Where Buyers Have the Best Odds in the Twin Cities Area Property Market
The past two years have been a frustrating time to be a homebuyer, and this year isn’t looking much better.
At the start of the year, there were 25% fewer homes on the market than a year ago, and buyers outnumbered sellers in most of the metro.
Although buyers don’t have much influence these days, there are some cities in the metro area where they’ll find lower prices and a little less competition, according to a Star Tribune analysis of real estate data for over 100 largest housing markets. .
Using data on sale price, available listings and seller asking price, Star Tribune’s 2022 Buyer’s Index shows that the best places to shop are primarily rural communities on the outskirts of the metro and of two suburbs, Burnsville and Spring Lake Park.
The top of the index, which uses 2021 sales data from Minneapolis-area real estate agents, was River Falls, Wisconsin, a college town on the far eastern edge of the Twin Cities metro that has become a hotspot for early buyers, including Jessica Lee, who was renting a cramped apartment in northeast Minneapolis.
“I realized that for the price of my apartment, I could own my own house,” said Lee, who works remotely so he doesn’t have to worry about a daily commute. With a budget of $325,000, her top priority was affordability and quality, so she shopped from one end of the subway to the other.
“I was looking everywhere,” she said, “from Bloomington to northern Wyoming.”
In early December, after a year of shopping and bidding 16 times, she eyed a three-bedroom, two-bathroom home in River Falls, about 35 miles east of Minneapolis.
The home, which was built in 1940 and is within walking distance of the University of Wisconsin-River Falls and downtown shopping, has a three-season porch, wood floors, a fireplace, and dining area. a home office.
The nearly 1,500 square foot home, which spans a third of an acre, had just been listed for $275,000. She offered $14,000 more than the sellers were asking for and closed the house in January.
“I wouldn’t have been so eager to have a home here if I wasn’t working remotely,” Lee said. “If I have to work from home, I might as well have more room and a better space.”
The lowest prices are on the sidelines
A few years ago, bargain hunters and first-time buyers were finding value in Minneapolis and St. Paul and inner suburbs where homes tended to be older, compact, and on smaller lots. This is no longer the case, and bargain hunters head for the outskirts of the metro.
In May 2021, the average price per square foot for home sales in the Metro exceeded $190 for the first time and hovered around that price for the rest of the year. The top 10 cities in the Star Tribune Buyer’s Index sold for around $160 per square foot or less.
At $149 per square foot, River Falls was one of the cheapest communities in the metro. Other affordable neighborhoods were Montrose and Watertown, both located more than 30 miles west of Minneapolis.
“The more you get for your money, the further you get,” said Alyssa Boeckermann, sales agent at Apple Valley.
Many buyers, she says, want to be in inner cities or suburbs, but broaden their search once they realize how much they’ll be paying. They find better values in suburban areas, where the average price per square foot is much lower.
Boeckermann recently worked with first-time buyers who lived with their parents and were looking for a first home with a large plot. Any homes that had the space they wanted in their prime southern suburbs were budget busts. They ended up buying a house on land in Cambridge, where the average price per square foot was around $150, making it the sixth most affordable market in the metro.
The most expensive homes in the metropolitan area were in Wayzata, where the average price per square foot was $321, followed by Orono and Edina. With an average price per square foot of $223, Minneapolis was the fourth most expensive city on the index, followed by St. Louis Park, where homes averaged $217 per square foot. At $150 per square foot, Brooklyn Center was the most affordable inner suburb.
Where to find the most ads
Buyers in the Twin Cities faced a historic shortage of property listings last year. Not because new listings were at an all-time low – that happened in 2011 and 2012 – but because buyers outnumbered sellers.
When you factor in the number of homes sold versus the number of listings, there were only enough listings on the market at the end of 2021 for about three weeks of sales. That’s a far cry from the five to six month supply of listings needed to be considered a balanced market between buyers and sellers.
“Every offer I made in the last year was over the asking price; I was over $40,000 and not getting it,” said Seth Marshall, an agent with Northstar Real Estate Associates who works with many buyers. who want to live in the north. Metro.
“You were pulling up on a list and you had 20 cars in front of a house,” he said. “At one property in Ramsey, the neighbors were sitting on their lawns, drinking beers and watching the cars. It was such a sight.”
With more than a month of listings available at the end of 2021, Clear Lake and Minneapolis had the most options, according to the index. But generally, buyers who want the least competition will find it in several suburbs, including Carver on the west end of the metro and Somerset and New Richmond, both in Wisconsin.
While all of these communities are less competitive than many inner suburbs, where there are only a few weeks of listings, they are still woefully short of home listings.
Betty Most, a sales agent with an office in downtown River Falls, said she listed a small farm on nearly 5 acres in New Richmond last spring. She received 17 offers on the property and it sold for more than $20,000 above her asking price.
Most said buyers no doubt see the benefit of driving across the border, bringing more buyers to the area, making 2021 its best year for sales in 37 years of property sales.
“In years past, many buyers who bought in River Falls came from River Falls, but there has been a noticeable shift,” she said. “Over the past two years with COVID, there are more and more people working from home, so their space needs have been redefined.”