Real estate developers: people aren’t wild about them. They’re making money, which is bad, and why you don’t see it in other types of businesses.

I’ve found that as a Planning Commissioner, it’s actually a little bit refreshing that it’s always clear what a developer’s motives are. All of their decisions are going to be through that same nakedly financial lens. Some maybe approach it from a slightly different angle, but ultimately, that a developer wants to use a higher quality building material or what have you will come back to the rents or sale prices they think they can get for what they’re building. So in that sense, they can be easy to talk to and make demands from.

One thing that no one talks about, though, is another group that’s making money off of our hot real estate market—folks who own houses already.

In the middle of last year, I became a homeowner. A condo, to be precise. It’s fine. In fact, based on sales of similar units in the building and area, the City Assessor’s Office estimates it’s already worth $25,000 more than I paid for it five months ago. That’s probably a bit aggressive, but the point is generally correct—people want to live downtown, and there isn't a whole lot of condo inventory downtown, and they’re getting more expensive. So in theory, I’ve already made tens of thousands of dollars by virtue of having been able to purchase some property.

Downtown is a useful example because it’s small enough that you can talk about it in a way that makes sense to everyone. “People who want to live downtown” are kind of a specific pool of buyers, and there are only so many thousand condo units. Looks like there are 32 two bedroom condos available downtown right now. Why not list yours for $5,000 higher than you think you could get and see what happens?

And the same thing applies across the whole city on a larger scale. People want to live in Minneapolis, a nice place, and there are only so many housing units. Some people also have certain preferences on top of just wanting to live in Minneapolis—maybe they want to live within walking distance of some shops, or near transit, or the lakes, or in a certain school attendance area.

Some potential buyers have more money than other potential buyers, and so the housing units that exist are able to fetch more on the market, and those other people are then priced out. Like developers—which we know are bad—individual home sellers generally do not sell their houses for less than their market value.

So who’s accumulating a lot of wealth from their houses? Well, I asked local Internet user Scott Shaffer to throw together a map that shows the difference between the estimated market value of houses in Minneapolis and their last purchase price. Kind of a rough way of estimating how much equity people have on top of whatever they’ve paid down on their mortgages. Get a load of this: