MAR will be closed on Monday, May 27 in honor of Memorial Day. Regular hours and service will resume Tuesday, May 28.

Recent New Construction Activity by Price Point

As the shortage of residential property listings persists, many observers are rightly examining recent new construction trends. We’d like to get in on that.

Using exclusively NorthstarMLS data, this analysis only looks at listings with a “year built” field of 2016 or later. However, the closed sales count only uses 2017YTD activity and inventory is always the most recent monthly snapshot, further limiting the pool of records and keeping the analysis as up-to-date as possible while still allowing for a reasonable sample size of records.

As of the end of May 2017, 25.3% of all active listings that were built in or after 2016 were listed between $400,000 and $500,000. 24.9% of all actives were listed between $300,000 and $400,000. In other words, about half of all recently-built active listings were priced between $300,000 and $500,000. About 33% were priced above $500,000; while the remaining 17% were listed under $300,000.

There are a few noteworthy trends here. There seem to be several threshold effects. First, active listing market share declines dramatically above $500,000 for relatively recent construction and then flattens out somewhat. The next notable decline comes above the $1.3M mark. That may reflect the tear-down activity happening around the metro–particularly within the urban cores and inner-ring suburbs. Even though most of the demand for new construction is well under $1M (more on that below), this could reflect the higher land, tear-down and (re)development costs associated with infill construction. There is also a significant decline above $2.5M, which could reflect a mix of risk aversion from developers and a fairly limited buyer pool.

Transitioning over to the demand side, the $300,000 to $400,000 bracket witnessed the largest share of newly-built home sales. Next up was the $400,000 to $500,000 range, followed by the $200,000 to $300,000 range. Once again, activity drops off above $500,000 and again over $600,000.

Interestingly, and in contrast to active listing share, the $800,000 to $1,000,000 range enjoyed more sales than the $700,000 to $800,000 range. Sales between $1,300,000 and $1,600,000 represented less than half the market share of those between $1,000,000 and $1,300,000. In other words, the “$1,000,000 plus crowd” may be willing to enter the low seven-figures but maybe not yet much beyond that.

The $800,000 to $1,000,000 range also captures listings that sellers and builders initially listed at $1,049,000 or $1,099,000 and had a price adjustment or an offer accepted under the $1,000,000 threshold. Even though a home may have been listed above the $1,000,000 mark, it may have sold for less.

That got us thinking: wouldn’t it be cool to look at the ratio of active versus sold market share by price point? Of course it would! So that’s what we did.

Unsurprisingly, for the most part, active market share tends to outweigh sold market share as you climb the price ladder. In other words, the higher the price point, the more likely you are to have more supply relative to demand. That’s why absorption rates and market times increase in the higher brackets. It’s also why the ratio of sold price to list price tends to be slightly lower. There simply isn’t the same market pressure or imbalance between supply and demand in the luxury brackets as there is in the affordable brackets.

As indicated, that theory is mostly supported by this analysis, with a few exceptions. First, the market share of active listings between $2,000,000 and $2,500,000 is about 5 times that of the sold market share in that range (0.54% versus 0.11%). Even though it’s a small sliver of both active and sold market share, it’s that ratio or relationship between the two shares that we’re after. Even the $3,000,000 and up range has a ratio of about 4.5. 

Second, and perhaps surprisingly, the ratio of active to sold market share in the $2,500,000 to $3,000,000 range was only about 1.7, lower than all other ranges above $700,000 except $800,000 to $1,000,000. That means the active market share in that range is only about 60-70 percent higher than the sold market share in that range, which seems downright balanced compared to 4 to 5 times greater active versus sold market share in other upper brackets.

Third, and as expected, it’s difficult for builders to be profitable under the $300,000 price point, given rising construction costs, limited lot availability, the labor shortage and new impact fees. Also as expected, budget-conscious consumers facing limited inventory options are having to go farther out where newer construction is more common. The fact that sold market share is outpacing active market share in all ranges up to $400,000 speaks to the strong demand but insufficient building activity in these affordable and in-demand price points.

You see? Data can be educational AND fun! Infosparks and the many market reports on our website can help you impress your next client and increase your referrals and repeat business. Please use the data for good and never for evil!

Jim Stanton, Owner of Shamrock Development Passed Away


Over the weekend, the real estate community lost a prominent industry leader. Jim Stanton leaves his real estate footprint throughout the Twin Cities on over 6,000 home sites in 28 cities in Minnesota and Western Wisconsin.

“Jim Stanton always had his eye on the next project whether it be development or industry advocacy efforts. He absolutely believed in homeownership as a core value,” said Bill Wald, Minneapolis Area Association of REALTORS® CEO. Stanton would say, “I don’t lose money in real estate; in the stock market who’s to know.” He believed in the power of housing and homeownership to transform people’s lives.

Stanton was not just a home builder or even a condo developer—he built communities. Large swaths of the North Metro were created because of his vision. Stanton was developing downtown condos during the housing recovery at a time when few others were breaking ground. Today, many parcels across Lakeville and Shakopee exist as they do in large part thanks to him.

He was quick with an anecdote, joke, story, anything for a laugh. He was hard-nosed in business, willing to stand up for what is right, but never took himself so seriously as to not have time to chat. His legacy will live on for decades—he laid the brickwork that makes up our communities.

Our deepest condolences to the Stanton family.

Inventory Low, Market Times Quick, Buyer and Seller Activity Steady

Compared to May 2016, new listings in the Twin Cities inched up 0.7 percent while closed sales fell 1.1 percent. Given that there were 17.3 percent fewer homes on the market compared to last May, it’s clear that buyers remain motivated. Declining foreclosure and short sale activity can contribute to market-wide declines. For example, traditional new listings rose 2.5 percent while traditional closed sales rose 2.1 percent. Those shopping for homes have 11,615 properties from which to choose in the metro area, the highest figure so far this year but the lowest May inventory reading since 2003.

Prices continued to rise. The median sales price rose 5.5 percent from last year to $250,000. Nominal home prices have now risen for the last 63 consecutive months. Multiple offers on updated, turn-key properties are common in low inventory environments. Properties also tend to sell quickly and for close to or above list price. Homes went under contract 15.0 percent faster than last May. Half the homes on the market sold in less than 20 days. The average percent of original list price received at sale was 99.5 percent, 0.9 percent higher than last year. Similarly, the median percent of original list price received at sale was 100.0 percent, meaning half the sales closed for over list price. The metro area has just 2.3 months of housing supply—the lowest May reading since 2003. Generally, five to six months of supply is considered a balanced market where neither buyers nor sellers have a clear advantage. 

“Not only does the traditional market now account for over 96.0 percent of sales,” said Cotty Lowry, Minneapolis Area Association of REALTORS® (MAAR) President, “but traditional new listings and sales continue to rise, despite the shortage of homes on the market.”

A thriving and diverse local economy has been conducive to housing recovery, as job growth is key to new household formations. The most recent national unemployment rate is 4.3 percent, though it’s 3.3 percent locally. The Minneapolis–St. Paul region has a resilient economy with a global reach, a talented workforce, top notch schools and a quality of life that’s enabled one of the highest homeownership rates in the country.

The average 30-year fixed mortgage rate has declined from 4.3 percent to 3.9 percent recently, still well below its long-term average of about 8.0 percent. Excluding any surprising data or events, the Federal Reserve is likely to increase their target federal funds rate at least once more this year. Wage and inventory growth are key to offsetting affordability declines brought on by higher rates and rising prices.

“It’s tempting to treat this market as one entity,” said Kath Hammerseng, MAAR President-Elect. “However, that won’t provide an accurate and detailed picture of what’s really happening. Different areas, market segments and price points all behave quite differently.”



2017 Jean Leake Emerging Markets Service Scholarship Recipient—MY NAR REALTOR Legislative Meeting Experience

By Erin Wilson

The night before I left, I had planned to get up at 4 a.m. to make my 7:30 a.m. flight but found myself awake at 2 a.m. in anticipation of my first trip to the National Association of REALTORS® (NAR) Legislative Meetings in Washington, D.C. I am Erin Wilson, Minneapolis Area Association of REALTORS (MAAR) recipient of the 2017 Jean Leake Emerging Markets Service Scholarship.

After a quick flight to DC, we were off and running. We walked from our hotel to the convention location; it was a balmy 94 degrees. We were hot and tired but ready for mind expansion. The NAR 360 (the kick-off meeting for the convention) was energizing; it was great to see so many dedicated Realtors packed into the room and it was there I realized how important it is to stand in solidarity with other Realtors and have our voices heard. As Realtors, it is our duty to stand up for our clients and homeownership.

At the NAR 360, we listened to a presentation on the key issues that we, Realtors would focused on during the legislative meetings. There was a fun spoof where Kevin Sears, Vice President of Government Affairs, took to the streets of D.C. to question the average person on the acronyms that are common in our industry. One hilarious response to “what is FEMA” was a confident reply that it was “the bone connected to the other one in the arm.” This was an excellent reminder that sometimes people have no idea what we are talking about even though we use acronyms all the time. The MAAR/SPAAR reception followed at the beautiful Omni Shoreham Hotel. The networking was a great opportunity to meet and reconnect with other MAAR/SPAAR members and staff who were attending the legislative meetings.

The second day started at the crack of dawn. It was our busiest day in D.C. We met early in the morning for a tour of the White House. Congressman Erik Paulson met us and escorted us through security and into the White House. The White House tour was fascinating. I am forever grateful for what could be a once-in-a-lifetime experience. It was fun to see the house up close verses seeing it on TV.

After the White House tour, we zipped back to the Realtor conference to attend the NAR Diversity Committee meeting and then we were off to Capitol Hill. Our first visit was with one of Minneapolis’ local heroes, and my representative, Congressman Keith Ellison. Unfortunately, Keith was taking a vote on the floor, yet he stopped by to say hello. He left us in the very capable hands of his aide. We had a lively discussion about tax reform, the National Flood Insurance Program and the importance of protecting sustainable homeownership.

We met with Congressman Rick Nolan. Rick was very receptive and told several stories about his time in Washington and the fight to save his seat and the current political atmosphere in Washington D.C. I was surprised by how receptive and interested he was about Realtor issues.

While on Capitol Hill, we met with Senators Amy Klobuchar and Al Franken. They took the time to listen to our unified message and Amy also had questions for us, including our thoughts on Fannie Mae. At these meetings, I was proud to be a Realtor. Amy was impressed with the large group of 98 Realtors, who were all nestled in the conference room, unified with our message to preserve and protect homeownership and private property rights.

The remainder of my trip was spent at the Realtor conference and attending scheduled meetings on various topics. Donnie Brown, MAAR VP of Community Affairs and Foundation kept us moving, engaged and participating the entire week. There was never a dull moment. One of my many takeaways from this experience is that I will be talking to other Realtors who work hard with clients from emerging markets to apply for this scholarship. The end of the trip turned out to be a beginning for me and my involvement at MAAR. I am very excited to join the MAAR Diversity Committee and keep the momentum going.