Even when adjusted for inflation, home values in the Twin Cities have kept pace with inflation, according to the Case-Shiller methodology. On average, home prices in the Twin Cities have appreciated nearly 35% in the past five years, with the biggest gains happening among the least-expensive houses. Case-Shiller breaks the metro-level data into three price tiers, representing the least expensive houses, those in the middle and those in the the top third.
By a large margin, the lowest price tier increased the most, rising 42% in the past five years and outpacing the top tier by nearly 10%.
A lack of house listings affordable to first-time buyers and those wanting to downsize are partly driving price gains among the least-expensive houses. Already, softer gains and slight declines in mortgage rates in the past few weeks have made homebuying in the Twin Cities more accessible.
Housing affordability in the Twin Cities has increased for the past two months, rising nearly 8% in September, according to a Minneapolis Area Realtors analysis that tracks how much income a buyer would need to purchase a median-priced house.
The Case-Shiller index, often considered the most accurate way to track changes in prices, has closely mirrored monthly price data from the Minneapolis Area Realtors, which tracks the median price of all sales, including condos and townhouses not part of the Case-Shiller equation.
On Tuesday, the group said the median price of all sales during September was $380,000, a 2.4%-increase from the same time last year. That gain came as new listings increased 4.2% while pending sales were up only 1.5%.
