Barb Jandric, president, Edina Realty
As president of Edina Realty, Barb Jandric provides guidance and direction to nearly 2,500 REALTORS®.
2016 was an exciting year for the housing market in the 13-county Twin Cities metro area as prices continued to steadily increase and low inventory in many market segments created competition and a fast path to closing for sellers.
As our market remains stable, we can continue to expect slow and measured growth in home prices in 2017. Whether you're buying, selling or just like to keep up with the housing market, here are insights you can use as we enter a fresh new year.
The basics
- 2017 will be much like 2016, with moderate home price appreciation. Unlike during the "bubble years," low inventory and low interest rates are the main factors driving price growth.
- Mortgage loan interest rates will remain low, though they might rise slightly in 2017. First-time homebuyers can benefit from rising FHA loan limits for most counties in Minnesota and Wisconsin.
- Listing levels are expected to improve slightly, by 3-5 percent, as homeowners gain equity and new buyers see the value of homeownership. The demand for housing inventory will remain strong in most market segments.
- The two markets that emerged in 2016 will continue: "Starter" homes priced under $250,000 will continue to show clear signs of a strong sellers' market due to low inventory and high demand. Meanwhile, an inverse is occurring in the Twin Cities luxury market; we're seeing a rising inventory and longer time on market for homes priced at $500,000 or above.
Local home price growth
- Homeowners across the country are expected to see rising appreciation of about 3.9 percent and Minnesota's home values are expected to grow in that same range.
- While some areas are reaching pre-recession home price levels, we are encouraged that the values have been rising steadily and are in response to buyer demand rather than loose lending standards and a spike in home appreciation.
First-time buyers entering the market
- With some millennials delaying homeownership, 2017 may be the year that the tides turn as those aged 18-35 begin to form households.
- A recent report indicated that 40 percent of millennials owe less than $10,000 in student loans, which puts homeownership well within reach.
- Rising rent could spur local millennials into action. Stats show that on average, it's still $300 cheaper per month to own a home in Minnesota or Wisconsin than it is to rent.
- Minneapolis was recently the top-ranked city in the Millennial Opportunity Index, based on its "high educational attainment and participation rate in the labor force."
- Our strong local economy is boosting Gen Y's earning and savings potential, putting Minneapolis on the list of the markets that may show a higher home buying rate among millennials in 2017.
- Millennials looking at homes in that starter home range of under $250,000 should plan to be pre-approved and ready to move quickly due to low inventory.
New construction trends
- While single-family new construction continues to grow, residential rental and multi-family home construction will remain strong in our market.
- Lending practices, limited lot availability and rising labor costs will continue to challenge small, local builders, and we will see a rise in "production" or semi-custom inventory homes that are common among larger builders.
- The cost of new construction is driven by the location and cost of your chosen lot. Buyers looking for a starter home that's also new construction should consider looking at the outer suburbs.
Buyers have modern preferences
As our lifestyles change, so too do the homes that best represent our needs. You may know that formal dining rooms have been less common over the last few decades than they were in the 1950s and 1960s, but what about other rooms and home features? If you're a seller, consider what trends you may be able to implement so that your home is aligned with the needs and wants of today's buyers.
- In our ultra-busy society, keeping a massive "McMansion" clean can be nearly impossible. Many buyers agree, and the new trend is for homes with big-impact amenities and lower square footage.
- Updated kitchens and open floor plans remain the biggest trends, and barn doors can help retain privacy and control noise in homes where walls have been removed. Other buyer trends include farmhouse sinks and tankless water heaters.
- Homebuyers love hardwood, and younger buyers may not mind if the floors are actually laminate, which are easier to keep up. Here's a quick pricing and upkeep guide that can help you determine what flooring choice is best for your house.
Need a real estate expert?
If you're preparing to buy or sell in 2017, Edina Realty has more than 2,500 REALTORS® in nearly every neighborhood across Minnesota and western Wisconsin. Reach out now to get connected with an expert you can trust.
