According to Builder Magazine and NAR, Minneapolis/St Paul home prices will increase 8% in 2012 and building permits to spike up to 10,118.
Are a couple of my theories about to be proven correct? I had theorized that we were actually correcting quicker than the rest of the nation as our home prices were plummeting further than other areas. While I still believe this to be true, I have a difficult time imagining a 8% increase in home prices in 2012 even with a 2.5% growth in employment.
Our inventory is getting back to 2005 levels, added employment will put pressure on home prices. 8% is a stretch in my mind, but it is possible. I would venture to say we will more likely see 3% to 5% increase just off the cuff without running any population, employment, and housing units count and assuming we don’t get hit with the “Shadow Inventory” of foreclosures. Building permits will pick up to try and supply the shortages where the market is lacking housing units.
Many of the housing markets projected to have the biggest gains into 2012 tend to be the home to major universities, strong private sector employment, or have nearby military bases, according to a list of the healthiest housing markets by Builder Magazine. Builder teamed with Hanley Wood Market Intelligence to compile its annual list of the healthiest housing markets in the country, factoring in housing projections from Moody’s Economy.com. The list was based on projected price appreciation, population growth, income growth, and improving employment picture.
The following are the eight cities that topped Builder’s list, including projected housing permits in 2011 and 2012.
1. Minneapolis-St. Paul-Bloomington Minn.-Wis.
2011 Building Permit Forecast: 4,511
2012 Building Permit Forecast: 10,118
Home prices here are expected to rise 8 percent next year, the highest growth projected in the 100 cities analyzed. As a hub for medical technology and headquarters for several large companies, employment is expected to grow 2.5 percent in 2012.
Here is short clip from Builder magazine online regarding the Minneapolis/St Paul housing market:
One negative in the market is that home prices plunged during the first half of 2011. Median home prices, $147,300 after the first half of the year, are down from $229,200 in 2006, a 36% drop that is close to the national average. Home prices have fallen 13% this year due to an increase in foreclosure sales. But Hanley Wood Market Intelligence expects prices to rebound next year.
- Minneapolis / St Paul Building Permits up for Sept 2011 (craigkamman.com)
- Minneapolis / St Paul Unemployment Rate down for September 2011 (craigkamman.com)