Agenda - Council - 08/27/2019 - Laserfiche WebLink

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Ms. Chloe McGuire Brigl City of Ramsey August 15, 2019 Page 4 For -Sale Market • After a lengthy recovery resulting from the Great Recession and the trough of last decade; home prices are at peak values in 2019. Median home prices are at an all-time high of $280,000 (July 2019), up 4% since year-end 2018. The market has been strong due to ongo- ing job growth, economic growth, increased consumer confidence, and low mortgage inter- est rates. Sellers are receiving 99% of list price and days on market continues to slide to less than 30 days. The market continues to suffer from a lack of inventory, especially for entry- level homes priced under $300,000 where demand is strongest. • The Twin Cities has one of the highest price spreads in the U.S. between new construction and existing homes. New construction has a median sales price of about $400,000 ($ 173 PSF) compared to $265,000 ($ 143 PSF) for an existing home. Builders are unable to deliver affordable homes due to a number of headwinds including building codes, regulatory issues, and increased land, labor, and material costs. As a result, most new construction targets the move -up and executive buyer with most new single-family homes coming in over $500,000. • New attached housing units such as townhomes, twinhomes, detached townhomes, and condominiums have increased production as buyers seek more affordable housing options in denser locations. However, housing costs for attached townhomes still exceed $275,000 and more while new condominium product targets the luxury home buyer with prices above $600,000. Production of attached housing products has not recovered since the re- cession and still represents a small proportion of new for -sale housing products. • Because of the lack of supply and low mortgage rates of existing homeowners, many home- owners are staying put and are not selling their homes. This has contributed to the lack of homes for sale and kept many first-time home buyers are the sidelines due to lack of availa- bility for entry-level homes. • Mortgage rates have continued to fall in 2019 and are now at the lowest level since 2016 (about 3.6% on a 30-year fixes mortgage). Low interest rates have led to a refinancing boom and have assisted the housing market in 2019; however, interest rates have not nudged many first-time home buyers off the fence as they are concerned about housing af- fordability. • New construction demand has moved outside the Twin Cities core as buyers seek afforda- bility. Technology and the Amazon effect allow outer -ring and tertiary locations to grow as more and more households are able to telecommute and are less dependent on proximity to their place of employment. MAXFIELD RESEARCH AND CONSULTING, LLC