Water, water, everywhere,
Nor any drop to drink.
–Samuel Taylor Coleridge, “Rime of the Ancient Mariner”
All politics is local.
–former U.S. Speaker of the House Tip O’Neill
All real estate is local.
–Corollary, Ross Kaplan
One of the biggest misconceptions about today’s housing market is that there is a surfeit of homes available in every neighborhood, at every price point.
As Buyers’ agents and their frustrated clients know all too well, there is currently a shortage of some types of homes, in certain Twin Cities neighborhoods.
Twin Cities “Sweet Spots”
Here’s just a sampling of what seems to be in tightest supply at the moment (no doubt, other local Realtors could add significantly to the list; the following is just what I have Buyers for right now).
—Linden Hills: $550k-$725k for anything in move-in condition with 2,500 – 3,000 finished square feet
—Fern Hill (St. Louis Park’s first alphabet): $450k – $650k for 2,500 square feet, in move-in condition.
—Lion’s Park (Golden Valley): 3,000 square feet for $400k-$550k, nicely updated with a large, level backyard.
Notice what all of the above have in common?
Great location; family-sized (but not too big); and no work needed.
That’s because young families — still the most common Buyer in the Midwest — want a spacious (not cavernous) home that won’t cost them a fortune to update or keep up once they own it (factoring in utilities, annual maintenance, and property taxes).
They also want to avoid huge out-of-pocket expenses for their kids’ education (at least before college).
In turn, that means the house has to be in an area with a good public school system.
Pockets of Tight Supply
The bigger point is that the housing market is always characterized by such countervailing trends and exceptions to the rule, for the simple reason that homes — or at least the vast majority of homes — are unique and non-interchangeable.
That’s most certainly not the case with commodities such as soybeans, cotton, or copper.
So, yes, demand for housing as a whole can fluctuate depending on the economy, interest rates, demographic trends (e.g., retiring Baby Boomers), etc.
But the supply of homes is very much a day-to-day, neighborhood-by-neighborhood phenomenon.