Comprised of eleven neighborhoods stretching from Minnehaha Falls over to 35W and roughly from 42nd St. E. down to the Crosstown, the Nokomis Community offers classic South Minneapolis living with convenient lake, dining, nightlife, transit and freeway access.
Though it wasn’t always the case over the last decade or so, the Nokomis Community boasts higher median home prices than both the metro and the City of Minneapolis. The most recent July figures show the Nokomis median home price at $239,900, Minneapolis at $225,000 and the metro at $227,000 (rolling 12-month view).
Looking just at single-family homes, Nokomis properties have consistently commanded a higher price per square foot than both the city and the metro. At $161, buyers are willing to pay a nearly $10 per foot price premium to be in Nokomis compared to the rest of Minneapolis.
Shifting gears to neighboring South Minneapolis communities, Nokomis is toward the higher end of the pack for median sales price, even though it trails the Southwest Community by over $100,000. It does, however, boast higher price points than both Powderhorn and Longfellow.
Partly due to that marginally higher price point, Nokomis has an absorption rate slightly higher than neighborhood Longfellow and Powderhorn but well below the 2.1 months of supply available in Southwest.
The good news? South Minneapolis has a neighborhood for just about everyone.
The Lyndale Neighborhood is part of the Powderhorn Community and not the Calhoun-Isle Community (or “Uptown” to some). The Powderhorn boundary juts out to the west of I-35W to incorporate Whittier and Lyndale (map). Whittier and Lyndale are typically thought of as part of “Lyn-Lake,” just in case the various official and unofficial geographies weren’t confusing enough.
In terms of the price per square foot of a traditional, single-family, previously owned home, Lyndale tracks very close to the city with a value of $156 per square foot compared to $155 for Minneapolis. Just across Lake Street to the north, similar Whittier properties are selling for $151 per square foot.
Absorption rates are noticeably tighter in Lyndale than in Minneapolis. There are currently 1.5 months supply of inventory in Lyndale compared to 2.2 months supply in the City of Minneapolis as a whole. That means that there is about 50.0 percent less supply relative to demand in Lyndale compared to the city.
Similarly, homes in Lyndale are taking a median of 20 cumulative days on market to go under contract. For comparison, sellers in Minneapolis are waiting a median of 28 cumulative days before accepting offers.
Lyndale sellers are accepting offers at a median of 98.7 percent of their original list price. That’s one of the highest figures compared to nearby peer neighborhoods. Whittier sellers are accepting 97.2 percent of their original list price, Lowry Hill East sellers are accepting 98.3 percent.
Examining listing activity, active counts or sales trends by price range can shed a lot of light on local market dynamics. In terms of seller activity, the $200,000 and up range used to be the lion’s share of the market from 2005-2008. Since mid-2013, the $200,000 and up price point has once again dominated new listing activity.
Is the Lack of Housing Inventory Taking the Spring Out of Your Market?
It’s no secret that we’re experiencing an inventory shortage. Consumers and real estate professionals are feeling the frustration of a low housing supply after submitting multiple offers without success. This trend is not unique to the Minneapolis and St. Paul area, according to Jonathan Smoke, Chief Economist for Realtor.com:
“The increase in sales is resulting in continued tighter-than-tight supply—measured by NAR to be four months in January… that metric measures the number of months it would take to sell the current inventory of available homes, at the current pace. Six to seven months’ worth of homes on the market is considered normal; four months is cray-cray.”
The present conditions have some professionals wondering what brought us to this point. In an article written by Steve Cook of Real Estate Economy Watch, he lists six reasons that explain what’s keeping owners from selling:
1. One in five homeowners with a mortgage still doesn’t have enough equity to sell. 2. Buyers who bought during the 2004-2006 boom are waiting to make a profit. 3. Inventory shortages are squeezing move-up buyers. 4. There are five million fewer homes to be sold. 5. New home construction was decimated by the housing crash and hasn’t yet recovered. 6. The Boomer timetable has been delayed.
Here are some ideas that might help sellers or real estate professionals adapt to changing conditions:
1. Know your market. Each area is unique and it’s important to stay informed so you can anticipate possible changes. Use MAAR’s market reports or InfoSparks to find the most recent numbers. 2. Be honest and up front. You can’t control the market but you may prevent some disappointment or unreasonable expectations by giving an accurate picture of the market on the front end. 3. Be Prepared to Act Fast. When entering into a multiple offer situation it’s important to have finances in order and be prepared to make quick decisions. 4. Focus on the positive. David Arbit, MAAR’s Director of Research and Economics recently reported that job and wage growth trends remain encouraging. The unemployment rate continues to decline and we’re steadily producing sufficient private jobs to absorb newcomers to the labor force. Wages are growing at their fastest pace in years—an encouraging sign that should offset declining affordability brought on by rising prices and interest rates. Locally, the latest Bureau of Labor Statistics figures show the Minneapolis-St. Paul-Bloomington metropolitan area had the second lowest unemployment rate of any major metro area at 3.1 percent compared to 4.9 percent nationally. Mortgage rates are still below 4.0 percent compared to a long-term average of about 8.0 percent. Rates actually went down after the Federal Reserve’s December hike, though marginally higher rates are expected this year. 5. Serve as a resource. At the end of the day, it is the client’s decision on whether or not they choose to sell. However, real estate professionals should provide the resources necessary to help their client make the most informed decision (market stats, financing, pricing, marketing, etc.).
Judy Shields, Minneapolis Area Association of REALTORS® (MAAR) President has shared her perspective on the situation:
“This spring market will be a telling one for a number of reasons. Many would-be buyers are waiting on sellers. Early indicators such as mortgage applications suggest demand is only likely to strengthen. The uncertainty comes on the supply side, but there’s a good chance we’ll see more inventory this year.”
As the spring season unfolds, we can prepare for the unexpected and work within the current market conditions. Low supply levels are likely to persist in the near term, but it’s important to note that buyers are still finding quality homes—perhaps with a bit of patience and persistence. Hang in there. It’s well worth it.