to start building new homes.
NAR reports the housing inventory is up 9.6% to 1.94 million existing homes are listed on the market for sale.
Indicating a 4.7-month inventory supply at the current home sales pace, compared to 4.3 months in January.
January's numbers highlighted a pivotal point with the lowest housing supply since May 2005. Year-over-year, listed inventory is down 19.2%, compared to the 6.4-month supply from a year ago.
Total existing home sales were up 0.8% to a seasonally adjusted annual rate of 4.98 million completed home sales in February compared to January’s 4.94 million. Existing single-family residential home sales rose 10.2% above the 4.52 million-unit level seen one-year prior.
New and existing home sales in February reached the highest level since the tax credit period of November 2009.
"In moving, there is no payback. It is a pure expense. You end up writing an average of $40,000 in checks, and no matter where you move, that money is gone. It doesn't increase your net worth -- it is just gone. Almost without exception, if you have a viable neighborhood and if you are bringing your home up to or slightly above neighborhood standards, from the financial side, you almost can't go wrong by renovating." ~ Dan Fritschen, the author of Remodel or Move economist.
Home Sales Have Climbed 12 Consecutive Months
According to NAR, home sales have scored higher over a year-ago for 20 consecutive months. Twin Cities home prices show 12 consecutive months of year-over-year price uptick, which means home values have increased. One of the primary reasons for the strong housing demand is the general lack of prime properties available to homebuyers, with a call out to home builders to start building. The inventory is at low levels not seen in nearly 10 years. New construction should increase this summer with a higher number of building permits pulled. Newly constructed homes are already drivingn the number of available homes up at a snails pace. However, the housing demand for higher inventory levels outstrips the new number of new builds
Working Closely With Clients To Help Them Locate Where They Want To Live
Although Minneapolis home improvement projects over $25,000 have shown signs of strength through out 2012, some homeownver still have catch up property alterations and home maintenance and repair jobs on the to-do list. The recovery of the remodeling market in general, and large projects in particular, continues to be constrained by factors such as tight home equity lending and problematic appraisals.
Inventory Has Decreased Due To Sparse Numbers Of Home Sellers
Twin Cities tight levels of available lot supply impact builders ability to obtain quality lots to build on that would help increase housing inventory. The Minneapolis Area Association of Realtors reported in The Skinny on March 18 that the Twin Cities housing inventory decreased 30.7% to 12,476. Combined with low inventory, low rates have been a prominent motivation for buyers. The same time one year ago, sellers weren't so sparse and there were 17,993 residential homes for sale.
Stats On Twin City Lots Available
There are currently 9 percent fewer vacant developed lots throughout the Twin Cities for home builders to purchase and build on. “The recent uptick in new home demand has created a run on desirable vacant developed lots located throughout the metro,” said Jones. Lot numbers in the Metrostudy report are as follows:
The current number is 25,268 vacant developed lots
A decline of 9% compared to last year
The fourth quater of 2012 saw the lowest supply number since late 2007
Contact Destiny Homes if you are considering a move to the Minneapolis / St Paul area and simply cannot find the home you want within the our slim housing inventory, or want to renovate your existing home. Gain our professional advice to weigh personal options to determine if it is better to build a new home or renovate your existing one. Call 952-923-5706.
Download the Minneapolis Association of Area Realtors Twin Cities Housing Inventory Levels report
Download NAHB's Remodeling Market Index for January 2013
Download NAHB's Single-Family Housing Starts Help Improve Twin Cities Housing Inventory
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.