Twin Cities Hottest Housing Market: North Minneapolis?
A new study from Zillow Inc. forecasts that two of the “hottest” metro home markets for 2017 are in north Minneapolis: the Folwell and McKinley neighborhoods. That’s probably surprising to Twin Cities residents who know that the economically challenged north Minneapolis area has some of the lowest-priced homes in the market.
Zillow’s rankings are based on its projected increase in home values for those neighborhoods. Its forecast calls for home values to rise 7.8 percent in the Folwell neighborhood this year and increase 7.6 percent in the McKinley neighborhood. Those are the largest local projected increases based on Zillow’s research and data.
The Seattle-based real estate information company does not have an office in Minneapolis.
As housing prices climb across the metro, some potential buyers are being priced out of the market said Dr. Svenja Gudell, Zillow’s chief economist. That brings some buyers to look at areas that offer cheaper homes.
“It’s probably starting to be too expensive for some folks, so they start to look for more affordable neighborhoods,” said Gudell, who noted that local housing prices are now higher than the peaks seen in 2006. “Minneapolis is at its peak: homes are more expensive than they’ve ever been in Minneapolis.”
Zillow’s current median home value in Minneapolis is $227,100 compared to $185,700 for St. Paul. But in Folwell, the median value is $123,200. McKinley is slightly lower at $120,100. But Gudell said that those prices are much higher than another Midwestern metro.
“We’re not talking Detroit prices where we’re down to like $30,000 or $40,000 per home,” said Gudell. Zillow calculates the current median home value in the city limits of Detroit at $36,600 – more than 80 percent lower than Minneapolis.
“North Minneapolis has actually had the biggest value increases because we had such a big hit in the foreclosure crisis,” said Minneapolis City Council President Barb Johnson. “The affordability for first-time home buyers is fantastic….You just get a whole lot of house for your money.”
Johnson, now in her fifth term representing the city’s Fourth Ward in north Minneapolis, said that she’s not surprised to see north Minneapolis neighborhoods landing at the top of Zillow’s forecast.
“There’s a lot of charm in Folwell,” said Johnson. “McKinley is very, very quiet and residential.”
Other neighborhoods slated for solid increases include St. Anthony East (6.8 percent) and Central (6.78 percent), both in Minneapolis, and the Dayton’s Bluff neighborhood in St. Paul, where Zillow projects that home values will climb 6.7 percent.
Zillow’s statistics reflect a different methodology than other market studies. For November 2016, the Minneapolis Area Association of Realtors reported the median sales price across the Twin Cities metro at $232,000, a number based on closed sales.
MAAR statistics for November showed that the year-to-date median sale price for Folwell was up 51 percent to $124,500. For the McKinley neighborhood, the year-to-date median sale price through November was up 11.3 percent to $103,500.
On Zillow’s ranking of the top national housing markets, Minneapolis is nowhere near the top of the charts. Zillow ranks Nashville, Seattle and Provo, Utah, as the top three markets for 2017 based on an analysis of home value increases combined with unemployment and income growth statistics.
Minneapolis ranks 46th on the national list. Gudell said that local homeowners and real estate agents should not be discouraged about its standing on the list. Gudell said that the ranking reflects that the Minneapolis market is more steady and stable than other markets, so short-term forecasts for home value increases are not as high as in other metros.
“For you it’s really a sign that the market is relatively steady overall,” said Gudell. “You’re in a good market.”