Demand For New Construction And Buyers Moving To The Suburbs
I read an article in Finance and Commerce the other day about increasing new construction pending sales in the suburbs. I have lived in Minneapolis since 2002, but I grew up in Chanhassen before I moved to Minneapolis. Back in 1991 when my family moved to Chanhassen it was a very small town, mostly farmland, but it was starting to develop and my Dad actually built three homes in Chanhassen in the 1990s. Today, Chanhassen is one of the most popular suburbs west of the Twin Cities. When I read that new construction pending sales was up 27%, I wasn't surprised, but I did take a second to think.
Since death of George Floyd Minneapolis hasn't been the same. The destruction from the riots that followed has amounted to over $500 million worth of property damage that has effected over 1500 businesses. And the Covid-19 crisis on top of this has really changed a lot of people's attitudes about living in Minneapolis. Also, I hear the numbers of shootings have increased a lot in 2020 so all of these factors are making some people double think about moving to Minneapolis. I have heard from a number of people that they are planning on moving out of Minneapolis and into the suburbs. There are a lot of people in their 30s that are having families and the thought of living in a quiet suburb with their kids without the drama of the politics of living in Minneapolis sounds very appealing. Also, home prices in Minneapolis have skyrocketed over the last 8 years so it's not as great of a deal as it once was.
Starter homes in south Minneapolis that used to cost $175,000 in south Minneapolis are now $350,000 or more. The really nice bigger homes that are around 2000 sq. ft, in great condition and neighborhoods can cost up to $270 per square foot or more in Lake Nokomis. Most of these homes are built in the 1940-1950s. Compare that same price range in Chanhassen and homes are selling for around $170 per square foot and you get around 3200 square feet. Plus these homes are built in the late 1990s and early 2000s so they are a lot newer with less wear and tear. This difference in price and size has always been the case between Minneapolis and many of the popular suburbs, but because of, Covid, the unrest in Minneapolis, and the rising home prices more people are looking at the pros and cons of living in Minneapolis versus places like Chanhassen.
So it is going to be interesting to see what happens over the next 12-36 months. Will more homeowners in Minneapolis sell and move to the suburbs then before? I don't know, but I do know right now Minneapolis still has a great economy and has so much to offer as a city. We have beautiful lakes, parks, and so much culture. There is just a lot that you get in Minneapolis that you can't get in the suburbs or anywhere else in Minnesota. These factors will always make a difference to buyers when they are making decisions. If we do see more people moving out of Minneapolis that will create buying opportunities so there is a silver lining there as well. If you need help finding a deal or selling your home give me a call.