Home buyer demand lives in Twin Cities' suburbs
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An influx of new homes is pushing up prices in the Twin Cities' suburbs.
Why it matters: Remote workers and millennials flocked to the suburbs in recent years to get more space for their money. Now, suburban home prices are rising faster than those in the two big cities.
By the numbers: Home price gains in Minneapolis aren't keeping up with the metro as a whole, continuing a trend from 2022.
- Over the last 12 months, the median sales price has risen 5.5% in the broader metro, compared to a 0.3% bump in Minneapolis, per the latest data from the Minneapolis Area Association of Realtors.
What's happening: More new construction and luxury market activity is taking place farther from downtown, where there's more space to build bigger and sleeker homes, Frank D’Angelo, board secretary of the Minneapolis Area Association Realtors, tells Axios.
- "The offerings out in the suburbs are much more desirable than the older homes we're finding within the city limits," he says, pointing to hot spots such as Maple Grove and Lakeville.
Zoom in: In May, Maple Grove took the top spot for building activity with 47 permits issued, according to Housing First Minnesota.
- Woodbury came in next with 41 permits, followed by Lakeville with 35 permits, Blaine with 34 permits and Rogers with 24 permits.
The big picture: Location is less of a priority for buyers as remote and hybrid work persist, D’Angelo says. Downtown Minneapolis' foot traffic has bounced back slower than other big cities.
- New census data shows suburbs of big cities, along with smaller metro areas, claimed most of the country’s growth last year, the Wall Street Journal reports.
Reality check: Both Minneapolis and the greater metro are still tight and competitive markets, according to David Arbit, MAR's director of research.
What we're watching: Buyers are settling down wherever they can find a house within their budget — or sitting on the sidelines, Redfin senior economist Sheharyar Bokhari tells Axios.
- If home prices in urban areas continue to drop, we could see a return to those areas.
- "The cost will outweigh any amenity," Bokhari says.