Spring/Summer Market Update
Now that we’re fully into the Spring/Summer real estate market here in Minneapolis, what I’m seeing is that prices are at all time highs – even above all time highs. The inventory level is extremely low (especially in South Minneapolis) and it’s really tough for buyers to get a good house unless they want to pay a premium (and that’s usually for quality that isn’t as good). A lot of the homes I see for sale now need at least $50,000-$100,000 worth of work to retrofit them to 21st century energy standards, and that can add a lot to a buyer’s eventual bottom line.
The issue in a market like this is that buyers end up paying much more than they’d otherwise pay because they are forced to overlook bigger issues given the high level of competition out there just to get a home. Listings will hit the market and within 24 hours, they are in multiples and have the property under contract in a snap. This may be great for sellers, but it certainly has driven up the overall price for buyers city-wide.
A lot of buyers just think about existing homes – largely because they’d prefer something that is move-in ready and that they don’t have to put a lot of work into. But like I said, unless they are able to pay a premium, what ends up being in their price range is homes with a lot of remodel needs. There is a solution, though. I think there’s a lot of opportunity in new construction – especially if you build homes that use zero energy.
Zero energy homes cost a little more up front, but in the long run they end up increasing your cash flow because utility bills will be lower, and they end up bettering your health and quality of living because the HVAC system is designed in a way that allows for higher levels of insulation, better air flow, and less energy waste.
So if you’re on the hunt for your new home, don’t just focus on previously owned homes on the market; think about new construction and whether or not it’s something you’d be interested in pursuing. There are always deals out there, you’ve just got to know how to find them.