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Real Estate Hall of Fame is Seeking Nominees for 2019

University of St Thomas

Minnesota Real Estate Hall of Fame

Award Criteria

The basic criterion for acceptance into the Hall of Fame is outstanding business performance coupled with a high standard of ethics. Usually the honorees are responsible for successful and/or innovative business activities and have made major life-long contributions to our industry.

– All nominees must be retired from their primary business   or

– Must be at least 65 years of age   or

– Be deceased

Nominations are not limited to University of St Thomas graduates.

Nominees can represent any discipline related to real estate in Minnesota.  The nomination committee is encouraged to nominate candidates from all  disciplines of both commercial and residential real estate.  The committee is encouraged to solicit recommendations from the real estate community and to encourage others from outside the committee to make nominations to insure a wide variety of candidates.

The Selection Committee will consider the following when making their selection of honorees:

  • Business: the nominee has made a significant contribution as a leader in the field of real estate;
  • Nominees are expected to have made a significant impact in their particular area of real estate and be recognized primarily as a person that is an exceptional role model in their discipline.
  • Weight will be given to such accomplishments as starting and building a business, leading an established business to significantly greater achievements, major transactions, and innovative projects.
  • Among the factors to be considered are industry recognitions and accomplishments, being an industry pioneer and/or leader, and recognition by others for achievements.
  • Community: the nominee has had concern for improving his/her community as a business leader
  • Ethics: the nominee has displayed the highest level of ethics in their business practices.

Beyond the criteria noted here, the Selection Committee has the responsibility   and discretionary power to make their determinations from the pool of nominations submitted.

Access the Nomination Form: https://centers.stthomas.edu/shenehon/wp-content/uploads/sites/7/2019/05/2019-REHoF-Nomination-Form.pdf

Nomination deadline: June 14th 2019

Economics, Home Prices, Housing, Housing Trends, Investment Real Estate, Minneapolis / St. Paul Housing, Real Estate Brokerage, Real Estate Trends, Residential Real Estate, Technology, Twin Cities Real Estate

iBuyers are Changing The Landscape of the Housing Market

April 2019

University of St Thomas Twin Cities Housing Market Update

What is an iBuyer?

An iBuyer is a company, in many cases an institutional investor, that will make an offer on your home within hours (or days) based on a proprietary valuation model. If you choose to accept the offer, you can close the sale in as little as a couple of days. The recent big news in the Twin Cities market is that last Monday Zillow began offering its Zillow Offers service to home sellers in the Twin Cities. The Twin Cities is the 10th metro area in the nation where they are offering this service. In addition to Zillow there are a number of local and national iBuyers here already with a number of new companies on the way.

How is the iBuying process different?

Traditionally, home values are calculated by using recent comparable sales of similar homes in the nearby area. The issue is that no two homes are identical and adjustments need to be made to account for the differences. Some of these adjustments are hard to calculate and can be somewhat subjective. Many of the newer, well capitalized iBuyers use “automated valuation models” or algorithms using computers to process massive amounts of home sales data to arrive at a value. Based on that value and information that home sellers upload about their homes they can close a sale in as little as a few days. There are some iBuyers may require a visual inspection by a local real estate partner.

Is iBuying the apocalypse for traditional agents and brokers?

The short answer is No. Nationally, in 2018, iBuyers accounted for 0.2 percent market share. At this point, even in markets where iBuyers has been operating longer they are only accounting for 3 – 6% of the sales volume. As more home sellers become more familiar and comfortable with the iBuying process that percentage will undoubtably increase. While a few iBuyers work directly with home sellers many of the iBuyer’s business models include working with and paying commissions to local real estate partners. Additionally, local Realtors do have the advantage of local market knowledge and are able to spot emerging neighborhood trends. As an example, look at what happened to the travel industry when technology made travel booking information directly available to individuals. At the time some were saying that it would be the end of travel agents. In reality travel agents have survived, however the industry has consolidated, become more sophisticated and has changed the way it does business.

Should I use an iBuyer?, What is the cost?, What is the Value Proposition?

Sellers are looking for a faster, simpler, less stressful way to sell their home. They want the process to be more efficient. Not all iBuyers offer the same services, some are full service, they want to be able to offer a one stop experience. Their process works like buying a car where you can buy a car, trade in your car, obtain financing and insurance all in one place. Since the larger iBuyers are buying and selling homes all the time, their business model works well taking trade ins. There others in the market who offer varying levels of service including those at the other end of the service spectrum who will only buy your home.

Average commissions using an iBuyer are about 7%, additionally their offer is discounted below fair market value. They expect to make necessary repairs and make a profit when they sell the home. In contrast commissions are about 5% – 6% for traditional sale listings. Sellers need to consider the trade off between convenience and maximum offer price.

The following are situations where a seller may consider using an iBuyer;

  • If the purchase of your next home requires the sale of your current home, you may need access to the equity tied up in your current home. Many Americans can’t quality for two mortgages at the same time meaning they have to sell their current home before they buy the next one. In today’s tight housing market contingent on sale offers are rarely successful.
  • If you can’t or don’t want to do the work to repair or upgrade your property before you sell.
  • If you’re moving to a new city and need to be on the job ASAP, you may not have time to wait for your home to sell
  • You’ve inherited a home you don’t want to own or manage

iBuying can provide a quick cash option but this speed and convenience comes at a price. In many cases a local agent may be able to get you a higher price for your home if you have the time available. Is it worth it? That depends on your priorities and circumstances.

There is more to come

Look for more large iBuying companies to come to town. Much of recent iBuying activity is being driven by multi-billion dollar organizations. In addition to Opendoor, who entered the Twin Cities market last fall, there will be other new arrivals such as Knock, OfferPad and Redfin. With technology advancing at such a rapid rate there will be more concepts and companies entering the market like Ribbon and Eave that work on the other side of the transaction helping buyers compete with cash offers.

Affordable Housing, Appraisal, Economics, Home Prices, Housing, Housing Trends, Industry News, Minneapolis / St. Paul Housing, Real Estate Trends, Residential Real Estate, Residential Real Estate Index, Twin Cities Real Estate

University of St. Thomas Housing Market Analysis for November 2018

Will A Computer Tell You How Much Your House Is Worth?

Lower Mortgage Rates for Energy Efficient Homes?

Market Update – Is the Twin Cities one of the top markets in the country where you should buy this winter?

 

Will A Computer Tell You How Much Your House Is Worth?

Federal regulators have proposed loosening real-estate appraisal requirements to enable a majority of U.S. homes to be bought and sold without being evaluated by a licensed human appraiser. That potentially opens the door for cheaper, faster, but largely untested property valuations based on computer algorithms.

Appraisals help lenders ensure that the estimated value of the property supports the purchase price and the mortgage amount. An appraisal that is off by a few percent could leave a homeowner owing more than their house is worth or lenders with insufficient collateral to cover defaulted loans.

Will this automated approach work? It is hard to see how an appraisal can be done without a human appraiser involved. There is so much variation in condition and functionally that cannot be assessed by a computer algorithm. There’s still no computer that can see, hear, taste, smell and touch the property. Until that happens appraisals with humans involved will continue be necessary to do accurate appraisals.

Lower Mortgage Rates for Energy-Efficient Homes?

Mortgage guarantors, insurers, underwriters, and security owners have recently observed that home buyers with lower monthly utility costs default less. Do these lower-risk home buyers deserve a lower interest rate? Lenders are starting to consider the idea of offering a lower interest rate for mortgages on energy efficient homes. Energy efficient mortgages (EEMs) encourage energy efficiency by giving buyers a better rate or more borrowing capacity to buy an energy efficient house or to cover the cost of new energy improvements.

There are several types of EEM products in use today; however, adoption remains limited. Developing programs in several states inject capital into traditional mortgage products to “buy down” the interest rate that is charged to borrowers as an incentive to finance energy retrofits. A third structure being tested assumes that the energy savings and reduced exposure to energy costs reduce the risk profile of the loan and on average should lead to better loan performance. The reduced risk justifies a lower interest rate, which in turn improves the loan pricing for borrowers, while leaving underwriting criteria unchanged.

There are now quantitative standards available to measure a home’s efficiency. The HERS Index is the industry standard by which a home’s energy efficiency is measured. The HERS or Home Energy Rating System was developed by RESNET and is the nationally recognized system for inspecting and calculating a home’s energy performance. Certified RESNET Home Energy Raters conduct inspections to verify a home’s energy performance and determine what improvements can be made to increase it. Home buyers will be attracted to buy homes that are not only more efficient, saving utility costs, but also being able to qualify for lower mortgage rates.

November Market Update

According to a recent Zillow report the Twin Cities was one of the top ten markets in the country where it makes the most sense to buy this winter. This ranking is based on an index they developed using the factors below. For potential buyers looking to make a move before rents and mortgage payments rise further, the report indicates our market compares favorably to most other markets in the country.

Here are the three factors that went into the index:

  • The share of price cuts compared to a year ago: (In the Twin Cities the year over year over year actual selling price compared to the asking price has been declining since June indicating that sellers are beginning to cut prices.)
  • Rent appreciation forecast: Metros where rents are expected to rise more over the next year are ranked higher on the index, because they offer the greatest opportunity for buyers to save money by picking up a mortgage rather than continuing to pay rising rents. (Year over year rents in the Twin Cities continue to increase modestly and are expected to continue to do so, although the rate of increase is expected to moderate.)                      
  • Mortgage affordability: Metros that already have bad mortgage affordability will become harder for buyers as mortgage rates rise, so they are prioritized on this index. (Relative to other markets in the country the Twin Cities does not already have “bad” mortgage affordability. In our market mortgage rates have increased and median sale prices continue increase faster than income making mortgage affordability more difficult.)

The median sale price increased .4% between October and November, however the median sale price of homes sold in the Twin Cities has increased by 8.6% in the past year to $266,000. In comparison, the average annual increase for the previous 12 months has been 7.8%.

The number of closed sales decreased .2% between November of 2017 and November of 2018, continuing a trend of decreasing year over year sales that has been observed for 10 of the last 12 months. The combination of the low number of homes available for sale and higher interest rates continues to take its toll on the number of homes sold. The number of pending sales decreased by 5.7% however the number of new listings increased 11.8% compared to the same period last year. The increase in new listings is a hopeful sign that will be more homes available for sale in the coming few months and that the slide in the year over year sales volume will begin to reverse itself.

For more information, visit the Shenehon Center’s complete report for November 2018 at http://www.stthomas.edu/business/centers/shenehon/research/. The report is also available for free via email from Tousley at hwtousley1@stthomas.edu

 

   

 

 

 

 

 

Home Prices, Housing, Housing Trends, Minneapolis / St. Paul Housing, Real Estate Trends, Residential Real Estate, Twin Cities Real Estate

University of St. Thomas Housing Market Analysis for October 2018

Twin Cities Rents Continue To Increase As The National Average Decreases

Median Home Sale Price Up 8.6%

Number of Homes for Sale – Beginning to Stabilize?

 

Twin Cities Rents Continue To Increase As The National Average Decreases                    In September, the Zillow national median rent index fell 0.2% year-over-year to $1,440, the first decline recorded since July 2012. However, during the same period the Twin Cities median rent index bucked the national trend, increasing by .5% to $1,638. Despite the addition of a near record number of new rental units the Twin Cities rental market remains one of the tightest in the nation. The outlook for rent growth next year is showing some signs of moderation. The expectation for new apartment supply in some sub-markets will peak as the year comes to a close and then are expected to flatten in 2019. Pockets of increasing supply may persist but demand is expected to remain strong. Any slowdown in rent growth will be good news to renters, putting more spending money in their already stretched pockets. There has been growth in the percentage of renewed leases, as well as a historically low turnover rate. This is a positive sign for apartment owners, as renters are choosing to remain in their units resulting in lower vacancies.

For the first time in six years, the median rent nationwide is slightly less than it was 12 months earlier. In the Twin Cities rents climbed steadily from 2013 through the end of 2017. Since then the rate of growth has moderated considerably. (See the chart above)

October Market Update

The median sale price increased 1.2% between September and October. The year over year median sale price of homes sold in the Twin Cities increased by 8.6% to $265,000. This is the highest year over year increase seen since earlier this year. This rate increase continues to exceed wage growth in the Twin Cities region. While good for sellers, higher median sale prices combined with higher interest rates will continue to make home ownership less affordable for many homebuyers.

The number of closed sales increased 3.8% between October of 2017 and October of 2018, reversing a trend of decreasing year over year sales that has been observed for 8 of the last 12 months. The number of pending sales decreased by 1.4% and the number of new listings decreased 7.8% compared to the same period last year. The combination of higher closed sales volume and the lower number of new listings will continue to put upward pressure on median sale prices in the coming months.

 Number of Homes for Sale – Beginning to Stabilize? 

The number of homes available for sale was down slightly (1.8%) compared to last October. This year 11,758 homes were available compared to 11,978 last year. Over the last four months the number of homes for sale appears to be stabilizing. Although still historically low, the number of double digit year over year decreases that has been observed over most of the last 3 years appears to be moderating.

For more information, visit the Shenehon Center’s complete report for October 2018 at http://www.stthomas.edu/business/centers/shenehon/research/. The report is also available for free via email from Tousley at hwtousley1@stthomas.edu

Economics, Home Prices, Housing, Housing Trends, Minneapolis / St. Paul Housing, Real Estate Trends, Residential Real Estate, Twin Cities Real Estate

Latest Survey of Twin Cities Home Builders Finds Them Slightly Less Optimistic For 2019

Latest Survey of Twin Cities Home Builders Finds Them Slightly Less Optimistic For 2019

Industry Leaders Have Some Concerns About Higher Interest Rates and Increasing Costs

St. Thomas’ fifth semiannual survey of 30 industry leaders measures sentiment and is designed to be a forecasting tool.

 Leaders in the Twin Cities single-family home-construction industry are generally optimistic about market conditions for the coming year although they have concerns about increasing mortgage rates and higher costs of land and building materials. That’s according to a new survey conducted by the University of St. Thomas Shenehon Center for Real Estate in partnership with the BATC Housing First Minnesota

The Twin Cities Home Builders Survey is patterned after St. Thomas’ Minnesota Commercial Real Estate Survey that began in 2010. The Home Builders Survey polls the same panel of 35 industry leaders semiannually in spring and again the following fall about their expectations for the upcoming year in six key areas of the housing market.

These experts are asked to assign a number of zero to 100 for each of the six questions. A midpoint score of 50 is neutral; scores higher than 50 indicate a more favorable outlook and scores lower than 50 indicate a more pessimistic outlook. “The industry leaders we poll every six months are actively engaged in studying both the demand and supply side of the housing market,” said Herb Tousley, director of real estate programs at the university. “Since they are involved in creating new housing units and adjusting supply-to-demand conditions, these individuals are close to the actual changes taking place in the market.”

“These results align closely with what we are hearing from the market and our members.” Said David Siegel, Executive Director of BATC Housing First Minnesota. “While there is a great need for residential construction in the Twin Cities, there are still several factors holding it back including land prices, the regulatory burden and a shortage of labor.”

Here are the scores for each of the six questions that were asked in our most recent survey:

Housing Starts: 57

This score decreased from 65 in our previous survey to 57, it indicates an expectation that the number of single-family housing starts will begin to slow down in the next 12 months. While still optimistic, home builders are concerned about the impact of rising interest rates and the rapidly increasing cost of building materials.

Price Per Square Foot: 70

This score is still very optimistic, however the drop from 74 to 70 reflects the expectation that the rate of increase will begin to moderate in the next 12 months. It shows the panel’s expectations that home prices will continue to increase at a slightly lower rate. At that level there is a continued belief that sale prices will increase at a rate that will more than offset the expected increases in project costs.

Land prices: 33

While still well into pessimistic territory at 33 this index has increased sharply from our last survey’s score of 23. This could be an indication of our panel’s expectation that the rate of the increase in land prices will moderate. It will be interesting to look at future surveys to see how this plays out. While there may be enough finished lots available, the higher land prices will continue to squeeze profitability.

Availability of finished lots: 53

This index decreased from 60 last December to 53 in our current survey reflecting the panel’s increased concern that there will be an adequate supply of finished lots in 2019. An adequate supply of well-located finished lots is crucial to the health of the home building industry.

Cost of building materials: 31

The outlook for the expected increases in the costs of building materials continues to be a major concern. This index moved from 24 in December 2017 to a slightly less pessimistic score of 31 in current survey. This score is an indication of ongoing concerns by our panelists that much of the gain from increased sale prices and more building starts will be offset by higher costs. These expected increases in costs could depress profitability and could reduce the number of new homes built in 2019.

Mortgage rates: 27

This index has declined slightly to 27 compared to 28 in our last survey. Although interest rates have been rising in 2018 the indication is that the panel continues to expect mortgage rates to increase in the next 12 months. Most panelists are expecting an additional increase of ¼% to ½% within the next year. The affordability issues created by higher rates could put a damper on home-building activity.

More Information

Additional details can be found on the Shenehon Center’s website: http://www.stthomas.edu/business/centers/shenehon/research/default.html.

 

 

 

 

Affordable Housing, Economics, Home Prices, Housing, Housing Trends, Minneapolis / St. Paul Housing, Residential Real Estate, Residential Real Estate Index, Twin Cities Real Estate

Rising Home Prices Are Creating Wealth For Twin Cities Homeowners

Traditional Median Sale Price Up $82,300 (43.8%) From Low Point in Feb 2012.

Rapidly rising median home sale prices have been a major source of wealth creation for homeowners since the low point in median home sale prices that occurred in February 2012. Since then median home sale prices in the Twin Cities have increased by $82,300, a gain of 43.8%. In April the median home sale price was $266,500 eclipsing the prerecession high water mark of $238,000 observed in July 2007. As has been noted before this rapid rate of increase has been fueled by the historically low availability of homes for sale coupled with improving economic conditions and relatively low mortgage rates. Another positive development is that in February 2012, 61.5% of all the sales in the metro area were distressed sales compared to the 3.3% that was observed this April. The percentage of distressed sales has since returned to pre-crash levels at less than 5%. The wealth creation effect of continued increases in home values will ripple throughout the economy as homeowners will be able use this newly created equity for investments or purchases.

 

 

 

 

 

 

 

 

How long will this trend continue?

In the near term a rapid rise in interest/mortgage rates and/or an increase in inflation would begin to make homes in all price ranges less affordable for many potential homebuyers. A decrease in the number of qualified buyers would put a damper on the demand for homes, reducing the upward pressure on home prices. In the short term it appears that neither one of those scenarios is likely to occur. Until that happens expect to see the supply of homes for sale remain very low and annual price increases in the 6% to 8% range. As in the past the current shortage of homes for sale has been most acute in lower to moderately priced homes (See the table below)

                   At What Price Range is the Shortage of Homes for Sale the Greatest?
Price Range % of Homes Available For Sale in April 2018 % of Closed Sales in April 2018 Months Supply
Less than $200,000 13.6% 22.7% 0.9
$200,000 – $399,999 42.4% 57.0% 1.5
$400,000 – $599,999 23.6% 14.0% 3.5
More than $600,000 20.3% 6.1% 6.6
  Median Sale Price $266,500  

Market Summary

 Median sale prices increased 3.3% between March and April ($258,000 to $266,500 respectively). The Twin Cities housing market continues to a show strong year over year gains in sale prices, marking an 8.8% percent annual increase in April 2018. While this is great news for sellers, a continuation of this rate of increase is going to create affordability issues for some potential buyers since this rate of increase is much higher than the growth rate of area income. On the supply side in April 2018 there were only 9,100 homes available for sale, 24% less than the 11,964 that were available in April 2017. A high annual growth rate in median sale prices and historically low supply will continue to dominate the market.

The number of homes sold in April 2018 was 4,664 an increase of 15.5% compared to last month and a decrease of 4.6% compared to April 2017. At the end of April there was a 1.8 months supply of homes available for sale, In comparison in a normal, balanced market there is a 6-month supply. Distressed sales accounted for only 3.3% the recorded home sales in April, similar to percentages observed before the housing market crash in 2007. New listings in April were 7,325, a decrease from the 7,890 recorded in April 2017. The decrease in new listings indicates that the supply of home of homes for sale situation will continue to tight in the near future.

For more information, visit the Shenehon Center’s complete report for April 2018 at http://www.stthomas.edu/business/centers/shenehon/research/. The report is also available for free via email at hwtousley1@stthomas.edu.

Affordable Housing, Architecture & Design, Housing, Minneapolis / St. Paul Housing

Not just a building… But a home

A story of the Dorothy Day Center

In the beginning the Dorothy Day Center was meant as a training center, but because of a need in St. Paul seen by community members, Catholic Charities decided to help. It became a consistent resource for many homeless year round and soon had to turn people away due to space limitations.

Early last year, Catholic Charities of Saint Paul and Minneapolis announced the largest public-private partnership of its kind. Backed by broad support and funding from both public and private sources, the vision was for a new Dorothy Day Center – two buildings with temporary and permanent residence plus support structures to empower and dignify those in need.

In January 2017, Higher Ground St Paul opened its doors to a community in need. The 5 story building across from the Xcel Energy Center in downtown St Paul contains 193 single room and apartment style units. Already, these units are filled and assisted 473 people of all backgrounds from the elderly, veterans and young adults struggling to make ends meet.

Catholic Charities wanted to bring more dignity to their services in this renovation of the Dorothy Day Center. The new buildings include showers, storage lockers, and light meals. Some residents have said,

“Catholic charities is my backbone, they’re there to pick me up, they rescued me in a time when I needed them…”

– Markeus from room #327

“Catholic Charities is a blessing for everybody in need.”

– Camille Pasha

Phase 2 of the project is underway in St. Paul. The building will contain the Opportunity Center and Dorothy Day Residence, and the goal is to be up and running in the next 12 months. This building will serve for more daily services such as emergency housing, transition housing, a health clinic, mental health services center, education guidance, veteran services, and employment services ranging from training to job placement. Truly a place for the benefit of all community members.

In Minnesota, the Dorothy Day Place project is the largest public-private social services collaboration in history. Funded with the support of local and state government and private sector leaders, the Dorothy Day Place project is a unique real estate development helping those in need.

The Shenehon Center for Real Estate of the University of St. Thomas is dedicated to advancing public and private interest in real estate issues as a resource and platform to the commercial, residential and corporate real estate segments. To learn more, please visit the Shenehon Center site at www.stthomas.edu/centers/shenehon or email us at realestate@stthomas.edu

 

For more information:

https://dorothydaycampaign.org/

https://www.mprnews.org/story/2015/03/06/mpls-homeless-shelters

https://www.cctwincities.org/catholic-charities-reaches-private-fundraising-goal/

https://www.youtube.com/watch?time_continue=371&v=_XlBAmkHCPo

https://www.youtube.com/watch?v=6sfMW2jcDy4

http://www.startribune.com/old-dorothy-day-homeless-shelter-demolished-to-make-room-for-new-catholic-charities-campus/444300843/

Minneapolis / St. Paul Housing, Residential Real Estate, Residential Real Estate Index, Twin Cities Real Estate

UST Housing Index: “It’s Not Your Father’s Housing Market Anymore”

The September Residential Index report from the Shenehon Center for Real Estate came out last week. Mr. Tousley, director of the Shenehon Center, was not surprised by the continuation of the supply glut, but in this latest report, he pointed out that the housing market is now being driven by the Millennial generation and Generation Z. Some key takeaways,

  • Over half of home sales this year have been to people 36 years old or younger
  • Home price appreciation continues to outpace income growth
  • Inventory remains significantly below demand
  • Price and inventory are affecting the “typical” renter

As seen in Minneapolis, many major cities are being pressed by a combination of decreased household sizes, sociocultural trends for “more” space, and an influx of people coming to live in the cities not seen since the 1940’s. The report states, Millenials and Generation Z’ers while interested in buying Continue Reading

Affordable Housing, Development, Housing, Housing Trends, Minneapolis / St. Paul Housing

Affordable Housing (Part 2)

According to Minnesota Compass, 48.4 percent of Minneapolis households are overburdened by housing costs. To explain, these households pay more than 30% of their gross income towards housing. Just for reference, a house in Minneapolis is averaging around $200,000 which for a first time home buyer with 10 percent down payment amounts to a monthly mortgage around $1,400 including an estimates for coverages and taxes.

There are many factors affecting this overburdened number. According to a Minneapolis City Council housing report, the city’s current population [approx. 412,000] has not been this high since the 1970’s which is still lower than the peak seen in 1950 [reported 521,718]. Further exacerbating the issue is the fact that there are about the same amount of units today as in 1950 in conjunction with a decrease in average household size. In 1950, it was roughly 3.3 persons per household compared to today’s 2.3 persons per household.

The most recent residential housing report from the University of St. Thomas and the 2017 Housing Market Comprehensive Analysis by HUD, give evidence that the cost burden is a result of the simple economic principle of supply and demand. The influx of demand for housing within Minneapolis has increased the risk of displacement. Housing prices are up year over year and there remains record low vacancy levels of 4 percent. Talks with a political liaison, Mark Stenglein, and local developer and founder Bob Lux of Atalus, LLC, reinforced the challenges to affordable housing Continue Reading

Affordable Housing, Development, Economics, Home Prices, Housing, Minneapolis / St. Paul Housing, Residential Real Estate

Affordable Housing: Misconceptions (Part 1)

Affordable housing is and has been a buzzword in the real estate industry for years. It carries many misconceptions. Let’s clear up these misconceptions before going further.

  • First, affordable housing is not typically affordable to everyone. It is affordable in that rent or sale value is reduced from market rates in order to allow individuals and families below the median income level to not be “overburdened” by rent or mortgage payments.
  • Second, the majority of people assisted HAVE jobs and ARE productive members of their communities in which they reside. The idea that affordable housing induces crime and the lowering of community home values, to name a few, is false.
  • Third, affordable housing is just like any other rental or purchase agreement with the addition of a historical income check. Owners and tenants undergo credit checks and asked of employment. Just in case you weren’t convinced when I stated earlier that a majority of affordable housing owners and tenants are employed.

 

So, why is this topic being brought up? Of almost 116 million households surveyed by the 2013 American Housing Survey, 36 percent are by definition overburdened by housing costs. To be overburdened by Federal government definition, a household must pay more than 30 percent of their yearly income. There are multiple perspectives to even this number, but before “Part 2” of this discussion, we ask the reader to do some research.

Do you think more affordable housing is needed? Is it a policy issue? Is it a supply and demand issue?

 

Our reason to talk about affordable housing is simple. With more than a third of the United States overburdened by housing costs and as a part of the University of St. Thomas, the Shenehon Center for Real Estate serves as a resource to the commercial, industrial, residential and corporate segments of real estate industry and the community to advance the public interest in real estate issues and to advance the common good.