Why is there still a shortage of inventory?
If I had a crystal ball…….. Hmmmm…..
Remember, I am not an economist, I have a degree in counseling. But, I have been observing the ebb and flow of housing in this town for a very long time and this is what makes sense to me:
1. We have a very good economy and our population is rising and has been since 2010. Minneapolis has increased by 12% and St. Paul by 9.8% according to the Met Council. Check out this link: https://metrocouncil.org/populationestimates
2. Construction of new homes stopped when our market was down between 2007 and 2012. Hard to catch up from 5 years of not much to nothing in the way of building.
3. Our rental market is very pricey.
4. Baby boomers who should be getting rid of their homes can stay in their homes cheaper than they can rent an apartment.
5. Building of condos in the City is not happening. Only three downtown buildings have been built since the market returned in 2012 (Portland Towers, Stonebridge and the Legacy). All the buildings that you see in downtown Minneapolis, in particular, are rental, not condo. Young professionals who might buy
a downtown condo can only rent since there is almost nothing to buy. So, they are now forced out into neighborhoods outside of downtown.
6. Three new condo buildings are now underway in downtown Minneapolis. Excellent! The bad news is that two of the three are starting at $500,000 for the smallest units (studios). The third building is starting at $300,000 for 500 sq feet. Certainly, targeting a certain group and income level.
7. You tie all that together what do you have? The shortest inventory in 50 years!!!!!
And of course the question is when will it change? OR, are there further outside forces that will override the above?
My guess is that it is going to be awhile before City inventory gets any better. No matter what, think of it this way: if you are the seller you have power and if you are the buyer, you have almost none.