Minneapolis housing market going strong but seeing changes
New report shows increasing listings and sales, but condo market is softening
Considering ongoing changes and competing narratives around the Minneapolis housing market, it’s important to periodically re-examine the market data to see what it reveals. The following analysis utilizes updated research from the white paper Minneapolis Housing Market: Are Homeowners ‘Fleeing’ the City? released by Minneapolis Area REALTORS® in July 2020. The latest data shows an overall increase in buyer and seller activity, but a softening market for condos. There are many reasons why people buy and sell property, but MAR does not collect this information.
Increasing buyer and seller activity
Compared to other large cities across the region, Minneapolis is experiencing heightened activity compared to what the numbers were showing us this summer (see table below). For example, in September of this year Minneapolis sellers listed 47.8 percent more homes than last September, reaching the highest level of new listings for the month since 2006. On the demand side, Minneapolis buyers entered into 41.4 percent more purchase contracts compared to the same period. Which is the highest level for September since 2004, marking the strongest September sales figure in 16 years. It’s clear that it’s a record-setting time for the Minneapolis housing market.
This trend in seller activity outpacing buyer activity started in July, but buyer activity started to catch up in August. This dynamic has resulted in 3.0 months supply of inventory, which is up from 2.4 months last September and a five-year high. While that fits the definition of a seller’s market overall, it doesn’t favor sellers as much as last year. By contrast, Minneapolis homes continue to sell in record time and sellers are receiving historically strong offers above original list price, on average.
Minneapolis civic leaders continue to express confidence in the city’s attractiveness to home buyers:
“The desire to move to and live in Minneapolis is still a reality and will continue to be into the future. That sentiment is supported by the data. Every city in Minnesota presents opportunities and challenges for residents as they buy houses, invest in the cities and build communities. I believe current and future residents of Minneapolis are up to the task of tackling our unique challenges in order to become an increasingly diverse, equitable, and safe city for all of who choose to live in our beautiful city.”
Dan Collison, Director of Downtown Partnerships, Minneapolis Downtown Council
Shifting Condo market
In comparison to single-family homes, condos, which represent 21.9 percent of Minneapolis home sales, are undergoing a more notable shift. In September, condo new listings rose 37.1 percent while pending sales fell 17.4 percent. That gap between buyer and seller activity was larger than that of the metro-wide condo market, even though condo sales also fell metro-wide.
The combination of increasing listings and dropping sales drove up the inventory of condos in Minneapolis to 6.1 months of supply. A balanced market typically has 5-6 months of supply (figures under 5 months indicate a seller’s market, over 6 months suggest a buyer’s market). In contrast to single family and townhome prices which both rose in the city compared to last year, condo prices were flat with last September. Minneapolis condos still sold more quickly than last year, but both condo and townhome sellers accepted a lesser share of their list price than last year.
MAR does not collect data on the reasons why people buy and sell property, but there have been reports of buyers and sellers expressing concerns about investing in the city since the pandemic and civil unrest. This former Minneapolis homeowner attributes her decision to sell on the impacts of COVID-19 and historic low mortgage rates:
“I have lived in Minneapolis for 20 years and have loved it here, but it no longer suits my needs. My 588 square foot downtown condo is not big enough to work from home and there’s not much to do with so many things shut down. The only way I could afford more space was to move out of the city. Thanks to record low interest rates, I now have a 1300 square foot townhouse in the suburbs.”
Owner of Minneapolis condo that sold in October 2020
Ultimately, while elements of the Minneapolis market are undergoing some changes, its fundamentals remain intact. The rate of turnover is elevated, as evidenced by the fact that both buyer and seller activity have risen significantly over the last few months. Buyer activity in the city reached record levels this year that go back even farther than the record for listings. But inventory is also increasing, especially in the condo sector, and sellers of condos and townhomes are commanding a smaller share of their list price compared to a year ago at this time. While not necessarily implying an exodus from the city, these figures are worth watching.
For more information,
Minneapolis Market Update http://maar.stats.10kresearch.com/docs/lmu/x/Minneapolis (communities on Pg. 2)
Disclaimer: MAR does not collect data on why people buy or sell a property. The quotes included in the report do not reflect the views of MAR