Last year, Kenley Johnson moved from an apartment in the downtown North Loop neighborhood to a starter home on a tree-lined street near the Columbia Park golf course in northeast Minneapolis.
It has gone from being a neighborhood where a square foot of real estate sells for more than anywhere else in the city to now being the hottest in town for homes.
“I wanted something that wasn’t right in the middle of town and not so much traffic,” said Johnson, who spent a year looking for homes. “But I didn’t want to be in the suburbs.”
Every neighborhood in Minneapolis and St. Paul saw housing prices rise in 2021. But the fastest growing were cheap, working-class neighborhoods, according to the Star Tribune’s Hot Housing Index. The index tracks year-over-year changes in several metrics that measure buyer and seller activity.
At the top were Columbia Park in Minneapolis and Dayton’s Bluff in St. Paul.
Columbia Park’s rise is due in part to its relatively inexpensive housing stock. On average, homes in the neighborhood sold for $188 per square foot last year. It was $35 less than the city average. But that was well above the neighborhood’s $154 average of the previous five years.
A similar price spike occurred in Dayton’s Bluff, where homes last year sold for $155 a square foot. It was $30 cheaper than the St. Paul average, but also significantly above the neighborhood’s five-year average of $116.
“Affordability was number 1 on my list,” said Johnson, who bought a 1,600-square-foot, three-bedroom, two-bathroom home built in the 1950s for $279,000.
Johnson said the people who sold his home, which is a few blocks from the Columbia Heights border, had lived there for 24 years. She said other properties in northeast Minneapolis are now coming on the market for even more than she paid, and are selling fast.
For Minneapolis as a whole, the average price per square foot was $223 last year, a 17% increase from the previous five-year average and one of the highest in the metro. The supply of registrations was also above average. In St. Paul, where the price per square foot also rose by double digits to $186, listing inventory was also near the top of the metro.
Despite rising prices, urban areas are experiencing a noticeable turnover of property which is driven by various factors including changing demographics, rising crime and the pandemic.
It is visible in many neighborhoods, including Columbia Park, where there were 51 closures in 2021, a 55% increase from previous years. Homes there sold on average in just two weeks, five days faster than normal. And the supply of listings, which includes new listings minus sales, fell 76%.
At Dayton’s Bluff, there were 256 sales last year, a 22% increase over the five-year average. Homes there sold in just 12 days, more than twice as fast as normal, and the supply of listings fell by 53%.
While crime is on the minds of many buyers and sellers, the pandemic has at least temporarily altered the market by influencing where and how people want to live, said Emily Green, a real estate agent for nearly three decades and a longtime resident. Minneapolis date.
“Three years ago I could show you a million houses in outer suburbs that nobody wanted because people didn’t want big houses out of town,” Green said. “But that has completely changed and could change again. People have had two years to fall in love – or fall in love – with their spaces.”
The data has yet to show that rising crime is causing an exodus from the city – and that may not be the case in the end.
“We’re just seeing these new negatives and it’s stressful,” Green said. “But for the person who says ‘I’m done with the town’ and wants to sell their house, there are probably 15 people who say ‘I’ll get rid of it for you’.”
Take the Minneapolis neighborhood where violent crime increased the most in 2021 compared to 2020 — Uptown. Home prices rose nearly 10% in this neighborhood last year, a sign of continued demand.
And while there were more listings for homes in Uptown last year compared to 2020, there were bigger increases in some Minneapolis neighborhoods where violent crime was less of an issue.
For Johnson, who had grown weary of the traffic and density of the North Loop, leaving town was not an option. Still, the 28-year-old wanted a community, she said, that felt a little less like the big city and a little more like the small town in western Minnesota where she grew up.
“There are actually grown trees here, and it’s a very quiet neighborhood,” she said. “It’s quaint and cute and I hardly see any traffic unless it’s people who live on our street.”
Johnson’s house hunt first began in and around the Longfellow neighborhood between downtown Minneapolis and Lake Street. The houses she visited there were older, smaller and more expensive than those she visited in the northeast.
After outbidding a house, she bought her Columbia Park home in early 2021 by paying sellers more than they were asking.
“We probably visited 15 to 20 houses before we found this one,” she said. “So I got lucky.”
For less fortunate buyers, there are still several areas of the urban metro that are a little less frenetic than those that were the most popular last year. This includes the Loring Park neighborhood along the southern edge of downtown Minneapolis.
This densely populated enclave, dominated by condominiums and rental apartments, ranked at the bottom (#83) of the Neighborhood Index, in part because homes took longer to sell and there was a much larger supply of listings than in other parts of the city. .
On average, properties sold in 95 days and there was over a four month supply of listings. Because the market is considered balanced between buyers and sellers when there is a six month supply of listings, it was still a seller’s market in Loring Park last year.
Still, it wasn’t the cheapest part of town. That distinction goes to the Hawthorne neighborhood in north Minneapolis, where the average price per square foot was $132, nearly $100 less than the city average.
The most expensive was the North Loop, an area dominated by condos that had an average sale price of $322 per square foot.
In St. Paul, the cheapest homes were in the North End, where the average selling price was $149 per square foot. The most expensive neighborhood was Macalester-Groveland, where the average price was $237 per square foot.
For buyers looking for less competition, the median time to market in the Summit-University neighborhood is just under 30 days — the highest of the 16 planning districts. And for buyers who want the most choice, the highest inventory was in Summit Hill, where there were enough listings to last about 1.7 months.
Benton Johnson, who is Kenley Johnson’s brother, roommate and real estate agent who helped her find her Columbia Park home, said about 95% of her clients over the past two years have been first-timers. buyers like her sister.
With prices rising dramatically in the region, he advises them to adjust their expectations.
“I had to have this conversation with a lot of potential buyers about what they really want and need,” he said. “We have this huge group of young, first-time buyers who are ready to buy and there just isn’t enough inventory.”