The reason we’re not seeing more new-home sales is definitely a function of price. ~ Stan Humphries, chief economist for real-estate website Zillow Inc.
Minneapolis, Twin Cities Minnesota (PRWEB) November 04, 2014
The cost per square foot for new home construction in the Twin Cities Minnesota in Q3 of 2014 continues to rise. An analysis of the 13-county Twin Cities metropolitan housing market new home prices helps homebuyers determine how to gain the most for their money when buying a newly constructed Twin Cities home. Being informed of options and having a realistic view of the costs to build a home helps homebuyers narrow down their real estate search based on prices provided by Northstar MLS.
“A change on the demand for new construction housing is a signal of housing market stability; traditional home buyers are replacing the high number of bargain-hunting investors previously seen,” says Jenna Thuening, owner of Home Destination. “The shift reflects fewer but more expensive new home sales from move-up buyers. Many are transferring new home equity gains from the starter home they purchased years ago into a new house.”
Nationally, residential new construction lengthened by 1.8 percent rate in the third quarter, a dawdling pace considering the 8.8 percent rate of gain in the spring, according to a Census Bureau report released October 24th. In the Twin Cities, new construction costs have increased by 11.4 percent, according to YTD facts by Northstar MLS.
The increased cost of buying a Twin Cities home is driven largely by supply and demand and the cost of building materials. When selling a new construction home, buyers typically pay a bit more than gently used existing homes for the same upgrades - but new is BRAND NEW and exciting! Northstar MLS current housing data shows comparable figures between the cost of new homes in the Twin Cities and existing homes.
When comparing the cost of a home, price is defined largely by the type of home purchased; home prices in the Twin Cities vary by whether or not the home was newly constructed or previously owned:
- New construction homes average $370,174, an increase of +11.4%
- Previously owned homes sold for an average of $196,000, an increase of +7.4%
- All home construction types stand at $205,000, an increase of +8.0%
The cost of purchasing a new home in the Twin Cities depends more on the type of house the buyer wants and how fancy they wish to build it. Construction costs for the home remain the same regardless of the cost of the lot it is built on. Meaning that home buyers should consider the cost of the lot separately; building a home in a prime location may include a million dollar lot price.
"For example, a prospective metro Minneapolis home buyer who wants a home with a commanding view of Lake Minnetonka from its most prominent point will be paying more," says Jenna Thuening. Available lots to build on in Lake Minnetonka have been absorbed by homeowners who now own 300+ feet of Lakeshore in the midst of prime acreage of nature preserve land. Therefore, it is easier to find an existing Lake Minnetonka home for sale than prime lots for building a new home in Minnetonka.
October 2014 building activity levels in the Twin Cities dropped substantially below last month’s level, according to reports from the Builders Association of the Twin Cities (BATC). However, a favorable outlook for renewed gains in new construction will help support growth this quarter and into next year.
New Home YTD in October 2014
- Building Permits - 4,154
- Permitted units - 8,241
- Permit value - $1,626,653,318
New Home YTD in October 2013
- Building Permits - 4,502
- Permitted units - 8,618
- Permit value - $1,667,111,772
"New construction that lagged in recent years has proved a remarkable turnaround overall in the Twin Cities, Minnesota area. Home builders have been busy so far in 2014, in spite of rising costs to build new homes and a need for more construction workers," comments Thuening. Buyers who want more options to choose from may prefer building a new home where their choices in home features are exponentially greater. The cost of new homes in the Twin Cities has not deterred suitably financed home buyers.
About Home Destination - Twin Cities Real Estate:
Home Destination offers a loyal and committed real estate professional service that personally handles all of the details of selling or purchasing homes in Eden Prairie, Minnesota. Highly regarded by peers as a Minneapolis metro expert for over 15 years, gain a skilled representative as guide to make the best possible housing decisions. Helping all home buyer types, from individuals seeking to buy their first home to individuals moving-up to a luxury home, Jenna Thuening has the real estate experience and acumen buyers and sellers benefit from.