November market stays hot for Twin Cities homebuilders

A fall rebound continues for Twin Cities area homebuilders.

During November, 736 building permits were issued to build 1,558 units across the metro, according to data compiled by the Keystone Report for Housing First Minnesota. That was a nearly 17% increase over last year.

Those figures included 701 permits to build single-family homes, an 8% increase over last year. That gain helped make up for a slow spring due to pandemic-related slowdowns in showings and construction. So far this year single-family permits are slightly ahead of 2019.

"Homebuilders are still catching up and pulling permits from an increase in sales this summer and fall," said Gary Kraemer, president of Housing First Minnesota, in a statement.

Multifamily construction — mostly market-rate rental apartments — has been weaker and more volatile this year. During November enough permits were issued to build 857 units, a quarter more than last year.

So far this year, however, total multifamily construction is down 16% as developers re­assess their plans during what's been a difficult year for rental properties.

A single permit can be issued to build more than one unit and those figures have been erratic from month to month.

Homebuilders are riding the coattails of a surge in existing home sales throughout the metro.

But because buyers outnumber sellers in some parts of the region, many buyers are considering new construction.

Builders are also the beneficiaries of a growing desire for suburban houses that offer bigger yards and more space for home offices.

"Buyers are looking for more inventory," said Jim Schwarz, a Twin Cities sales agent who works with several homebuilders. "I'm seeing more buyers downsizing and moving into smaller homes, townhouses and condos with nice finish levels and maintenance-free living."

Schwarz has been marketing a 10-unit townhouse redevelopment in Eden Prairie called Sheldon Place, which has been appealing to buyers who want to move out of the Twin Cities and into the suburbs.

The project was built on a small infill site in an established neighborhood where there was little room to establish dedicated parking.

The solution, Schwarz said, was to give each homeowner a traditional two-car garage with storage, plus a covered carport with two additional parking stalls.

And to make the units appealing to those who want to age in place, the units come with an optional elevator.

Though the model is complete, three units are still under construction and five are yet to be built. One unit has already sold.

"We thought it would be a traditional empty-nester neighborhood," Schwarz said. "But it's resonating with many types of buyers including some that are looking to exit Minneapolis and move to the suburbs."