The Twin Cities are used to weathering storms. With its wintery weather, the Twin Cities have seen their fair share of cold winds blowing in, but a global pandemic and rising violent crime rates are a whole different issue.
Luckily, the cities’ real estate market did manage to weather these new storms, turning in a banner year in 2020, and enter 2021 as strong as it has looked in years. Although the downtown area of Minneapolis is still struggling to attract buyers, the Twin Cities had themselves a 2020 real estate year for the books.
In 2020, the housing market broke numerous records in Minneapolis and St. Paul. According to the Star Tribune, home sales rose by 8%, the luxury real estate market closed 25% more sales than in 2019, and houses sold 12% faster in 2020 than they did in 2019.
As well, the median home price hit a new record in 2020. According to Redfin, the median sale price hit $320,000 in August of 2020, which is the highest median sales price ever in Minneapolis.
Real estate prices in Minneapolis have been on a consistent upward trend in recent years. In less than 5 years, the median sale price in Minneapolis went up massively.
According to the same market report by Redfin, in February of 2016, the median sales price of a home in Minneapolis was just above $192,000. This shows the steady increase the market has been making, resulting in the peak that was 2020.
One of the reasons for the real estate boom was the pent-up demand. Shelter in place orders in Minnesota throughout April and May led to the usually busy Spring months being quiet. Particularly May was uncharacteristically inactive in 2020, with Redfin reporting a 26% decrease in year over year sales this May. But this led to a more active market for the whole rest of the year.
While April, May, and June were likely impacted by the pandemic keeping the cities closed down, the entire rest of the year had sales volumes that were uncharacteristically high compared to previous years. The pandemic pushed the surge months further back into the year, but it didn’t stop the surge from happening.
Another factor that contributed to the swelling of the price and the surging of the market is a lack of supply compared to the high demand. According to a report by Minneapolis Area Realtors, the number of listings was up this year by 0.1%. However, the number of buyer purchases was up 7.7%.
With buyers being much more active than normal, and sellers pretty much remaining stagnant, it is clear why inventory was impacted. According to the same report, the months of supply inventory plummeted by 47% to 0.9 months of inventory. A balanced inventory is 5-6 months. With less inventory and an increase in demand, buyers are more competitive and have fewer options, driving prices up.
The Twin Cities are the heart of Minnesota, and in 2020, a huge year of change, they managed to have maybe their best real estate year on record.
While no city doesn’t deal with the growing pains that come with more national attention and a growing population, the Twin Cities real estate market is healthy and thriving.
