The Minneapolis housing market has unexpectedly become a victim of the city’s political upheaval.
In January, home sales across the city plummeted nearly 20%, marking the steepest decline among major U.S. metropolitan areas, with the exception of the highly-priced Bay Area. This significant drop reflects the hesitation of both buyers and sellers amid growing political unrest.
Simultaneously, home prices in Minneapolis have decreased by over $20,000 since summer, eroding homeowners’ equity and sparking concerns that the city’s housing market downturn might just be starting.
According to new data from Redfin, the market’s sudden standstill is notable, especially when compared to the national scene. Across the country, home sales saw only a modest decline of 1.6% during the same period, with prices remaining relatively stable.
Local real estate brokers attribute the decline in prices and the scarcity of buyers to increased activity by Immigration and Customs Enforcement (ICE) in the area.
The unrest has also led clients to reconsider their options. Redfin agent Bridgette Prew is currently assisting a client in selling their home in the city.
‘When they listed their house, they stated ICE activity in Minneapolis was one of the driving forces,’ she said.
Immigration and Customs Enforcement (ICE) charged into Minneapolis in early December as port of ‘Operation Metro Surge’. The operation significantly escalated in early January when 2,000 federal agents were deployed, and two locals were shot dead.
A new report from Redfin has shown that 19.2 percent of pending home sales in Minneapolis dropped in January
ICE charged into Minneapolis in early December as port of ‘Operation Metro Surge’ – which has been described as the largest immigration enforcement action in the area
The ICE operation in Minneapolis significantly escalated in early January when 2,000 federal agents were deployed
Redfin agent Emily Olson
Unrest grew wilder when Renee Nicole Good, 37, was killed by an ICE agent in a residential area on January 7.
A second citizen, Alex Jeffrey Pretti, was shot and killed by Border Patrol, which was working alongside ICE on January 24.
There were major protests on the streets and even an economic blackout day, during which 700 Minnesota businesses closed down for the day.
The impact on the housing market is clear. Since June the median home price in Minneapolis has fallen from $406,000 to $384,000, according to Redfin’s data.
If history is anything to go by, experts fear the decline will worsen. When activists hit the streets of Minneapolis to protest the murder of George Floyd in May 2020, the median home price sank $12,000 in just one month.
Sellers in Minnesota are retreating too.
New listings in the city fell 5.4 percent from a year earlier, compared with a roughly 1 percent rise nationwide – a sign that homeowners are choosing to sit tight rather than test the market.
Local brokers say home sales slumped in January as buyers paused – or disappeared – for several reasons linked to the ICE raids.
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How should Minneapolis balance public safety and protecting its community’s housing market?
Minneapolis’s housing market was already in trouble. Since June the median home price has fallen from $406,000 to $384,000
The average Minneapolis homeowner lost $22,000 in equity in just six months
Redfin agent Bridgette Prew
‘Uncertainty due to ICE raids, protests, political unrest, and so on is causing people to hold off on big decisions, like buying a house,’ Kristen Herhold, a local real estate agent, told the Daily Mail.
‘This usually first shows in fewer showings and longer days on market.’
Another reason for the slump in sales is that Minneapolis’s residents are devoting their time and energy to helping the community rather than selling or buying homes.
‘Some community members are focused on advocacy and response related to ICE activity, which may be contributing to some delayed listings and paused searches,’ Redfin agent Emily Olson told Daily Mail.
‘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.’
The disruption is now spilling into other parts of the housing market.
Olson said ICE enforcement may be slowing new home construction, as many job sites are seeing workers disappear due to the heavy reliance on immigrant labor.
‘Work crews have either been detained, fear enforcement actions, or relocate to states with less ICE activity,’ Redfin agent Bridgette Prew explained.
Minneapolis’s residents are devoting their time and energy to helping the community rather than selling or buying homes
There may be a few more Minneapolis residents relocating to other parts of the country because of ICE activity and protests (pictured: a home in Minneapolis)
Realtors say there are other explanations for the halt of sales, such as high mortgage rates, rising home-insurance costs, and maintenance concerns.
Olson says the true affect of ICE’s raids on Minneapolis’s housing market won’t show for a while longer.
‘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.’
