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Booming Twin Cities housing market raises concerns

May 1, 2021 GMT

MINNEAPOLIS (AP) — Home sales in the Twin Cities are soaring, even as sites to build homes are in short supply, the cost of materials is soaring, there’s a lack of skilled subcontractors and prices are going through the roof.

The median price of a new house in the Twin Cities has risen more than $4,000 each of the past three months, the Star Tribune reported.

Builders are struggling to balance the surge in demand with volatile costs. Some are putting a lid on sales.

“Demand is unlike anything we’ve ever seen,” said Jamie Tharp, Minnesota division president for Pulte Homes, one of the area’s biggest builders.

Buyers are being pitted against one another as builders devise unusual tactics aimed at limiting sales, including waiting lists, caps on sales and e-mail lotteries that randomly pick who gets to buy the home.

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There are also concerns that the booming market could hurt those looking for affordable homes.

Housing First Minnesota, the trade group that represents area homebuilders, said this past week that builders were issued more than 760 single-family permits this month. That is 60% higher than a year ago and a nearly two-decade high but it’s still not enough to keep pace with a surge of buyers.

There was also a building boom in 2006. But unlike now, then there was enough land, labor and materials for builders to stockpile completed homes.