The Twin Cities’ hottest housing markets were quite a distance from the cities
Although buyers outnumbered sellers in virtually every corner of the region last year, nearly a dozen mostly rural communities — from Minnetrista to Princeton — replaced several inner suburbs at the top of the index.
This shift is driven by buyers like Luke and Emily Kramer, who put aside concerns about long commutes and lack of city amenities and moved to the outskirts.
“When we realized we were going to be expanding our family and working remotely, we decided to pull the trigger,” said Luke Kramer. “It just boiled down to square footage,”
Last fall, the Kramers sold a small bungalow in a Minneapolis neighborhood they cherished and purchased a much larger home in Minnetrista after both began working from home during the COVID-19 pandemic. Although they always knew they would need to buy a bigger house, the pandemic caused them to speed up that decision.
Last year, seven of the top 10 communities on the index were outlying suburbs. This year it was a total sweep for the suburbs.
“The pandemic has really changed the world of real estate,” said Matt Baker, president of Coldwell Banker Realty. “Last year was a continuation of what started in 2020.”
The Star Tribune used data from Minneapolis-area realtors to compile its index, which ranks communities based on year-over-year change in number of sales, listing inventory and selling price (per square foot ) in 2021 compared to previous five-year averages. A score for each of these measures is assigned, ranked, and combined to determine an index score.
Rather than focusing on cities that were simply the most affordable or the most expensive, the index identifies communities that saw the biggest changes in 2021 compared to previous years.
Homes in Wayzata fetched $321 per square foot last year, making it the most expensive metro town. This is a 30% increase over the previous five-year average, but a lower gain than most of the top-ranked communities. The number of home sales and listings available in the city neither rose nor fell particularly dramatically, so it ranked 67th out of 107 cities that reached the 80-sales threshold to be included in the index.
In Minneapolis, where public safety concerns swayed many sellers, the average price per square foot rose just 17%. At the same time, there was a much more dramatic increase in sales and registrations, which made the city the 46th hottest in the metro.
Safety was not a concern for the Kramers. They loved their neighborhood and while the house was big enough for the couple and their first child, it wasn’t big enough for remote work and a second child.
After their son Henry was born in early 2020, they put his crib in their bedroom. Later they moved it to a second bedroom where Emily was working. This forced her to the dining hall and, when Henry became mobile, to the basement.
So when Emily got permission to work remotely even after the pandemic, a move to one of the Far West suburbs became an unexpected reality. Minnetrista is over an hour from her office near White Bear Lake, but they found a house much larger than they could afford in one of the inner suburbs.
“Home size absolutely remains a factor for many of these buyers as they need office space and more room to move around when multiple people are working from home,” said Eric Newman, the agent. real estate that helped the Kramers buy this house. “Minnetrista definitely offers bigger homes on bigger lots.”
On average, homes like the one they sold in Minneapolis cost $223 per square foot last year, compared to around $150 per square foot in Cambridge, Isanti and Princeton. Although prices in these three cities may seem like a bargain compared to Minneapolis, these cities have seen house prices rise much more than in previous years. The five-year average for these cities was around $115 per square foot.
Like many moving buyers, the Kramers were able to sell their Minneapolis home quickly and above asking price, but also had to pay more than list price for their new home. In Minnetrista, the average price per square foot was up 28% from the previous five-year average and on par with other suburbs. At the same time, the city has seen one of the largest declines in listings and home closings.
More than half of the main cities in the index were northern suburbs, where house prices fell the most during the 2008 recession and before the pandemic had been slower to rebound.
It’s all changed. The top-ranked Cambridge, St. Francis and Isanti all saw price increases of over 30%, outpacing Wayzata and several locations that were historically in high demand.
In Princeton, which is a full hour north of Minneapolis, home sales posted a 40% increase in price per square foot. This was the biggest increase in the subway and was the main reason why Princeton was the 10th hottest market in 2021.
“The more bang for your buck, the further away you get,” said Alyssa Boeckermann, sales agent at Apple Valley. “So price is a factor.”
She said buyers who would never have considered these northern suburbs are now broadening their search. She recently worked with first time buyers who lived with their parents and were looking for a first home with a large plot in the southern suburbs. Any houses that had the space they wanted in the southern suburbs were out of reach for them, so they ended up buying a house in Cambridge.
The same is true in several cities that straddle I-35E in Metro East. In Stacy, which topped the index in 2020, Trevor and Darcey Sloneker paid a repairman seller on 5 acres about $20,000 more than the asking price of $409,900. They owned a townhouse in Coon Rapids for several years, but wanted a much larger yard.
After three years of shopping, they knew Stacy’s home ticked all the boxes for them, so they immediately made an offer with no inspection or financial contingencies.
“We looked at the houses a little closer, but we couldn’t get anything for the price we wanted to pay,” said Trevor Sloneker.
The Kramers were in a similar situation. After already outbidding a house, they decided to make the sellers of their house in Minnetrista an offer they couldn’t refuse. The four-bedroom, three-bathroom home was listed at $489,000, but there were three other bidders. So they offered the sellers nearly $35,000 more than they asked for.
The 2,480 square foot home is almost three times the size of the one they owned in Minneapolis, and it has a lower level that they can finish off if they need space.
“It’s become a running joke that we now have so much space that we didn’t know what to do with ourselves,” Luke said. “We see it as a place where we can raise our family for the next 15 to 25 years and it really is the right place there.”
None of this would have been possible, however, without Emily’s ability to work remotely and Luke’s hybrid work schedule.
“It really allowed us to broaden our search, it made sense for us to search in the western suburbs and maybe further afield than we originally thought,” Emily said. “We didn’t want to lose this house, it has everything we wanted and needed.”