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
Related: The Best Tips for Investment Property Buyers in a Seller’s Market
The Effect of COVID-19 on the Real Estate 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.
Related: Coronavirus Real Estate Market Updates
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.
Start your search for a good real estate deal on a traditional rental property today.
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.