Why can’t we think outside the big house box?

tiny house

There is a housing affordability crisis in the Twin Cities and all over the country. I think that tiny houses and micro-apartments might be a solution.

There isn’t really an agreed-upon definition for a tiny house.  I think of homes that are less than 500 square feet and have found many that are less than 300 or even 200 square feet of finished living space. When they get down to 100 square feet they seem too small to call home.

These dwellings are much less expensive than a more standard size house. The idea is to spend less on housing and have fewer belongings and more time to spend doing something besides working for money and accumulating stuff that requires space.

Smaller houses also cost less to heat and cool and to insure. They require less maintenance and less furniture.

On average people who own tiny houses have money in the bank and many of them have no mortgage.

Today isn’t at all unusual for first time home buyers to be looking for at least 2000 square feet and the averages for new construction, at least in the burbs is closer to 2400 square feet. They don’t have enough stuff to fill it up so they start acquiring and accumulating.

Some studies have suggested that families who live in tighter quarters get along better because they spend more time together. Yet the most common reason for wanting a bigger house is to have room for children.

Many of the tiny houses are mobile and can be moved to a lot. Of course in the city, you mostly can’t do that but in some parts of the country the demand for tiny houses is changing local zoning laws, but in St. Paul laws are slow to change.

Having a tiny house far away from the city isn’t as sustainable as having it in the city close to amenities and jobs and perhaps using public transportation.

Accessory dwellings units, which are tiny houses in people’s back yards have been permitted in St. Paul, since 2016. I have seen a few. They can only house relatives or be used as offices or studios.

Adu – from the city of St. Paul web site

I think there is a market for tiny condos in downtown St. Paul. There are spaces that are less than 500 square feet. They are never marketed as tiny condos but they should be. Most have full-sized kitchens which really seems like a waste of space. Why not have a galley kitchen? I like the idea of a Murphy bed too or a sleeper sofa that can double as a place to sit.

When something comes on the market in the area that is small I usually go see it. We all have the idea of a dream house, I dream small.

There are numerous websites dedicated to tiny houses and they can be built from kits that can be ordered online but there aren’t any kits for tiny condos. 🙂 We are not seeing micro-apartments yet but they are sure to travel from the coasts and make it inland in the next decade or so and eventually maybe we will be able to put some tiny houses on city lots.

Small houses on small lots

Street Seal Coating

We got a bill from the city of St. Paul for $430+ dollars for seal coating the street. That amount was just our share. Seal coating must be very expensive. The city returned the money and said we should ignore the bill because our street wasn’t seal coated in 2019. We knew that.

The city does have a handy seal coating map. If they stay on schedule we can look forward to sending them a check at the end of the year. 2020 seal coating rates have not yet been set. I am thinking they will be higher rather than lower.

If you would like more information about the city seal coating program type “St. Paul seal coating program” into Google search. I would include a link but like most government entities the city frequently moves pages around so that I end up with broken links.

Yea St. Paul!

sealcoating map - st. paul
St. Paul seal coating map

Features buyers want in homes

old house with steeple
Queen Anne house in St. Paul

Here are some of the features home buyers are looking for according to a survey the National Association of Home Builders. The good news is most of them can be added to any existing home. A walk-in pantry might be a challenge but several items on the list are easy to do.

  • Laundry rooms
  • Energy Star–rated windows
  • Hardwood flooring
  • Walk-in pantries
  • Patios
  • Ceiling fans
  • Kitchen double sink

New construction in the five-county metro area costs an average of 610,000. The most expensive item on the list is the laundry room.  The average cost of adding a laundry room is about $6000.

New homes built in the five-county metro area in 2019 had 3.57 bedrooms, 3.19 baths and an average of 2725 square feet of finished living space. Almost twice as big as my little antique St. Paul home with the unfinished basement where there is plenty of space for a laundry room.

How many Realtors are there?

REALTORS are members of the National Association of REALTORS. The word REALTOR is often confused with the job title “real estate agent”. I like to think of the word as a brand name.

Here in the Metro area, most real estate agents are REALTORS. The number of REALTORS peaked at 1.38 million in 2007 which was just after the housing market peaked and as it was starting to crash.

Membership numbers dropped to slightly less than a million in 2008. I remember it well. Some members got jobs if they could find them and others were able to retire.

In 2018 membership numbers reached a new high and as of 2019, there are 1.4 million members nationwide. Membership growth has slowed. Home sales have declined as fewer homeowners are selling.

In Minnesota, membership numbers peaked at 25,400 in 2006 and went down to 16,071 by 2012. The latest numbers I can find showed that there were 19,752 members in 2017.  California and Florida have the largest number of REALTORS.

graph of NAR membership
REALTOR membership numbers

Real estate agents learn on the job. By hiring an inexperienced agent you are giving him/her/an opportunity to learn on the job. If you would rather not provide a learning experience there are plenty of qualified and experienced agents to choose from.

Residential Real Estate Predictions for 2020

It wouldn’t be new year’s eve without some predictions for the new year.

The local housing market should remain pretty much the same as it was in 2019 a strong seller’s market. Home prices will continue to rise but more slowly.

I can’t see anything on the horizon right now that might change that. There is little new construction in St. Paul and the demand for housing is higher than the supply. Interest rates should remain low throughout the year.

On a national level, the National Association of Realtors (NAR) chief economist Lawrence Yun says “Annual median home prices are forecasted to increase by 3.6% in 2020 and by 3.5% in 2021. NAR Chief Economist Lawrence Yun. “Real estate is on firm ground with little chance of price declines,”

“Apartment rents are expected to rise by 3.8% and 3.6%, respectively, in 2020 and 2021. According to the group of economists, annual commercial real estate prices will climb 3.6% in 2020 and 3.4% in 2021.”

Economists are predicting that there is a 29% chance of a recession.

“Sales of new homes probably will rise to a 13-year high in 2020 as the U.S. dodges a recession, according to Lawrence Yun, chief economist of the National Association of Realtors.

Yun is also predicting loosening of the inventory of homes for sale which will cause the number of home sales to increase in 2020. That may be the case on the national level but it is unlikely to happen in the Twin Cities area in 2020.

I am relatively confident that we won’t see a 13% rise in new construction either. New construction homes in the area ten to be very expensive and most home buyers can not afford them.

There are currently 1775 new construction homes that were built in 2018, 2019 or are currently under construction in the seven-county metro area. The average list price is $608,780, which is almost double the average price for homes in the metro area. Median home sale prices in the area were $270,000 in 2019 whereas new construction home sale median prices were over $400,000.

The demand for affordable housing continues to rise. The cities of St. Paul and Minneapolis both have affordable housing initiatives.



Home sales in the 2010s

The last ten years have been a wild ride. In St. Paul housing prices hit a low in 2011. It was after the great recession ended and after the federal income tax incentives in 2010 expired.

Home prices and home sales went up in 2012 but remained lower than they were in 2009.

For a time we thought 2009 was going to be the bottom of the market but it wasn’t. Here is a chart made with data from the NorthstarMLS which is deemed reliable but not guaranteed. The data represents a very high percentage of local home sales.

2011 was the best year of the 2010s to purchase residential real estate.

Graph that shows home prices
Median home sale prices 2010 through 2019