Are Twin Cities Suburbs A Better Place To Buy A Duplex?
This morning a fellow Realtor mentioned how much money their buyers who sat on the sidelines missed out by not buying a single-family home last year. There were referring, of course, to appreciation- the usually steady increase in value of real estate over time.
It made me wonder if I could say the same of duplex buyers. So I pulled the average annual duplex, triplex and fourplex sales price for the cities of Minneapolis, St Paul, and then all the other cities in the 7 county metro area. What I found surprised me.
In a post-Covid, post-George Floyd world, Minneapolis seems to have lost some luster in many would-be duplex buyers eyes. They, or their agent, ask me to find a property in the suburbs because of their perceptions about the city. When I tell them duplexes are a function of history and most are in the city or first ring suburbs, they persist and say they will wait however long it takes to find one in a third-ring suburb. (Hint: very few exist.)
So when I pulled average sales prices for the suburbs, I fully expected to find a big rate of appreciation. What I found was something else. In 2024 the average sales price for a duplex in the Twin Cites suburbs was $421,218. That represented a 5% increase over 2023. If I look back 9 years (the program I use won’t let me go 10), there was a 86% increase in suburban multifamily property values.
St Paul has far more duplexes, triplexes, and fourplexes than the suburbs. In 2024 it tallied an averages sales price of $356,062. This represented a 3.3% increase over 2023. Better yet, in 2015 the average sales price in St Paul was $195,756. The 2024 average is an 81.2% increase in value in 9 years.
How about Minneapolis? With the state’s biggest population of small multifamily properties, it has the most sales activity. Its average sales price of $439,881 represented a 6.2% year-over-year increase, and an 82.09% increase from 2015. So yes, the suburbs did experience a bigger rate of appreciation than Minneapolis.
That’s a difference of 4%.
So if it takes two years to find a suburban duplex simply due to lack of supply, you lose out on the suburban appreciation, the Minneapolis appreciation, cash flow, principal reduction and tax savings that may have been realized by simply buying someplace with more supply.
Whether in life or investing, no one can ever recoup lost time.