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Last week, we discussed the idea that a potential solution for housing shortages in highly populated metros could be rethinking and redeveloping suburbs. The Bay Area in California is one area discussed in the article that is already undergoing a transformation from single family homes to multiple, smaller properties on a single lot. Here in the Twin Cities, we’ve seen record home prices alongside a huge crunch on the inventory of entry-level homes. Local developers have primarily been building in the upper brackets, leaving those searching for a newer home under $300k and within a reasonable distance of the city in a tough spot. Well, with the latest news from the Star Tribune, there’s a light at the end of the tunnel, depending on what people consider a “reasonable” distance.


The article titled “Race for affordable houses sends developers back out to the exurbs” shares plans from multiple developers to build more affordable homes and multi-family units in locations within an hour or so of Minneapolis/St. Paul. One project will include roughly 1,700 new single-family homes in Dayton, a city 30-40 minutes northwest of downtown Minneapolis. Other projects are planned for nearby communities, Rogers and Big Lake. As noted in the article, this move to further develop far-reaching suburbs isn’t an anomaly; Zillow has even named “sprawl” as a top nationwide trend for the coming year. These new developments are aimed primarily towards those entry-level seekers. Any professionals working in the city will have a heck of a commute, but some will see it as worth it. The areas under consideration have open spaces, they’ll be shiny new homes, and new developments generally bring with them additional new amenities – parks, businesses and restaurants. Living in these exurbs is simply removed from much of the activity and attractions of the city – which will either be motivation for or a drawback of the move.


As more developments crop up in the next few years, it will be interesting to see if more centrally located entry-level homes become more affordable. Much will depend on the economy of course. Our guess is that the appetite for these homes will continue, and so the prices won’t experience downward pressure. However, it may help to tamper the high rate of price increases for this bracket. Affordability is paramount, but it’s important to note that home price isn’t the only factor. Buyers must understand the different impacts of yearly costs – insurance and taxes – and the amortized cost of the home on their monthly mortgage payment. For example, St. Paul residents are likely dealing with higher future mortgage payments due to a “hot off the press” 24% property tax increase and possible increased property values (the multiplier), though it may be partly offset due to the city dropping an assessment deemed illegal by MN’s Supreme Court. Increases to monthly payments can have dire consequences, with some being priced out of their own home. We take care to ensure our clients understand the breakdown of their monthly mortgage payment and advise against overextending. Please let us know if we can help you – call 952-258-3100 or email


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