By: Jon Ryan – Dwell Realty Group – 8/8/2017
What’s happening in the Rochester, MN real estate market?
You’ve probably heard it said a lot around Rochester, “Our inventory is so low right now!” When demand is rising with a growing population, and the supply can’t keep up, what happens? Home prices go up! Multiple offers are the new normal when a decent listing hits the market. See the chart below showing the real MLS numbers of our supply over the last two years.
So what is the solution to our low supply?
New residential developments.
So why aren’t developments being built faster?
The cost to develop is outrageous and frankly not always the most profitable venture. The supply and demand issue is not only happening in the real estate sales world, but the construction arena as well. Contractors cannot keep up with the current demand for skilled labor. There are also some grumblings around town about the turnaround time for building permits and some displeasure with the dollar amounts on fees from the City of Rochester. Building code is getting more and more strict which is great to protect the quality of our buildings, but that doesn’t come without extra expense to our projects. Result of that is higher sale prices to consumers.
It will be interesting to see how this supply and demand teeter-totter balances itself out over the next few years and how the market as a whole is affected by it. If you are thinking about getting into the construction trades, now might be the time to capitalize on mass amounts of opportunity. Cities can’t grow without a good base of blue collar workers.