The last few years have been full of surprises for our local housing market. First, we saw a bargain buyers’ market with a high percentage of short sales and foreclosures driving low prices. Next, we saw inventory stall and increasing prices, create a market with a sellers’ advantage. Here’s what’s happening in the Minnesota and western Wisconsin housing market now.
1. Multi-generational homes are rising in popularity
Baby boomers are often called the “Sandwich Generation,” because they are simultaneously caring for their aging parents and their young adult “boomerang” children, who are commonly moving back home. This phenomenon has expanded to housing in the last few years and we are seeing a major increase in multi-generational living.
Thirteen percent of 2014 buyers nationwide purchased a home suited for multi-generational living (National Association of REALTORS®). In Minnesota, this number was last measured in 2013 and showed that 10 percent of statewide buyers were purchasing multi-generational homes.
So, what are the common features of these types of homes? Often, they have a separate entrance to a private unit that includes a bedroom, small living area, kitchen and bathroom. These apartments offer a private, attached home for aging parents or younger family members who’ve moved back in. When the house doesn’t have a “mother-in-law” unit, it may include flex space on the first floor that can be easily converted to a bedroom, if necessary.
2. Senior housing rates are rising – even for those who aren’t yet retired
Members of the “Sandwich Generation” aren’t just taking care of their extended family. Many of them are also preparing early for retirement by buying homes in active senior communities or single-family homes equipped for retirees. In fact, 13 percent of home purchases by homeowners aged 50 and older were for senior-friendly homes and active senior communities (National Association of Realtors).
Senior-friendly single family homes usually include hallways, bathrooms and kitchens wide enough for wheelchairs to pass through. These buyers are also looking for ramblers so they can avoid stairs as they age. Meanwhile, chic retirement homes are popping up all over the Twin Cities and beyond, offering transitional amenities and a sense of community. Many younger seniors are happy to ease into retirement by purchasing a stake in these communities, which rarely resemble the “nursing homes” of the past.
3. The number of For Sale By Owner properties is decreasing
As the market continues to balance out, fewer homeowners are choosing the For Sale by Owner (FSBO) route. In Minnesota, only 9 percent of homes were listed FSBO in 2013.
We Midwesterners are a friendly sort, so it’s unsurprising that 75 percent of FSBO sellers statewide knew the buyer in advance of the sale. Nationwide, only 44 percent of FSBO sellers were previously familiar with their home’s buyer.
Because we have such a high rate of “friendly sales” in the FSBO segment of the market, only 2.25 percent of total sales in Minnesota were For Sale by Owner homes where the seller and buyer did not know one another (Minnesota Association of Realtors).
The National Association of Realtors reports that across the nation, sellers using an agent earned 25 percent more on their sale than FSBO sellers, which is enough to cover an agent’s commission and still have plenty left over. And there are so many other benefits to enlisting the help of a professional when selling your home: from staging advice to marketing your property and showing it to qualified buyers, a Realtor can take a lot of stress out of a complex process.
4. Luxury sales are the fastest growing segment of the market
In October, nationwide sales of homes priced at $1 million and above were the fastest growing segment of home sales. There is no mistaking it, luxury home sales are on the rise and we’re seeing that trend locally as well.
In Edina Realty’s market area of Minnesota and western Wisconsin, we consider homes priced at $500,000 and above to be in the luxury homes segment. In November 2014, local luxury homes sold 19 percent faster than they did one year ago, with a median of just 66 days on market, down from 82 days in November 2013 (Northstar MLS).
Low mortgage interest rates over the last year have made it easier for buyers to get more home for their dollar. If you’re thinking of buying a luxury home, do it now to take advantage of the still-low mortgage interest rates.
What it all means
It may seem that upticks in multi-generational housing and senior housing, fewer FSBOs and an increase in luxury home sales have nothing in common. However, it’s important to remember that each of these contingents represent a sense of choice for today’s home buyers and sellers. This is a victory for our local housing market. While many felt “stuck” during the market correction, our improved local economy is showing that today’s homeowners and buyers have options as they enter the marketplace.