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Hottest Twin Cities housing markets were far away from cities

Driven by a deeper search for more space and lower prices, homebuyers in the twin towns last year went far off the beaten path, sending several remote communities to the top of the Star Tribune’s sixth annual Hot Housing Index.

Although buyers outnumbered sellers in virtually every corner of the region last year, nearly a dozen mainly rural areas – from Minnetrista to Princeton – replaced several inner suburbs at the top of the index.

That shift is driven by buyers like Luke and Emily Kramer, who ignored concerns about long commutes and lack of urban facilities and moved to the suburbs.

“When we realized we wanted to grow our family and work remotely, we decided to hit the trigger,” Luke Kramer said. “It just came down to square footage,”

Last fall, Kramers sold a small bungalow in a Minneapolis neighborhood they loved and bought a much larger house in Minnetrista after both began working from home during the COVID-19 pandemic. Even though they always knew they were going to switch to a bigger house, the pandemic made them speed up that decision.

Last year, seven of the top 10 communities on the index were outer suburbs. This year it was a total celebration for the suburb.

“The pandemic really changed the real estate world,” said Matt Baker, president of Coldwell Banker Realty. “Last year was a continuation of what started in 2020.”

Star Tribune used data from Minneapolis Area Realtors to compile its index, which ranks communities based on the annual change in sales, inventory and sales price (per square foot) during 2021 compared to previous five-year averages. A score for each of these metrics is assigned, ranked, and combined to determine an index score.

Instead of focusing on cities that were simply the most affordable or most expensive, the index identifies communities that experienced the biggest changes in 2021 compared to previous years.

In Wayzata, houses brought in $ 321 per square foot last year, making it the most expensive city on the subway. That was a 30% increase over the previous five-year average, but a smaller gain than most high-ranking communities. The number of home sales and listings available in the city did not increase or decrease very dramatically, so it was ranked No. 67 out of 107 cities that met the threshold of 80 sales to be included in the index.

In Minneapolis, where concerns about public safety affected many salespeople, the average price per person increased. square feet only 17%. At the same time, there was a much more dramatic increase in sales and advertising, making the city the 46th hottest in the subway.

Security was not a concern for Kramers. They loved their neighborhood, and even though the house was big enough for the couple and their first child, it was not big enough for telecommuting and another child.

After their son Henry was born in early 2020, they put his crib in their bedroom. Later, they moved it to another bedroom where Emily had worked. It forced her to the dining room and, when Henry became mobile, to the basement.

So when Emily was allowed to work remotely, even after the pandemic, a move to one of the remote western suburbs became an unexpected reality. Minnetrista is more than an hour from his office near White Bear Lake, but they found a much larger house than they could afford in one of the inner suburbs.

“The size of the home is definitely still a factor for many of these buyers, as they need office space and more space to roam when more people work from home,” said Eric Newman, the real estate agent who helped Kramers buy that house. “Minnetrista certainly offers larger homes on larger grounds.”

On average, homes like the one they sold in Minneapolis brought in $ 223 per square foot. square meters last year compared to about $ 150 per. square meters in top-ranked Cambridge, Isanti and Princeton. Although prices in these three cities may seem like a bargain compared to Minneapolis, these cities saw housing prices rise significantly more than in recent years. The five-year average for these cities was about $ 115 per year. square feet.

Like many moving buyers, Kramers was able to sell their house in Minneapolis quickly and for more than their offer price, but also had to pay more than the list price for their new house. In Minnetrista, the average price per square meters increased by 28% compared to the previous five-year average and on a par with other suburbs. At the same time, the city was among the sharpest declines in house listings and closures.

More than half of the top cities on the index were northern suburbs, where house prices fell the most during the recession of 2008 and before the pandemic had been slower to rise.

It’s all changed. The top-ranked Cambridge, St. Francis and Isanti all experienced price increases in excess of 30%, surpassing Wayzata and several places that were historically in high demand.

In Princeton, a full hour north of Minneapolis, home sales rose 40 percent in price per capita. square meters. It was the biggest increase in the subway and was the main reason why Princeton was the 10th hottest market in 2021.

“You definitely get more for your money the further out you go,” said Alyssa Boeckermann, an Apple Valley sales agent. “So price is a factor.”

She said buyers who would never have considered these northern suburbs are now expanding their search. She recently worked with first-time buyers who lived with their parents and were looking for a starter home with a large farm in the southern suburbs. All the houses that had the space they wanted in the southern suburbs were far out of reach for them, so they ended up buying a house in Cambridge.

The same is true in several cities that straddle I-35E in the eastern subway. In Stacy, which topped the index in 2020, Trevor and Darcey Sloneker paid the seller of a 5-acre fixer top about $ 20,000 more than the $ 409,900 offer price. They owned a townhouse in Coon Rapids for several years, but they wanted a much larger farm.

After three years of purchasing, they knew the house in Stacy was checking all the boxes for them, so they immediately made an offer without inspection and financial unforeseen expenses.

“We looked at houses a little closer, but we could not get anything for the price we wanted to pay,” Trevor Sloneker said.

Kramers was in a similar situation. After already being outbid for a house, they decided to give the sellers of their house in Minnetrista an offer they could not refuse. The four-bedroom, three-bathroom house was listed for $ 489,000, but there were three other bidders. So they offered the sellers almost $ 35,000 more than they asked for.

The 2,480-square-foot house is nearly three times larger than the one they owned in Minneapolis, and it has a lower level they can complete if they need the space.

“It’s become an ongoing joke that we now have so much space that we did not know what to line up with ourselves,” Luke said. “We see it as a place where we can raise our family for the next 15 to 25 years, and it really hit the sweet spot on the site.”

None of this would have been possible, however, if not for Emily’s ability to work externally and Luke’s hybrid work schedule.

“It really allowed us to expand our search, it made sense for us to look in western suburbs and maybe further out than we originally thought we would be able to,” Emily said. “We did not want to lose this house, it has everything we wanted and needed.”

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