We’re in the midst of a construction boom here in the Twin Cities, but it’s not in the single-family housing Market, where we need it the most. It’s apartment developers that are spearheading this building boom.

This year, apartment buildings are forecasted to increase by over 30%, up to 5,600 units, the highest number of new units in almost 30 years. Mostly all of the buildings will be considered “upscale” and will be built in the suburbs.

In Minneapolis, developers are breaking ground on 528 units, predominantly in the Near North, Philips, Northeast, Prospect Park, Longfellow and Nokomis neighborhoods.

Cause for Concern

This uptick in the development of rental properties can negatively impact the home ownership market. Traditionally, a preponderance of rental properties has often brought down housing prices. Renters are seen as more transient, not participating in their neighborhoods in the same way that homeowners do. Owners are expected o remain in their communities, giving the neighborhood a desirable longevity and heightened sense of safety.

Homeowners are more of a force politically, and therefore have the power to make changes in the neighborhood that positively impact the community as a whole. Renters, it’s thought, just don’t have the same power to promote change.

The Issue of Inventory

Construction is most needed in the single-family housing market, where inventory is historically low.

Before the housing market crash almost a decade ago, we typically saw more than 20,000 homes for sale at any given time in the Twin Cities. By 2016 however, available homes fell to between 11,000 and 15,000 at any time. Most forecasts show that this dip will continue through 2017.

In the Twin Cities’13 County regions, 60,000 homes were sold last year. In December 2016, the median sale price was $229,000, which is up from $220,000 from December of 2015. In December 2016, homes that were priced under $200,000 accounted for 1/4th of the housing market’s inventory, with almost 40% of the sales. Houses that were priced between $200,000 and $400,000 constituted 40% of the homes on the market, but only half of sales.

These Increased sales prices resulting from low inventory can cut out first-time homebuyers, who generally can’t afford the higher prices, form the market, Only buyers with plenty of cash on hand, capable of making an offer on the spot, have the best chances of landing a home.

With the influx of rental properties and the lack of affordable homes, we could find ourselves in a peculiar position: renters, looking to take their first foray into home ownership, could have to return to renting life as a result of not being able to afford the high cost of home ownership in such a highly competitive market. In our low-inventory market, more rentals could hurt homeowners chances to sell their homes.

If you are a seller in Minneapolis-St. Paul and your asking price is on the high side, you may have a challenge selling, in spite of the rental housing boom. This Is Where We Buy Ugly Houses can help. Regardless of inventory fluctuations, We Buy Ugly Houses will buy your house as is, hassle-free. Contact the real estate professionals at We Buy Ugly Houses today.