Lessons from the RREAR Pt. IV
Once again, we pick up here where we left off with the fourth part of our new series: Lessons from the RREAR, where we dig deeper into the data found in our Annual Residential Real Estate Activity Report.
This is the fourth post in the series, so it's kind of like Led Zeppelin IV, only with fewer 9-minute meandering acoustic tracks about hobbits and more analysis of housing market activity. Other than that, they're completely identical.
Today's subject: New Construction Sales.
The new construction market reached its fevered peak in 2006. It was a wet n' wild ride for several years, with every day bringing news of a new housing development springing up from the cores of the two downtowns to the fringe exurbs to the first-ring infills.
But now builders have wisely stepped back. New construction inventory in the MLS has declined by around 25% in the last year, and 2008 should prove to be one of the lowest years on record for new building permits. All this adds up to a rebound in market share for previously owned homes. While the region's population is still growing, the demand for new owner-occupied housing units appears to have been satiated for now, and builders are refocusing on selling their existing inventories.
Below are the Top 20 Areas in New Construction Market Share -- in other words, the highest share of total closed sales in 2007 that were new construction. These are the spots in the Twin Cities where the builders are still active (or were last year):
| MLS Code | Area | % New Construction |
| 398 | Victoria | 53.8% |
| 302 | Mpls – Central | 45.0% |
| 307 | Mpls – Phillips | 39.0% |
| 705 | Lino Lakes/Hugo/Centerville | 34.8% |
| 741 | SP – Downtown/Capital Heights | 34.5% |
| 310 | Mpls – University | 31.6% |
| 341 | Wright County (except Buffalo) | 31.5% |
| 756 | Elk River | 30.3% |
| 760 | Ramsey | 28.3% |
| 646 | Jordan | 28.2% |
| 630 | Northfield | 26.8% |
| 367 | Hennepin–North | 25.1% |
| 726 | Woodbury | 24.4% |
| 648 | New Prague | 24.2% |
| 379 | Bloomington–East | 24.1% |
| 394 | Carver County | 23.4% |
| 616 | Rosemount | 23.0% |
| 650 | Belle Plaine | 22.7% |
| 368 | Hennepin–Northwest | 22.3% |
| 764 | Blaine | 20.8% |
Below are the Bottom 20 Areas in New Construction Market Share. These are the areas where stability reigns:
| MLS Code | Area | % New Construction |
| 363 | Brooklyn Center | 0.0% |
| 605 | Sunfish Lake | 0.0% |
| 618 | Eastern Dakota County | 0.0% |
| 768 | Fridley | 0.0% |
| 771 | Spring Lake Park | 0.0% |
| 772 | Lexington/Circle Pines | 0.0% |
| 744 | SP – Como | 0.4% |
| 303 | Mpls – Longfellow | 0.9% |
| 378 | Richfield | 1.0% |
| 728 | SP – Riverview/Cherokee | 1.1% |
| 750 | SP – Mac/Groveland/River Road Area | 1.1% |
| 380 | Bloomington–West | 1.2% |
| 373 | Golden Valley | 1.2% |
| 301 | Mpls – Camden | 1.9% |
| 361 | Crystal | 1.9% |
| 748 | SP – Town & Country/Merriam Park | 2.0% |
| 769 | Anoka | 2.2% |
| 742 | SP – Central | 2.2% |
| 765 | Arden Hills/Shoreview | 2.3% |
| 309 | Mpls – Southwest | 2.4% |
For a look at the geographic boundaries of these MLS areas, visit here. And stay tuned in the weeks ahead for more Lessons from the RREAR.
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