Minneapolis / St Paul seems to be back in the groove of building new homes again. Builders are beginning to run into shortages of available land to build on again as well as have trouble finding trades (labor) to build the homes. These are good problems to have again!
While things appear to be moving along, the Twin Cities did take a slight dip in new housing starts on 1 Unit structures (single family homes) in August. 34 Fewer Single Family home starts in August from July. It still up over June this year by 52 units, so 1 month does not make a trend…
There are a couple theories about this slight dip in August. 1) Interest Rates nudged up a bit 2) Land prices nudged up a bit 3) Material and Labor prices are going way up.
I don’t know if I would call those theories as much as I would call them dynamics of the marketplace. All 3 of those factors are playing into the buyers decisions on whether to build new, wait, or buy existing homes.
As demand slows down, the pricing on material, labor, and land should come back in line. It may feel at times like we are finally through the correction, but we still have some pains ahead of us as the markets continue to adjust.
The big wild card is what interest rates will do going forward. Interest rates are driving the current demand. If jobs growth picks up, the real estate market can easily handle higher interest rates – it has for years…
Title: Privately Owned Housing Starts Authorized by Building Permits: 1-Unit Structures for Minneapolis-St. Paul-Bloomington, MN-WI (MSA) Series ID: MINN427BP1FHSA Source: Federal Reserve Bank of St. Louis Release: Housing Units Authorized By Building Permits (Seasonally Adjusted) (Not a Press Release) Seasonal Adjustment: Seasonally Adjusted Frequency: Monthly Units: Units Date Range: 1988-01-01 to 2013-08-01 Last Updated: 2013-09-26 9:01 AM CDT2013-04-01 603 2013-05-01 622 2013-06-01 555 2013-07-01 642 2013-08-01 608