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December 2020 Home Prices

Seven straight months of double-digit increases in pending sales

MINNEAPOLIS (Jan. 12, 2020) – Home sales in Minnesota continued to outpace normal trends through the end of 2020. Closed sales in December rose +21.9% versus December 2019 with a total of 7,300 transactions across the state. Pending sales were also riding high with 5,118 in the pipeline, up +19.2% over a year ago.

Although new listings increased in December 2020 by +14.9%, the number of homes for sale dropped -46.1% compared to December 2019. As buyers competed for scarce inventory, the median sales price increased +10.4%, and properties averaged 43 days on the market, down -21.8% or 12 days less than December 2019. The shortage of properties pushed the average sales price up +9.9% statewide to more than $320,000, with sellers receiving 98.5% of the original price, a +2.4% increase over last year.

“The strong finish to the year stands in stark contrast to the turbulent first quarter when the spread of COVID-19 disrupted the economy and greatly slowed the housing market. As the recovery got underway in May, many buyers were highly motivated to find more spacious homes after months of lockdown imposed by the pandemic,” said Chris Galler, CEO of Minnesota Realtors. “Historically low interest rates fueled frenzied competition for diminishing inventory, making multiple offers the new norm. This level of activity has not been seen in Minnesota for 15 years.”

Overall, total pending sales for the full year 2020 totaled 94,474, up +10.6% over 2019. Closed sales reached 92,576 for the year, marking a +8.4% rise. The number of homes available for sale, however, declined -46.1% from the year before. And while new listings expanded to 106,873 properties—a +2.7% increase—they could not match demand. By the end of 2020, there were 8,403 homes for sale, which was -46.1% or 8,403 fewer homes for sale than 2019.

As market activity increased, so did the price range of homes. More than 9,700 properties sold for $500,000 and above, a +33.4 increase above 2019. By contrast, the percentage of homes in the $150,000 to $200,000 range dropped by 14.1%, with only 6,810 homes sold.

“All the indicators strongly suggest that buyer demand will remain high well into the 2021 selling season. We anticipate that mortgage rates will remain low, and buyers highly motivated to find affordable homes,” said Galler. “The only thing holding the market back is consistently sluggish inventory. That is unlikely to change until we innovate an intelligent, market-driven response that meets consumer demand. It will be a win for everyone that drives our industry forward.”

December year-over-year summary:

  • Closed sales: +21.9% to 7,300
  • Median sales price: +10.4% to $277,00
  • Average sales price: +9.9% to $320,551
  • New listings: +14.9% to 4,086
  • Pending sales: +19.2% to 5,118
  • Days on the market: -21.8% to 43 days
  • Homes for sale: -46.1% to 8,403
  • Months supply of inventory: -50.0% to 1.1

2020 year-over-year summary:

  • Closed sales +8.4% to 92,576
  • Median sales price: +8.3% to $275,000
  • Average sales price: +8.3% to $315,348
  • New listings -2.5% to 106,873
  • Pending sales +10.6% to 94,474
  • Days on market -8.2% to 45 days

Closed Home Sales Across Minnesota by Region

With one exception, every region saw double-digit increases in year-over-year closed sales. Even the Upper Minnesota River Valley — where sales were down -11.8% in November —overcame the deficit and ended 2020 with a +2.7% increase. See chart below for more details comparing December 2020 to December 2019.

housing report graph

The seven-county Twin Cities region comprises Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington counties. The official Minneapolis-St. Paul-Bloomington metropolitan statistical area recognized by the Census Bureau consists of 16 counties, which is what MAR & SPAAR local associations report on.

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Budgeting For Home Remodeling In 2021

From budget and finance to dealing with any unforeseen issues, here are some of the key things to know about home renovations and maintenance as noted in Inman news 12/31/2020.

2020 was the year of renovations for many homeowners. There were many transformations including kitchen updates, converting a bedroom to an office, and updating indoor and outdoor entertaining spaces.

When creating a budget, base it off of a worst case scenario (where you may need extra materials, your choice of materials may be out of stock or delayed, or an additional contractor may be required to repair any unforeseen issues that came up during the renovation).

Create an initial budget, but be prepared to potentially set aside 3 times that amount just in case for those unexpected issues that may arise.

Kitchens are the most popular renovation project with the average cost right around $25,424. The price can vary depending on the size of the project, but can range from $4,000 – $60,000. A quarter of the budget would cover labor, with cabinetry & fixtures ranging about $6,000 or more,  appliances $3,200 or more, and countertops $2,300 or more.

Bathrooms are the 2nd most popular remodel with a price tag averaging around $10,718. For a smaller bathroom the price could be as low as $3,500, but a larger grand master suite bath could be as high as $25,000 or more. Half of the budget would go to labor, $300 – $3,800 for a vanity, $300 – $3,000 for a shower/bath, $200 – $1,800 for fixtures, $200 – $1,350 for flooring.

Home offices were another popular remodel during 2020, while offering a possible tax benefit (see your personal accountant on how to calculate any tax benefit there may be for you). The cost range for this was $5,000 – $22,000, and was based on whether there was need to build an addition, or renovate an existing room. Desks, cabinets, and built-ins ran $1,200 – $3,900, connectivity & hardware $100 -$3,000, and soundproofing $1,000 – $2,4000.

Backyard entertaining also saw an uptick. This included: pools, pool houses, decks, porches, sunrooms, and outdoor kitchens. For a full backyard entertainment oasis having a majority of those features, home owners were looking at a price tag starting in the 6 figures.

When homeowners properly budget for a renovation, consider the cost of materials and labor, while also adding on for any unforeseen maintenances issue that may come up during any home renovation project.