Will Minnesota cost reductions hit when COVID evictions stop?

Question

Buying in Minnesota Twin Cities area, do you think it will happen after the Evictions cease and folks start to leave?

James Hamling · Answer

Lol.......I just don't understand why I keep seeing posts pop-up with "finger paint" economics messages about some impending housing collapse and huge price reductions. When will prices come down; - when we no longer have a significant housing shortage issue. - when cost of construction lowers 12,20,30%. -when those who have to move out of a home no longer need a roof to put over their head (an evicted person is still a person who needs a home so it is NOT an added empty unit on the market it is a unit swap). These are just the Grammar-School Economics level of it all, creating housing market price support. This paranoid illusion that there will be halving of housing prices in MN has as much chance of happening as ET coming down to hand out the cure for covid-19 and then throwing out the 1st pitch at TCF stadium, there is as much data to support 1 as the other. Again, there is a major housing shortage, SHORTAGE. Every home owner who goes bust will be a tenant. Kids keep turning 18, people keep having more kids, cost of construction is highest levels ever and we are a decade into a skilled labor shortage with zero easing in sight, and now a material shortage. Average cost for entry level home at lowest possible price point is $225k+. Existing home sale prices will be pulled up and up to and above this mark adjusted on geographic scarcity and configuration of home. As tax's increase so will cost of home construction with a multiplier affect. As labor supply dwindles, prices go up. All of this pushes existing home prices UP. Every argument for home prices collapsing is built on smoke & mirrors, no data facts and actually ignores these data points i listed above. Stop listening to the tinfoil hat eco-chambers on youtube, go get real data from real sources, maybe read a book, take a walk, might find life isn't half bad. And if your convinced the sky is falling, look me up for your MN properties as I have buyers ready for any and all, i will take them all, happy to do so.

Amber Gonion · Answer

@Frank Hinck I don’t believe the evictions will have much effect, but Certain parts of Minneapolis are certainly are seeing renters leave and rental prices are being affected which of course affect property value. The major engines driving it are safety concerns and restaurants/service industry not at full capacity. Many of the young renters work in the service industry and the unemployment kept them paying their bills (and more). But as they see that ending they have begun giving notice to move out of popular maps areas to less expensive areas like moms house.It is not all of Minneapolis and not all of the twin cities, but just certain parts. The evictions occurring all at once will have a temporary blip in the vacancy rate, but should not be a long term effect. In general there are not any more people that need to evicted, those that need to be evicted are the same as before we will just see all of them at the same time. We have already seen the responsible renters voluntarily leaving.

Daniel Anshus · Answer

I recently attended a webinar on this very subject put on by my local Realtor association (MAAR). They use nothing but data to explain what is going on and what may happen down the line. The fact of the matter is for every person trying to "flee" Minneapolis many more people are moving in. I will attach an info-graphic that I took during the webinar that shows that even through Corona and riots the Minneapolis housing market has boomed.

Anthony Vicino · Answer

As long as there are people willing to pay pre-Covid prices, not much will change.Unfortunately, that's the majority of investors.

Jordan Moorhead · Answer

I agree with @James Hamling on this one @Frank Hinck. Unfortunately the simple equation of supply and demand shows that considerably more people want to buy homes in the twin cities than want to sell. I may be wrong because I too cannot see the future but I don't see a massive downslide happening in the country and especially not in MSP. NYC and San Fran may be different than us, I hear NYC is having issues right now. Until there is more inventory than there is demand we will continue to be in a sellers market where we are and have been for the previous 4-5 years.