Real Estate Week in Review
Average long term US mortgage rates are back down after hitting their highest levels this year (Average US rate on 30-year mortgage eases to 4 percent; 15-year rate at 3.23 percent, Star Tribune Your Money, June 18). On Wednesday, the Federal Reserve appeared ready to raise interest rates for the first time in nearly a decade, due in part to Tuesday’s government report that home construction rates remain significantly higher than a year ago. Many hold “the belief that the economy no longer needs the stimulus of near-zero rates.” Nonetheless, the housing market has been “bolstered [by] the economic improvement and stronger employment picture,” and remains strong for both buyers and sellers.
An analysis of the Twin Cities home prices provided by MAAR reports that home prices are within 6.3% of their record high seen in June 2006 (Twin Cities Home Price Analysis, Minneapolis Area Association of REALTORS, June 18). Prices have a long term trend of increasing 5% yearly (nominal, not adjusted for inflation). “This market is not fueled by irrational, unjustified speculation and exuberance—a leading cause of bubble-itus,” MAAR reports, “rather, it is fueled by low interest rates, rising rents, job growth, a diverse and robust local economy and slowly rising incomes.”
In area developments, the Timberwolves and Minneapolis have signed a redevelopment agreement for the $129 million renovation of the Target Center (Timberwolves, Minneapolis sign Target Center redevelopment pact, Minneapolis / St. Paul Business Journal, June 19). Detailed design work will begin, with the bulk of the project expected to start in 2016 and wrap in 2017, said the Timberwolves and the Minnesota Lynx in a statement on Thursday. The Target Center is said to be the 6th busiest building in the nation and the 17th busiest in the world, hosting 200 events and a million visitors annually.