- A low inventory market means tight competition for homebuyers across Minnesota and western Wisconsin
- Buyers who have a flexible timeline, but prefer to exert more control over the buying experience, may want to consider new construction
- Buyers on a budget shouldn't rule out new home developments; the Twin Cities north metro is seeing a boom in lower-priced, newly built homes under $300,000
In today's market, happy sellers are benefiting from a shortage of homes on the market — while eager buyers are forced to move quickly as they compete over low inventory. This frenzied buying environment can be stressful for buyers who'd prefer to take their time or wait for a home that perfectly matches their needs.
For these buyers, a rise in new construction permits may be welcome news. Below are insights on how an increase in new construction across the Twin Cities can benefit homebuyers who want to avoid a bidding war and don't mind waiting on their dream home.
How construction is (slowly) easing the burden of low inventory
Before the market downturn, new construction across the country and in the Twin Cities was booming. There were more homes being built than there was market demand. Home builders who suffered losses when the market corrected are taking more care to ensure inventory closely aligns with buyer demand.
"Our new construction market is still gaining momentum, but it's a clear ‘natural market' where builders are meeting buyer demand," says Randy Bacchus, Edina Realty's Director of New Homes and Commercial Development. "Buyers who are stressed by the frenzied low inventory market on existing homes may find that new construction offers more control and less stress throughout the buying experience."
The main catch, of course, is that new construction development takes time. Depending on how much customization is requested by the buyer, new construction homes typically take between three months and one year to complete.
What are the benefits of new construction homes?
When working with a REALTOR® to buy a home, it's common to create lists of "must-have" and "nice-to-have" features. The goal is to find a listing that matches all your must-haves, and it's icing on the cake if a home has the secondary features you'd like to have.
In a low inventory market, buyers may feel that they're settling more than they had hoped. Whether it's a small sacrifice, like having a downstairs laundry room or a big change, like buying a split-level when you swore you'd only look at traditional two-stories, it can be difficult to make a clear-headed bid when you know the home is likely to attract multiple offers.
"New construction puts buyers in the driver's seat, which they aren't able to do in a low inventory market of existing homes," says Bacchus. "Everything is new, shiny and completely customizable — from the flooring to the cabinets to the appliances. And even better, new homes come with warranties, so buyers won't have to worry about any upfront repairs."
What can buyers expect to pay for a new home?
The top five markets for new construction — Lakeville, Plymouth, Blaine, Woodbury and Lake Elmo — offer a wide range of price points, beginning in the low-$300Ks and rising to nearly $1 million.
However, there is a fast-growing segment of new homes in the Northeast and Northwest Metro that are available for under $300,000. In these areas, 29 percent of new construction homes in that price range were attached homes (twin houses or town houses), while 71 percent were single family homes. Over the last six months, the top ten metro cities for sold new construction homes priced under $300,000 are:
- Big Lake
- Elk River
- New Richmond
Source: Northstar MLS
Buyers believe that new construction homes come with a big budget, but that's not always the case. In seven of the 10 above fast-growing new construction markets, the median home price was under $230,000.
Thinking of new construction?
Buying in this special market segment is a breeze when you work with a new construction expert. Reach out to our Customer Care Team to be matched with a new homes expert in your desired area.
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