The Twin Cities Housing Market: What's the Deal?

If you’ve kept your ear to the ground, you’ve probably heard some chatter about the Twin Cities housing market. We’re here to make sure you have the complete picture before making any moves in this market.

A Brief Overview of the Market

Minneapolis-Saint Paul is a well-known metropolitan area in the US. It is commonly referred to as the Twin Cities after its two largest cities, Saint Paul and Minneapolis. The Mississippi River separates these two cities. This waterfront is home to coveted real estate properties and many cultural landmarks. The municipalities in this region include Bloomington, Coon Rapids, Edina, Eagan, Plymouth, Savage, Richfield, and Shoreview.

Data from the U.S. Department of Housing and Urban Development indicates that the Twin Cities metropolitan area has a population of more than 3.5 million people, thus making it one of the largest metro areas in the US. Industries and sectors that offer employment include healthcare, trade, and government. The major employers in this region include Allina Health System, Wells Fargo, U.S. Bancorp, HealthPartners, University of Minnesota, and Target Corp.

How Competitive Is the Twin Cities Housing Market?

In recent years, the Twin Cities real estate market has been one of the hottest in the US housing market. In fact, at the beginning of 2020, the Twin Cities market was named the 4th toughest market in the US. It was a seller’s market as there were more buyers than sellers and sellers were getting multiple offers, landing great deals, and earning a good return on investment. All the while, buyers were competing over a limited inventory.

Looking at some statistics for the two major cities gives us a good idea of how competitive the market is right now in Q3 of 2020:

Minneapolis Real Estate Market

Warm Seller’s Market (according to Zillow)
Days on Market: 46 (according to Mashvisor)

St. Paul Real Estate Market

Very Hot Seller’s Market
Days on Market: 20

The Effect of COVID-19 on the Real Estate Market

effect of COVID-19 on Twin Cities housing market

How did COVID-19 impact the Twin Cities housing market this year?

Just like it did in other cities in the US, COVID-19 has had a major effect on the St. Paul real estate market and the Minneapolis real estate market. In May, Norada Real Estate estimates that new listings declined by 24.2%, while home sales declined by 20.4%. However, the economic toll of coronavirus affected market segments differently. According to Minneapolis Area Realtors, pending sales for properties priced between $350,000 and $500,000 dropped by just 2.5%. However, pending sales for Minneapolis investment property priced between $750,000 and $1 million slumped 34.8%. The main reason for low sales in the Twin Cities housing market is first-time homebuyers have been greatly affected by job losses in the retail, hospitality, and leisure industries. The report by Minneapolis Realtors also indicated that there was an 8% drop in home closing as a result of the lockdown in April and May.

The Current Situation

With the re-opening of the economy, demand for properties for sale in the Twin Cities housing market is on the rise. Mortgage rates are at their lowest levels ever. This is therefore a good time for investors to enter the market and find great real estate deals.

But it’s important to keep in mind that the Twin Cities market is still experiencing a seller’s market, despite COVID-19. Since many sellers have taken their properties off the Twin Cities housing market, there is a shortage of inventory. For example, Norada Real Estate reports that the monthly supply of inventory for the Twin Cities housing market dropped 33.3% in June.

Still, you can find a wide range of income properties in the Twin Cities housing market. According to Neighborhoodscout.com, the most common housing types are one or two-bedroom single family homes. Other types of rentals that are prevalent in the Twin Cities housing market include large high rise apartments or apartment complexes, condos, and front row houses. More importantly, the property prices in the best locations (listed below) are relatively affordable compared to other hot markets in the US.

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Where to Invest in the Twin Cities Housing Market Today

Based on Mashvisor data, here are some of the places with the best return on investment in the Twin Cities housing market 2020 where you can find cash flow properties.

#1. West 7th, St. Paul

Median Property Price: $244,220
Price per Square Foot: $151
Price to Rent Ratio: 11
Traditional Rental Income: $1,929
Traditional Cash on Cash Return: 3.9%

#2. Mckinley, Minneapolis

Median Property Price: $176,763
Price per Square Foot: $142
Price to Rent Ratio: 12
Traditional Rental Income: $1,236
Traditional Cash on Cash Return: 3.2%

#3. Corcoran, Minneapolis

Median Property Price: $246,250
Price per Square Foot: $215
Price to Rent Ratio: 14
Traditional Rental Income: $1,492
Traditional Cash on Cash Return: 2.4%

#4. East Harriet, Minneapolis

Median Property Price: $510,000
Price per Square Foot: $206
Price to Rent Ratio: 18
Traditional Rental Income: $2,390
Traditional Cash on Cash Return: 1.9%

#5. Standish, Minneapolis

Median Property Price: $308,841
Price per Square Foot: $215
Price to Rent Ratio: 15
Traditional Rental Income: $1,676
Traditional Cash on Cash Return: 1.9%

#6. Bryn Mawr, Minneapolis

Median Property Price: $369,372
Price per Square Foot: $248
Price to Rent Ratio: 16
Traditional Rental Income: $1,931
Traditional Cash on Cash Return: 1.8%

#7. West Side, St. Paul

Median Property Price: $235,285
Price per Square Foot: $154
Price to Rent Ratio: 15
Traditional Rental Income: $1,331
Traditional Cash on Cash Return: 1.8%

#8. Hawthorne, Minneapolis

Median Property Price: $258,180
Price per Square Foot: $128
Price to Rent Ratio: 17
Traditional Rental Income: $1,230
Traditional Cash on Cash Return: 1.6%

Related: Minneapolis Housing Market Forecast for 2020

#9. Dayton’s Bluff, St. Paul

Median Property Price: $213,144
Price per Square Foot: $133
Price to Rent Ratio: 15
Traditional Rental Income: $1,189
Traditional Cash on Cash Return: 1.6%

#10. Midway, St. Paul

Median Property Price: $239,921
Price per Square Foot: $161
Price to Rent Ratio: 15
Traditional Rental Income: $1,380
Traditional Cash on Cash Return: 1.5%

Conclusion

If you are thinking of buying a traditional or Airbnb investment, the Twin Cities housing market is a good choice during COVID-19. But you will need a way to beat out the competition when it comes to looking for deals. Mashvisor’s real estate investment tools such as the real estate heatmap, property finder, Mashboard, and property marketplace will help you find the most affordable and profitable properties in the Twin Cities housing market.

To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.

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The Twin Cities Housing Market: What’s the Deal?