Twin Cities New Construction Inventory is Pushed by a Booming Demand

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The Minnesota Association of Realtors released the Twin Cities Housing Market 2012 Report that coincides with the Creighton University Mid-America Business Conditions Index showing that Minnesota's new construction spending has out paced national levels contributing to a strong economy. Destiny Homes, a Minneapolis luxury home builder comments on the findings and threads the reports together for a Twin Cities overview of new construction homes for sale.

Twin Cites New Construcion Inventory

Twin Cites New Construcion Inventory

"Improvements in the housing and automobile sectors along with avoiding falling off the ‘fiscal cliff’ pushed the economic outlook higher. It was surprising that Minnesota numbers were so strong." ~ Ernie Goss, Creighton University

The Minnesota Association of Realtors (MAAR) recently released the Twin Cities Housing Market 2012 Report that helps Minneapolis home builders posture themselves to meet the growing demand for new construction homes in the Twin Cities. According to the report, since the peak of Twin Cities new construction inventory in February 200, we have a 3,354 drop in new construction inventory.

Destiny Homes Builder Butch Sprenger says, "Activity shows fewer homes entering the housing market in comparisons to prior years; with fewer homes for potential home buyers to view, there are fewer showings and home prices are pushed higher. The Twin Cities housing market recovery is smooth and steadily improving."

The years end months supply of Twin Cities new construction homes sits at 5.2 months, down from 7.4 in 2011 and 8.1 in 2010. The even lower inventory levels for previously-owned homes available to sale in the Minneapolis / St Paul metro add to the demand for more new construction. According to the reports 2012 housing market summary, the months supply of previously owned home is a mere 2.7, down from 4.9 in 2011 and 7.2 in 2010. Minnesota rates second in the nation, with 72% of its residents owning their own homes.

“We’re very encouraged by the recovery we saw in 2012. We clearly saw behavior (among buyers) change from the start of 2012 to the end of 2012.” said Andy Fazendin, president of MAAR, at January's news conference to announce the organization’s annual market-results survey.

HOW MARKET CONDITIONS ARE DETERMINED

  • Buyer’s Market = More than 7 Months of Inventory
  • Balanced Market = 5 – 7 Months of Inventory
  • Seller’s Market = Less than 5 Months of Inventory

The Absorption Rate is a strong downturn at only a 3.76 months supply of housing Inventory, which is considered a Seller’s Market.

Destiny Homes anticipates the Twin Cities Housing Market trend in the decline of new construction homes for sale will continue to decline given the rate of home buyers snapping up inventory.The housing market is poised to get stronger for Sellers in 2013. "Some Minneapolis homeowners are investing more in home renovations and deciding to stay in their home longer. In 2012, homeowners who chose to sell their homes added to 129,793 new properties to the Twin Cities marketplace, an 8.3 percent decrease or 11,684 units fewer than 2011,' adds Destiny Homes.

NEW RESIDENTIAL CONSTRUCTION IN DECEMBER 2012 - CENSUS BUREAU

New construction spending on a national level was up; Minnesota was stronger than the following national averages:

1) Building permits for 2012 increased 30.3 percent and starts grew 28.1 percent.

2) Housing starts in December 2012 were at a seasonally adjusted annual rate of 954,000, up 12.1 percent from the revised November estimate and up 36.9 percent from December 2011.

3) Privately-owned housing completions in December were at a seasonally adjusted annual rate of 686,000 - 1.6 percent (±14.7%)* above the revised November estimate of 675,000 and is 13.2 percent

"It is worthy to note that when an index rises above 50, it signals economic expansion; when it falls below 50, it signals contraction. Another new report substantiates Minnesota as a national housing leader of economic expansion." comments Sprenger.

The monthly Mid-America Business Conditions Index from Creighton University, released February 1, 2013, was surprising in showing just how strong home builders have bolstered up the Minnesota economy with the surge in Minneapolis home improvement projects and new construction. Minnesota vaulted upward to 57.2 in Creighton's index, lifting at a strong pace from 48.4 in November and signaling substantial economic growth.

"It is an exciting time in be at the heart of the closest thing to a boom market the Twin Cities region has seen in nearly a decade. The number of residential housing permits issued in January were up almost 70 percent, according to data from the Builders Association of the Twin Cities," says Sprenger.

After a low in 2009, construction spending has increased 59%. The National Association of Home Builders predicts single-family housing starts will continue to rise in 2013; however, a modest pace of growth is expected during Q1. Multiple housing experts forecast that Twin Cities residents can anticipate a better clip over the remainder of 2013.

Destiny Homes can help plan a new home build or a home renovation project in the Twin Cities. For families considering a move to the area, they'll find an exciting and positive housing market for home investment choices. Call 952-923-5706.

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Butch and Liz Sprenger
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