Home sales are up significantly in southwest Minneapolis neighborhoods compared to 2014.
Closed sales jumped 34.5 percent in southwest neighborhoods in March compared to a year ago, according to the Minneapolis Area Association of Realtors (MAAR). The median sales price has also increased 10.5 percent — $329,250 compared to $297,900.
MAAR defines the southwest market as Armatage, East Harriet, Fulton, Kenny, Kingfield, Linden Hills, Lynnhurst, Tangletown and Windom.
The Calhoun-Isles real estate market is also strong. Closed sales jumped 32 percent in March compared to a year ago, and the median sales price went up 22.2 percent, according to MAAR. The median sales price in March was $420,250 compared to $344,000 the same period in 2014.
The Calhoun-Isles market includes Bryn Mawr, Calhoun (CARAG), Cedar-Isles-Dean-East Calhoun, East Isles, Kenwood, Lowry Hill, Lowry Hill East (Wedge) and West Calhoun.
Tom Meckey, branch manager for Berkshire Hathaway Home Services, said the lack of inventory for first-time homebuyers remains low in southwest.
“It seems like everything that comes on the market get sold in multiples,” he said. “There is a lot of inventory of homes in the upper bracket, but when you get into homes priced under $500,000 — there is not a lot to choose from. It has been that way for a while now and does not seem to be changing.”
Jim Grandbois of Lakes Sotheby’s International Realty said the southwest market is the strongest he’s seen it since he started in 2002.
“Buyers are tuned into quality of life more than ever, so walk ability and a sense of community seem to be the biggest draws to our area,” he said. “The outdoor life around the lakes and parks and parkways really add to that, and as more great restaurants and shops open in the area the demand increases, and the community keeps getting better. I have lived in my home in Linden Hills since 1981 and I have never seen this much feeling of community, and buyers love that.”
He said he’s seeing a high demand for turn-key homes.
“My sellers have been great at preparing their homes for sale, and buyers notice,” he said. “Of the four homes I have put on the MLS in the past week, three are under contract and the fourth has only been on one day. All three under contract were beautifully prepared and had strong interest right away, another sign of the strength of this spring market.”
The market trends mirror those across the Twin Cities. The number of signed purchase agreements in the 13-county metro region increased by 30 percent in March — the largest increase in pending sales since August 2011 and the highest in March since 2005, according to a recent update from MAAR.
The median sales price also rose to $210,000 — a 10.5 percent increase.
“It appears that both the buyers and sellers really came out swinging last month,” said Mike Hoffman, president of the Minneapolis Area Association of Realtors.
“While some of this activity is driven by interest rate risk, that doesn’t explain the magnitude of these increases. People — including millennials — are proving that the dream of home ownership is alive and well.”
The role of foreclosures and short sales continues to decline as well. Traditional new listings accounted for 92.2 percent of the seller activity, according to MAAR. Meanwhile, traditional sales made up 84.9 percent of closed sales, a level on par with late-2007 activity.
Mortgage interest rates continue to hover around 3.7 percent. The Twin Cities job market continues to be strong with a unemployment rate around 4 percent.
“The numbers are certainly consistent with the sense of urgency and eagerness out in the community,” said Judy Shields, MAAR president-elect. “Pent-up demand and delayed purchase activity is certainly being unleashed this spring.”
In the southwest market, the neighborhood with the biggest increase in sales activity compared to a year ago was Tangletown. The neighborhood with the biggest jump in median sales prices was Lynnhurst — $495,950 in March compared to $278,500 in March 2014.
Overall, homes in this submarket were on the market an average of 96 days. The average price per square foot was $194.
In the Calhoun-Isles market, East Calhoun had the biggest bump in closed sales and Lowry Hill East (The Wedge) had the biggest gain in the median sales price — $351,000 compared to $198,500.
Homes are on the market for an average of 151 days and the average price per square foot is $217.
The apartment market also remains strong with new developments concentrated in Uptown and downtown Minneapolis.
The vacancy rate remains around 3 percent despite the influx of new inventory, according to the latest Twin Cities apartment market report from Colliers International.
Another 5,000 to 6,000 apartments are expected to be available this year, according to the market update.
The Uptown rental market is seeing higher vacancy rates than other submarkets given the increase in new high-end developments, according to the Colliers report. The vacancy rate is expected to hover around 7 to 10 percent throughout 2015 and possibly 2016 as new units take time to absorb.
“Nevertheless, the mid and long-term outlooks for absorption are rosy according to many analysts, lenders and developers as the Twin Cities market is typically cautious and quick to pull back once overbuilding concerns are voiced loudly enough,” the report stated.
Rent prices throughout the Twin Cities rose 3.5 percent the first quarter of 2015 compared to the same period in 2014, according to a market report by Marcus & Millichap. The average rent was $1,059 a month.