MINNEAPOLIS (KMSP) - The median sale price of a home in the Twin Cities in May 2016 almost reached a record high set during the pre-recession housing bubble a decade ago.
According to the University of St. Thomas’ Shenehon Center for Real Estate, low supply and quick demand drove the median sale price of a home in the 13-county Twin Cities region to $237,000. The highest median price on record was set in June 2006 at $238,000.
Herb Tousley, UST’s director of real estate programs said low interest rates, an improving economy, and a tight rental market are big reasons why the number of sales has steadily been increasing to near pre-recession levels.
The market’s low supply of homes has remained historically sparse since a drop in early 2013. Tousley listed difficulty in finding and purchasing a replacement home at a reasonable price; higher standards to qualify for a new mortgage; lackluster wage growth over the last several years; and home builders not building as many single-family homes as they used to as possible reasons.
“In spite of all of the new apartments that have been built over the last few years we remain in a very tight rental market,” he said. “The area has been absorbing the new rental units and vacancies continue to remain historically very low. The result of a low vacancy and a tight rental market is high rent growth. In 2015 the average rent in the Twin Cities increased by 5 percent. Repeated large rent increases over the last several years have many renters considering the idea of homeownership as an alternative, creating additional potential homebuyers.”
You can read the Shenehon Center’s complete report here.