An Analysis of Minneapolis vs. National Real Estate Markets
I read an article on the national real estate market, linked from The Weekly Standard.
Unlike most articles though, it does more than just list the problems and point fingers: It also suggests a 3-pronged approach to resolving the problem in the housing market. This is rare, as most people are not up to sticking their necks on the line, for fear of being made a fool of. This is logical, for as the article accurately (I think) points out, we’ve not yet been in a comparable position within the housing market, ergo we do not have previous data by which to go by.
This article is written by Lawrence Lindsey. In it he makes several well-known good points:
- Homebuilders built too many homes
- Prices rose too high and
- Credit standards were too low
A strong point the article makes is that our government is financially propping up builders, which gives them the ability to build more homes, which at this point is the last thing we need.
Also included though are three groups Lindsey suggests can or will help repair our market. He also explores these groups a bit in depth and elaborates what he means. The groups are;
- Inflation hedgers, aka speculators
- Foreign Investors (proper property investors)
- Proper government intervention
Further into the article, you get the money quote:
“Now is not the time for ideology from the left wing (soak the rich, punish speculators, and conduct a witch-hunt through the financial community) or the right-wing variety (stave off government involvement of any form).”
I agree that neither of these extremes would help.
Obviously the Minneapolis metro market is a bit different than the national market as a whole. It can best be described as a teeter-totter. You have the East and West Coast at the ends of the plank…they go way up and when they come down, they go way down. The midwest is more like the center of the teeter-totter, we have the ups and downs, just not to the extremes that they do on the ends (East coast and West coast) of the teeter-totter.
Within the Minneapolis metro area, certain parts of the Southwest lakes area and East Edina remain very strong. When a good listing comes on the market, it often sells very quickly. When you start pushing out further into the suburbs, especially the 2nd and 3rd tier, the market changes quite drastically. Also, North Minneapolis, certain parts of Northeast Minneapolis, the condo/townhome market and 1st tier Northern suburbs are much slower.
The rule of thumb, try to stick to the areas that historically remain strong: West Bloomington, East Edina, Southwest Minneapolis – especially around Lake of the Isles, Lake Calhoun and Lake Harriet. Great neighborhoods of the Southwest and East Edina area (by name) are: Kenwood, Lowry Hill, Linden Hills, Fulton, Armitage, Lynnhurst, Minnekada Vista, Fern Hill, Morningside, Country Club and a few others of the Southwest and East Edina area.
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