Dive Brief:
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Toronto-based homebuilder Mattamy Homes has agreed to sell the majority of its land assets in Minnesota to CalAtlantic Homes and M/I Homes, both strong players in the Midwest housing market, for an undisclosed sum, according to the Minneapolis/St. Paul Business Journal. The deal is expected to close in April.
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The builder will develop unfinished lots and build and service the homes of current customers. It will use the proceeds from the sale to purchase land in new or existing markets as it looks to double the size of its U.S. operations in the next five years.
- In March 2016, New Jersey-based K. Hovnanian Homes made a similar move, exiting the Twin Cities market, along with Tampa, FL, Raleigh, NC, and San Francisco, in an effort eliminate debt and reinvest in other markets, the Star Tribune reported.
Dive Insight:
While the Twin Cities region, like many other major U.S. metros, is experiencing a shortage of available housing, the market there is looking up.
Average home values in the Minneapolis–St. Paul market rose 6.5% to $236,200 in 2016, while 9.8% of homes listed there saw their prices cut, according to Zillow. Homes there spent an average of 83 days on the home-listing website, compared to between 50 and 60 days in the tightest markets and more than 100 in the least competitive.
Inventory in the Twin Cities is at its lowest level since January 2003, however, with a little more than a one-month supply of for-sale homes compared to the six months deemed necessary for market equilibrium, according to CBS Minnesota.
Midwest markets lead in housing affordability, and companies and households are responding by relocating there. However, those markets have generally been slower to recover from the recession than have their coastal peers and as a result, many builders there are struggling to ramp up construction to meet demand.
In an October report from Coldwell Banker that looked at more than 2,000 U.S. real estate markets, Minneapolis ranked in the top 150 cities by average home price, with many of its suburbs higher in the list. Meanwhile, recovering Midwest and Rust Belt cities including Detroit, Cleveland and Buffalo, NY, were ranked at the bottom of the list.
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