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House prices are rising in the Twin Cities, but not as fast as in other metropolitan areas

The rise in real estate prices in the Twin Cities pales in comparison to most other cities in the country.

The latest S&P CoreLogic Case-Shiller indices, which track repeat sales of the same home, show home prices in the Metro in January rose 11.8% annually, compared with a 19.2% increase in January. national scale. It was the second-lowest gain in the nation, beating only the 11.2% gain in Washington, D.C.

“It’s not that Minneapolis was particularly weak — by its own standards, it wasn’t — but other regions have rebounded dramatically,” said Craig Lazzara, general manager, product management at basis at S&P Dow Jones Indices. “It’s definitely less frothy than the average city.”

Lazzara said that while the index doesn’t measure relative accessibility from metro to metro, it does aim to measure an area’s performance against its own history.

Although price gains in the Twin Cities are lower than the national average, they are more than double the historic Metro average.

For many years, housing price trends in the Twin Cities have tracked national averages closely. That ended in 2021 when the national average started to skyrocket, especially in the Sunbelt states. In Miami, Phoenix and Tampa, for example, the price index has increased by around 30% or more.

Soaring home prices and recent increases in mortgage rates have made moving to cheaper areas the only viable option for many homebuyers, especially those who can work remotely.

Last week, a record 32.3% of all users nationwide sought to move to another metropolitan area in the first quarter. That’s up from 31.5% a year earlier and a significant increase from 26% in 2019, before the pandemic.

“Affordability had almost everything to do with our decision to leave Denver and come back to this area,” Lauren Judd said.

She and her husband, Lucas, began looking for a place to live in the Twin Cities after a failed attempt to buy a home in Denver, where the Case-Shiller Index is up 20% year over year. other.

They tied the knot last summer – after postponing their wedding due to the pandemic – and have started buying a house.

“The process was absolutely wild. About $500,000 for 900 wild square feet,” said Lauren, who taught preschool in the Denver area. “We had days, if not hours, to decide if we liked a house enough to make an offer, and it was expected that you would have to significantly exceed the asking price.”

In one case, they envisioned a 900-square-foot, two-bedroom, one-bath home in Denver’s Park Hill neighborhood. It was listed at around $430,000, they bid $450,000, but were outbid by someone who paid $500,000 cash.

In total, they looked at 15 homes, made offers (above asking price) on seven of them, and outbid each time. That’s when they decided to move back to the Twin Cities, Lauren said, preferring Milwaukee, where they have relatives, and Chicago and Des Moines, where they have friends.

“Once we saw our friends’ house in St. Paul, we knew it was the best place to start looking at houses in earnest,” said Lucas, who grew up in Deephaven and was a project engineer for a general contractor.

Prices are rising so rapidly in some parts of the country that many homeowners are getting more equity in their homes than they earn in their jobs.

According to Zillow, the national annual price growth in December was $52,667, compared to a national median pre-tax income of $50,000. In the Twin Cities, the annual price growth was $39,942, compared to a median pre-tax income of $60,000.

The desire to live in more affordable neighborhoods continues a trend that began in 2020, as rising housing prices and the proliferation of remote working made it easier for people to move to cheaper neighborhoods.

Last year, the average interstate mover moved to a ZIP code where homes were about $35,800 cheaper than where they came from, up from the average price drop comparable to the 2020 ZIP level around $29,500, according to a Zillow analysis of local home value data and data from Allied Van Lines.

Before the pandemic, according to the report, people tended to move to postcodes with very similar average prices. Analysis shows that, on average, these movers spent about $7,500 less each year from 2016 to 2019.

The top destinations for movers in 2021 were fast-growing, mid-priced metros in the Sunbelt states. The main origins of those wishing to leave their current region were generally colder places like the Twin Cities.

Still, the Twin Cities attract a significant number of buyers of more expensive metros. Judd’s Twin Cities real estate agent Emily Green said she’s had several out-of-town buyers recently, but the reasons for the move are often varied. Many, she said, were driven in part by a desire to be closer to their grandchildren.

“I think people are happy with what they can buy [in the Twin Cities],” she says.

Green said buyers in more expensive regions are often tough competition for local buyers because they come with much larger budgets.

“I noticed they were much more comfortable being competitive (or aggressive) than local buyers in multiple offer situations,” she said.

Green said the 1,678-square-foot brick hiker the Judds bought in St. Paul’s Highland Park neighborhood is exactly the kind of home many buyers are looking for. It includes three bedrooms, two bathrooms, hardwood floors and two wood fireplaces.

The home went up for sale late last year for $358,000 at a time when there were fewer buyers. The home also needed a “little tweak,” Green said, which made it less attractive to many buyers. Although the Judds’ offer was not the only one on the house, they only paid $340,000.

And it was the only offer the couple made after visiting half a dozen other homes.

“Our experience buying a home in the Twin Cities was a breeze compared to Denver,” Lauren said.

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