1. Minneapolis-St. Paul Residential Real Estate Market Update 1Q-2018
For the Governor’s Housing Task Force
1Q-2018
Ask Linda for update – with affiliates
Presented by
David Arbit

2. Crisis in Seller Confidence – “Nowhere to go”

3. Buyers highly motivated by rising rents, job/wage growth, low interest rates
But highly frustrated by lack of options, especially at affordable price points

8. 2017 Closed Sales

13. What’s holding back new construction?
4 “L”s
Lots
Labor
Lending
Lumber
And the 1 R - Regulation
Developers point to park dedication fees, stormwater retention ponds and façade mandates, but home buyers want to live near parks and in homes with nice curb appeal that don’t flood.

14. Market failure? Why? Failures: Reasons: The 4 “L”s
1) Inadequate inventory <$250K ) Declining affordability (+/-)
3) Spatial/Product mismatch
Reasons: The 4 “L”s
1) Rising Land/lot prices
2) Rising Labor costs
3) Construction Lending shortfall
4) Rising Lumber (building material) costs

15. Any fixes?
We desperately need additional housing options! Especially <$250K and Workforce Housing
Improved public-private partnerships and increased awareness of resources
Preserving NOAH is cheapest & least disruptive to private market
Homebuyer savings accounts
Job retraining to prepare workers to succeed in new economy
Geography-based tax credits/incentives to add housing density near job and transit/transportation nodes and corridors
Plenty of building in Blaine, Lakeville, Ham Lake, Rosemount but not enough jobs/businesses nearby
Encourage non-traditional housing production for multi-generational families
Mpls ADU ordinance is helpful and could be a model for other areas
Regulatory relief and reform (permitting, fees, impact assessments) and improving speed/delivery of product to market
Easing of Statute of Limitations on material building defects (timeline/scope)
Municipal disposition and infill policies – release the inventory!
Minimum lot size requirements (1 house/acre vs. 4 homes/acre)
Anything that encourages “workforce housing” production

16. Thank you! Q&A ? David Arbit
Director of Research + Economics