Jul 22, 2023 - Real Estate

Townhomes are a hot commodity in the Twin Cities

Illustration of a row of condo buildings with one wall rising up into the sky and forming an upward pointing arrow

Illustration: Annelise Capossela/Axios

Townhome sales are picking up in the Twin Cities.

Driving the news: This spring, the properties gobbled up their biggest market share in more than 15 years, according to Minneapolis Area Realtors.

  • And the trend doesn’t seem to be letting up: Townhomes were the only segment with sales growth in June, David Arbit, the group's director of research, tells Axios.

Why it matters: Townhomes' growing popularity comes as younger buyers look for more affordable homes and baby boomers want to downsize to a maintenance-free lifestyle, local real estate experts say.

  • The median sales price for a metro-area townhouse was about $104,500 less than a single-family home here, June data provided by Minneapolis Area Realtors shows.

The big picture: Across the U.S., condo and townhouse prices are now climbing at a faster clip than single-family homes, Realtor.com analyst Hannah Jones tells Axios.

Zoom in: Signed purchase agreements for single-family homes were down nearly 14% in June from a year earlier, while those for townhomes inched up 0.5%, per the Minneapolis Area Realtors data.

  • Context: Townhomes typically offer more space than a high-rise condo plus snow removal and lawn care services.

State of play: With fewer homes for sale, condos and townhomes can draw multiple offers if the homeowners association fee is low, local real estate broker Denise Mazone tells Axios.

  • Properties with higher monthly dues — they range from $250 to about $1,000, on top of a mortgage payment — aren't moving as fast.

Reality check: Some first-time buyers are holding out for the white picket fence.

  • "We want a small house and a tiny yard, but we do want our own walls … so we continue saving," says reader Britt B., who told Axios she and her husband have been ready to leave their one-bedroom apartment for about a year.
Year-over-year change in median sales price of homes in Minneapolis
Data: Zillow; Chart: Alice Feng/Axios

By the numbers: Twin Cities condo price growth has outpaced single-family homes in recent months, per the latest Zillow data.

  • In May, the typical metro-area condo sold for about $200,300, up 4% compared to last year. Meanwhile, the typical single-family home here cost roughly $362,800, down 2.2% year-over-year.

Between the lines: The post-pandemic housing shortage is keeping prices high nationwide. Twin Cities builders have slowed from their peak pace but are still building more homes than in the U.S. overall.

The intrigue: That new local building activity is being dominated by apartments.

  • Very few developers have built condos in the Twin Cities, even though demand is here.
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