Twin Cities Still A Duplex Sellers Market
After scratching my head for months, I finally found it. What had I been looking for?
The reason the Minneapolis, St Paul, and seven-county metro area duplex market feels so radically different than it has is tough to back up with facts.
Here’s why. Last month, 74 duplexes, triplexes, and fourplexes sold in the Twin Cities. Of those, 67 were in Ramsey and Hennepin counties. This is down 2 units over last November for the whole metro and four for the urban core. So in essence, the numbers are roughly the same as last year.
However, in November of 2021, the seven counties saw 135 small multifamily properties sell. November 2020 (Covid year) tallied 129.
Many real estate-centered economists suggest our last normal real estate market was in 2019. There were 103 sales in November that year. In fact, we have to look back to 2018 to see a similar number of solds for the month – at 78.
In other words, sales have been trending downward much longer than I realized. It isn’t a recent phenomenon. Sales have trended downward every month since June of 2022. And if you think back, the Fed started raising interest rates in late March of the same year.
Ironicallyt, the number of new listings has also trended downward from their 2021 and 2022 highs. That is, until September of this year, when the number of new listings grew month over month by 6 new listings in September, 2 in October, and a whopping 36 in November. Inventory is starting to grow, but not yet to the point where we can shout it from the rooftops.
In other words, as buyer activity has slowed the last two years, as has the number of new listings. The latter has grown slowly, then suddenly, and only in recent months. However, at 220, our monthly total of active listings metro-wide is comparable to last November’s 218. Both resulted in a 3 month supply of inventory. That’s up from the two-month supply of the summer months but is low enough to continue to be a seller’s market.
The 72 multifamily properties that traded hands in November did so at an average price of $397,619. While not a standard measure of duplex valuation, it is interesting this price translated to $157 per square foot. That’s the highest it’s been since October, 2018. Year-to-date, this number has tended to hover between $140 and $150 per square foot.
The deal of the month appeared to be a duplex that was a house conversion in NE Minneapolis. With one bedroom in each unit, it closed at $150,000. At the other end of the spectrum, a St Paul Grand Avenue fourplex with two two bedroom and two four bedroom units closed at a staggering $1.31 million. It also grossed $124,800 a month in rent.