Home pricing in the Twin Cities has recovered from the recession as the median sale price has once again reached the peak back in 2005 and 2006. However, in many communities within the 494 core and specifically first-ring suburban communities; housing pricing has appreciated faster than communities on the fringe. This is in part due to proximity to jobs corridors, shorter commute times, retail, and recreational and cultural amenities. Generally, although homes in the inner-ring are older and smaller..they sell for a higher sales price per square foot than larger homes in 3rd and 4th tier suburban areas.
Because of the demand to locate closer in is high, the demand for tear downs and flips has been high and investors have sought out neighborhoods in Edina, St. Louis Park, and Golden Valley. The Mullins Group expects this trend will continue in the near term.
Buried inside the region’s real estate data are the winning places that ring the two cities
DAVID JOLES, Star TribuneJon and Angie Whitcomb had to scramble when their Prior Lake house sold the day it was listed. With their daughter, Grace, they now live in Edina.
By several measures, places like Falcon Heights, Richfield and Edina are leading the region’s residential real estate market.
“It’s just unbelievable,” said Marcus Johannes, a sales agent for Edina Realty who last week listed a two-bedroom, one-bathroom house with about 1,000 square feet in Richfield, where there’s been a 10 percent increase in sales so far this year, nearly three times the growth rate metrowide.
While the seller was still putting the finishing touches on the paint job, there was a knock on the door. It was someone who wanted to see the $215,000 house, but the seller asked them to come back. When the house officially went on the market at 2 p.m., that buyer returned and by 4:30 submitted an offer for more than the asking price.
Johannes is having the same experience in Brooklyn Park, he said. “If it’s priced right and in good shape, it’s gone,” he said.
With first-time buyers and downsizing baby boomers driving sales, communities with the amenities that are important to them are faring particularly well. That includes proximity to shops, restaurants and transportation. Buyers are also beating a path to markets within the best school districts.
Edina appears to have it all. That first-ring suburb was one of the first cities in the metro to exceed the pre-crash high and the median sale price of all closings in the city last month hit a new high: $419,500, according to the Minneapolis Area Association of Realtors.
The city has been a magnet for buyers like Angie and Jon Whitcomb, who have been willing to trade space for location. After more than a decade living in Prior Lake, the Whitcombs decided they’d had enough of their daily commute, so at the beginning of June they decided to test the market.
On the same day the for sale sign went up on the lawn of their $800,000 house near the Wilds Golf Course, they received an offer.
“I started crying. I wasn’t expecting it to sell. I wasn’t even looking at houses, not one,” said Angie Whitcomb. “We weren’t prepared for that.”
The Whitcombs were particularly concerned because they wanted to move to Edina, which would reduce Jon’s commute and put them nearer to their closest friends and all the places they like to visit.
They were well aware, however, that Edina was one of the most coveted communities in the region and that, despite its relative expense, houses there were selling very quickly and usually for more than their asking price.
The Whitcombs asked their buyers to accept a reverse contingency, which meant that they would close the sale only if they found a house to buy.
The Whitcombs made an offer on the fifth house they toured in Edina. Though the five-bedroom house is smaller than the one they sold in Prior Lake, but nearly as expensive, they were willing to sacrifice space for location.
“Being there [in Edina] means 10 more hours that Jon won’t be in traffic,” she said. “That’s family time and you can’t put a price on that. I’d rather have [Jon] for 10 extra hours a week than a big kitchen I’m standing in by myself. I like my husband.”
The same phenomenon is true in the east metro, where several St. Paul suburbs are setting new price records. In Falcon Heights, for example, the median sale price so far this year was $300,000, compared with a previous high of $259,200.
The most recent sales data demonstrate that buyers are sometimes willing to pay more per square foot to be closer to downtown Minneapolis and to jobs, dining, nightlife and all the other amenities that are appealing to millennial buyers and downsizing baby boomers.
Though several first-ring suburbs had a much lower median sale price than their outlying neighbors where the houses tend to be larger, houses in those first-ring suburbs had a much higher per-square-foot sale price.
In Bloomington, for example, the median sale price during July was $227,000 compared with $215,000 in Richfield. On a per-square-foot basis, however, houses in Bloomington sold for $126 per square foot vs. $131 in Richfield, The same was true in Minnetonka and neighboring St. Louis Park, which is closer to downtown, where buyers were willing to pay 10 percent more on a per-square-foot basis than in Minnetonka.
Aside from proximity to downtown Minneapolis or St. Paul, one of the most profound influences on price and demand has been the desirability of the school district, according to Michael Bartus, a sales agent for Michael Bartus with Lakes Sotheby’s International Realty.
The impact of a school district on house prices has been so profound, Bartus recently added a new feature to his website that enables buyers to find out which listings are available in certain school districts.
He said that buyers are willing to pay 8 percent to 10 percent more to be in parts of Maple Grove and other cities that are in the Wayzata district.
“Everybody wants to be in Wayzata, Edina or Minnetonka, but when you show them what kind of houses you get for the money, it’s not for the faint of heart,” Bartus said. “They end up saying ‘We have to adjust our expectations.’ ”