The hunt for an affordable home in Southwest
Prospective buyers find slim pickings for homes priced under $300,000
LINDEN HILLS – A safe neighborhood, close to parks and trails, and preferably with a little charm to it, too.
When Parrish and Lisa Aharam started looking to buy a house earlier this winter, Linden Hills seemed like the perfect match.
It’s a part of town Lisa would feel comfortable being home alone in when Parrish is away on business. It’s got a friendly, small-town feel but it’s also close to Downtown. And the lake’s trails would be ideal for exercising their border collie.
Both late-twentysomethings work full-time – Parrish is a consultant and Lisa runs an interior design business – and they’re ready to spend around $350,000.
After six weeks of hunting, though, a pattern started to emerge in the homes they viewed.
“The houses we’ve looked at under $300,000, there’s just so much work that would have to be done,” Lisa Aharam said. “It’s frustrating. We’re finding that in Linden Hills, in our price range, you really can’t find anything.”
The Aharams’ disappointment is a common one for younger, first-time home buyers looking in Southwest, where a nationwide housing boom in the last decade boosted already-high prices out of reach for many buyers.
Meanwhile, as younger home hunters look elsewhere, some Southwest residents worry about how the trend will affect the character of their community. Some Southwest neighborhood groups are taking action, putting affordable housing on the agenda.
The median home price in Southwest between Dec. 1, 2005, and Nov. 30, 2006, was $315,000, according to a Southwest Journal analysis of single-family home sale data from the city assessor. That figure varies greatly depending on the neighborhood, though. (See chart.)
In neighborhoods bordering Crosstown and Interstate 35W like Windom, Kingfield and Armatage, median home prices are around $250,000. Venture away from the freeways and you’ll see prices escalate, drastically in some neighborhoods, as you approach the lakes area. Median home prices in neighborhoods like East and West Calhoun, Cedar-Isles-Dean and East Isles last year were well over half a million dollars.
The median home price in Linden Hills, where the Aharams are looking, was $415,000 – several thousand more than what they think they can afford.
They haven’t given up on Linden Hills yet, but they’re now looking outside Southwest for better values. In particular, the Longfellow neighborhood has jumped out as promising.
“I feel like you could get a lot more for your money in Southeast,” Lisa Aharam said. “We don’t even want to consider living outside of Minneapolis.”
Out of reach?
“I really don’t know how young people are doing it,” said Mary Jane Mitchell, a member of the Southwest Interfaith Neighborhood Group for Affordable Housing, or SWING.
Mitchell, whose home in Lyndale has been on the market several months for about $590,000, said she’s seen many young home hunters frustrated with prices.
“We hear this story all the time,” she said. “They come in and say they grew up in this neighborhood and they want to move back. They’re looking in the $300,000 range, and they’re very discouraged because there’s nothing here.”
Soaring home appreciation has made buying affordable housing in Southwest difficult during the past decade, said Deb Greene, president of the Minneapolis Area Association of Realtors.
For many first-time and lower-income buyers, the area has become out of reach.
“They were simply being priced out of the marketplace,” Greene said.
Thatcher Imboden, 24, and his fiancée Melissa Kusmich, 22, hope they aren’t in that crowd.
Imboden grew up in Uptown and Kusmich in Fulton. The couple, who will be married in June, rent near Uptown but would like to purchase a single-family, two-to-three bedroom home in Southwest within the next couple years.
“It’s familiar,” Imboden said of the area. “People like to stay with what they know and love.”
Imboden and Kusmich love the lakes and recreation offerings, the close proximity to businesses, and the transit service, among other amenities. The couple isn’t looking seriously yet, but they have started stopping by open houses to get a feel for what’s on the market. They’re planning to spend in the mid-$200,000 range and are skeptical about their ability to afford a home in their ideal locations of Uptown or Fulton.
But Imboden thinks they might have a shot in a more affordable neighborhood such as Kingfield, where the median home price last year was $265,000. But Imboden and Kusmich have also discussed buying a home in nearby St. Louis Park if the Minneapolis market proves too difficult.
“That’s not really what we’d like to do, but you’ve got to look where you’ve got to look,” Imboden said.
Sarah and Shawn Mahmud, both 27, hunted for their first home a couple years ago in Linden Hills, East Harriet and other Southwest neighborhoods, but they had a hard time finding anything in their price range and almost gave up. The couple started looking in Northeast and St. Paul before their real estate agent found a bargain in Kingfield. They snatched it up for $227,000.
“We got in, but it was very much a challenge,” Sarah Mahmud said.
The Mahmuds’s 100-year-old home wasn’t perfect. The front and back porches needed new roofs, and the exterior paint was in rough shape. Other minor problems have surfaced since moving in, but they don’t mind getting their hands dirty. They’re close to work, and they love their neighbors and the area’s charm.
“It’s definitely worth it,” Sarah Mahmud said.
Much of Southwest’s housing stock priced under $300,000 requires a little fixing or “sweat equity,” said Kate Gigli, an Edina Realty real estate agent who works in Southwest.
“They’ve got to go in and use that elbow grease to make it beautiful,” she said.
Tom Melchior, a researcher with LarsonAllen in Minneapolis, said younger buyers can still find deals if they’re willing to settle for something less than their dream home or neighborhood.
“The opportunity to purchase a modest-priced house still exists,” Melchior said. “Maybe they grew up in East Isles, but now they have to look at buying in Whittier. Maybe they like the four-bedroom but need to get the two-bedroom. There are trade-offs.”
The cost of a home depends largely on its location, Gigli said, and affordable houses that don’t need much work can still be found in some sections of Southwest.
Annie Schmidt, 27, found one in Lyndale about a year ago.
She lives in a 1,100-square-foot cottage-style home built in 1914. It’s close to a park, her work and the amenities of Uptown.
Schmidt initially wanted to live closer to the lakes and, like many young buyers, was interested in a low-maintenance condominium, but the ones she liked were out of her mid-$200,000s price point. She fell in love with a single-family house on the same day she started looking at them and closed the deal a couple weeks later.
A friend lived with Schmidt for a while to help pay the mortgage, and she’s had to make some lifestyle changes such as a reduced budget for clothes, entertainment and travel, but she’s on her own now and doing fine.
Southwest housing values went up so much in the last decade and a half for a number of reasons, Melchior said. He expects the trend to continue at least another 15-20 years. That’s because as gas prices and traffic become larger concerns, more people will want to live close to their jobs in the city.
“It’s a good situation that’s causing that,” Melchior said. “There is so much interest and desire for housing in Southwest that the prices, which were already highest in the city, will go even higher.”
All corners of the city are seeing rising home values, he said, but Southwest started out higher to begin with because of its proximity to its parks, lakes and quality of life, Melchior said. It’s been good for many homeowners because their investments are worth more.
But even some homeowners in Southwest are unsettled about the trend. Maxine Davis, a Linden Hills filmmaker who runs her own business, bought a home with her husband a couple decades ago for about $80,000. They’re among the many owners who say they could never afford a house like theirs in the neighborhood again.
When they bought, the market in Linden Hills was very different, as were the people who could afford to buy there, she said.
“There were a lot of people in the arts,” she said. “People who didn’t have a lot of money but had a lot of creativity.”
If Linden Hills owes some of its character today to the eclectic class of people who bought homes there 20 years ago, what does that mean Linden Hills will look like 20 years in the future?
“I’m hoping it won’t change too much. There is something unique about Linden Hills that I hope we don’t lose because of the housing prices. It’s the soul,” Davis said.
Ahndi Fridell of Fulton shares some of the same worries. A few years ago, she and her husband wanted to upgrade from their two-bedroom starter home.
“We wanted to take the next step up and stay in the neighborhood,” Fridell said. “When we started looking it was just all these dumpy little houses the same size as ours that we could afford.”
The experience motivated her to get involved in housing issues, and she now chairs the Fulton Neighborhood Association’s housing committee.
“I don’t want to live in a gated community,” Fridell said. “When you concentrate areas of wealth or poverty, you’re missing out on getting to know other people’s experiences.”
Southwest prides itself in its great schools, but a teacher couldn’t afford to buy a good house in Fulton anymore, said Fridell, who stays at home with their kids while her husband works a software job.
“What I’m seeing now is Š people have to pay $300,000 or $400,000 for a starter home, and that’s not a starter home,” she said. “You’re not getting young families.”
Mitchell, of SWING, said it’s important to have a mix of housing in a community for people at different stages of life. Employers struggle to find workers when the people they hire can’t afford to live near their work, she said.
“I think you have a stronger neighborhood if you have representation of all economic classes,” said Nancy Nelson, chair of the Linden Hills Neighborhood Council housing committee.
City Council Member Betsy Hodges (13th Ward) agrees.
“The most vibrant communities are built with a variety of incomes and experiences among the people living there,” Hodges said. “A big piece of preserving the character of the neighborhood is to make sure we maintain a variety of housing stock so that a broader sweep of incomes can live there.”
Greene said hope is not lost for the first-time buyer. Price appreciation slowed significantly in the last year and the market is turning, she said. She said it’s a correction that will create more affordable housing in the area.
The Aharams know it could be worse, too. Before Minneapolis, they lived in Washington, D.C., where housing prices were far higher.
“This is nothing compared to the East Coast,” Lisa Aharam said.