Local Redfin agents say high costs and frigid weather are the primary reason fewer people are buying and selling homes in Minneapolis. ICE activity and protests are factors too, but smaller ones.
Minneapolis pending home sales fell 19.2% year over year during the four weeks ending January 25, the biggest decline among the 50 most populous U.S. metros outside the Bay Area.
On the selling side, new listings of homes for sale in Minneapolis fell 5.4% year over year. Sales and listings are falling faster in Minneapolis than the U.S. as a whole. Nationwide, pending home sales declined 1.6% year over year and new listings increased by roughly 1%.
High Costs and Winter Weather Are Stalling Sales; ICE Is a Secondary Factor
Pending sales have been dropping by double digits in Minneapolis since mid-December. New listings have also been dropping over that period. That coincides with the U.S. Department of Homeland Security sending federal ICE agents to Minnesota with the stated purpose of apprehending and deporting undocumented immigrants, putting residents on edge and causing some to stay inside their homes and avoid day-to-day activities. That has led to widespread anti-ICE protests, in which tens of thousands of people are marching city streets after federal agents fatally shot two Minneapolis residents. And hundreds of businesses in the Twin Cities shut down last week and the week before that as part of the protests.
Local Redfin agents say ICE activity is just one small factor in Minneapolis’ housing-market slowdown, attributing most of it to high costs and frigid winter weather. There are a few small ways ICE activity is contributing to the stalling housing market:
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- New construction. Redfin Premier agent Emily Olson says ICE activity may have slowed construction of new homes; numerous job sites are emptying out due to the heavy reliance of certain trades on immigrant workers. Redfin Premier agent Bridgette Prew added: “New construction appears to be more affected by ICE activity than existing home sales. Construction timelines have been delayed as work crews have either been detained, fear enforcement actions, or relocate to states with less ICE activity.”
- Migration. Prew has one listing that’s a result of ICE’s presence in the city. “One of our clients is leaving the country due to American politics. When they listed their house, they stated ICE activity in Minneapolis was one of the driving forces,” she said. There may be a few more Minneapolis residents relocating to another part of the country due to ICE activity and protests. The flip side may also come to pass; people who live in other parts of the country could reconsider moving to Minneapolis.
- Minneapolis residents’ time and energy is directed toward their community. “Some community members are focused on advocacy and response related to ICE activity, which may be contributing to some delayed listings and paused searches,” Olson said. “A segment of residents are focused on peaceful protests, supporting families whose children are staying home from school, organizing meal support for those hesitant to leave their homes, and other forms of mutual aid.”
But other factors are a bigger driving force behind the slump.
“Higher costs are a bigger factor than ICE activity,” Prew said. “People are still sidelined by 6%-plus mortgage rates and rising home-insurance costs, and some buyers are cautious about buying now due the increasing cost of maintenance as many homes in the area are older, with aging roofs, wiring and plumbing.”
Olson said she doesn’t think heightened ICE activity and related incidents in the city is having a meaningful impact on the housing market right now; she attributes the slowdown partly to seasonality. Minneapolis has been experiencing frigid weather, with subzero temperatures keeping some would-be buyers and sellers home.
“Our spring market tends to be from February through June. We’ve had some sellers ask if they should delay their listing due to ICE, and we’re telling them not to let current headlines dictate their timing,” Olson said. “But if ICE activity doesn’t diminish in the next month or so, we may start to see it have a tangible impact on the spring market.”
