To snag a house in southwest Minneapolis, buyers need to act fast. That can even mean putting an offer on a home the day it goes on the market, as exceptionally high turnover rates mean homes are often snatched up within days of their initial listing.
It’s a seller’s market across the Twin Cities, a University of St. Thomas study released late August found, with few low- and middle-priced homes available across the metro.
Minneapolis’ southwest, downtown and northeast areas are especially friendly to sellers, said Herb Tousley, who directs St. Thomas’ Shenehon Center for Real Estate.
“The market in general is definitely improving, but [those areas] are bright spots,” he said.
The St. Thomas study didn’t have neighborhood-specific data, but instead considered the Minneapolis-St. Paul market as a whole. The median sale price for Twin Cities houses increased 4.7 percent from July 2014 to July 2015, the study said.
And with this seller-friendly market, the metro area is seeing its annual number of closed home sales return to pre-Great Recession levels. However, the number of new listings hasn’t yet recovered, according to the study.
Southwest, downtown and northeast Minneapolis all follow these overall trends, but a closer look at each area shows the unique situation of each sector.
Minneapolis’ southwest neighborhoods are continuing their dominance as some of the best real estate in the metro area, Tousley said.
This is easily proven by the low turnover time once a house hits the market.
Many homes sit on the market for just days and get multiple offers, Tousley said. Others will be flipped in just 24 hours, meaning prospective buyers must be ready to purchase quickly.
Southwest’s multitude of large, high-quality houses keep prices high, he said, although there are instances of homes being demolished for a new build.
In recent years southwest Minneapolis’ real estate success has even expanded to neighboring cities like Edina and St. Louis Park, Tousley said, with Uptown playing the role of the entertainment center for many buyers.
As it sits now, downtown Minneapolis can’t satisfy demand for condos and that likely won’t change soon.
The lack of these downtown abodes can be attributed to the Minnesota statue that essentially saddles developers with assuming responsibility for condos for 10 years after their construction, Tousley said.
For example, a roof that becomes leaky eight years after construction is the builder’s problem — not the condo owners.
“That’s potentially a large liability for builders and developers,” he said, “and a lot of them don’t want to assume that risk.”
This case of high demand for condos and very low supply will be the reality for the foreseeable future, Tousley said.
However, he said he knows of a few developer and builder associations that have plans to lobby at the state Capitol next legislative session to push for changes to the law so building condos would be more enticing and less potentially burdensome.
The neighborhoods of northeast Minneapolis are growing similar to southwest, from a real-estate perspective.
The dense area of bars and restaurants around University and Hennepin avenues in Northeast is starting to act as the area’s entertainment core, similar to southwest’s Uptown. In addition, Northeast is becoming evermore desirable for younger residents and first-time homebuyers who are finding cheaper single-family homes.
Development is kicking up in Northeast, especially by the river.
These factors mean Northeast is becoming more of a seller’s market, too.
Northeast’s characteristically smaller houses will keep home prices lower than southwest, but it remains to be seen what future development will mean for the market.