North Minneapolis is the hottest spot in a hot city housing market

By David Pierini staff reporter

Salem Mahmoud and his wife, Emily Beltmann-Swenson, kept noticing the “ugly house” with the For Sale by Owner sign as they searched North Minneapolis to buy their first home. 

“It was right across the street from the first house we put an offer on,” Mahmoud said. “But we were definitely not interested.”

They put in offers on four or five homes and were outbid. They drove by more than 30 other houses that were far from move-in ready. Finally, Beltmann-Swenson’s father talked them into looking at the house for sale by owner in the Cleveland neighborhood. 

Despite the exterior, the 98-year-old owner had done a lot of work remodeling the inside. The young couple knew they had found their home. 

“The woodwork was beautiful and it was exactly what we were looking for,” Mahmoud said. “We were kind of sold on it immediately.”

With a shortage of homes in the red hot Minneapolis housing market, housing data shows how buyers like Mahmoud and Beltmann-Swenson are setting their sights on North Minneapolis in their search for an affordable house.

Over the past five years, the Northside’s zip codes have had the fastest growing home prices in the Twin Cities, according to Zillow. 

Salem Mahmoud and Emily Beltmann-Swenson with their son, Ramy, in their first home. Finding it was no easy feat but the long search yielded them just what they wanted from a first home. Photo by David Pierini

Leading all zip codes is 55411, where the average cost of a home jumped 65 percent, from $135,300 to $223,200. Not far behind was 55412 with a 59 percent increase, from $135,300 to $215,500, the Zillow data shows. 

In the past two months, there are signs the market is cooling off. Homes are staying on the market longer yet the challenge remains the same for couples and families who are looking for that first, affordable house. 

Mahmoud and Beltmann-Swenson were renters in Northeast but homes there were out of their price range. One of their few criteria was that they wanted to live in the city and they quickly realized North Minneapolis had homes at a good price and suitable for starting a family.

The housing data provides only broad brush strokes. Missing from the spread sheets are the individual reasons people are buying and selling. Ten sales could have 10 different tales.

“We’ve got a ton of data and I can tell you until I am blue in the face about condominium versus single family home sales and where there is new construction, but we don’t have the surveys asking humans why they move here,” said David Arbit, director of Research and Economics for Minneapolis Area Realtors. “We know people are looking for a bargain and in North people recognize you can get a lot of bang for the buck up there in North.”

The lack of available homes for sale in other parts of the Twin Cities is one factor. There are also stories of buyers new to Minnesota finding prices more affordable than their last residence and were willing to pay $10,000 or more over asking price. 

Unique to North Minneapolis is the bustle around new developments. Long impoverished and neglected, several new projects, including the Upper Harbor Terminal redevelopment and an extension of the Blue Line lite rail train to run through North sometime in the near future, has attracted speculators who are buying homes and apartment buildings, hoping to cash in on the shifting demographics of gentrification. 

In the Harrison neighborhood alone, where Blue Line track and stations were proposed, property taxes in some blocks increased by 60 percent. It drove up rents and forced many people to search for more affordable housing in nearby neighborhoods. 

After the housing crash of 2008, many in North Minneapolis lost their homes because of predatory lending practices that turned homes into opportunities for investors to scoop up for little money.

Arbit points to statistics that showed two out of three homes were bought with cash during a five-year period. From 2008 until 2013, the number of cash sales was more than half. 

“We don’t have the data that breaks out the buyer pool,” Arbit said. “Some owner-occupants, some investors, some hedge funds.”

Anne Mavity, executive director of the Minnesota Housing Partnership, said many neighborhoods in North are paying well above 50 percent of their income to stay in their home or rental unit. 

She also cites the 2008 housing crash, which took ownership out of the hands of a number of people.

“Wages are not keeping up with housing costs,” she said. “Almost 60 percent are paying too much for their housing. This tells you a bit of the story.”

Devonda Scott, a Northsider and realtor with Keller William Realty Integrity Lakes, said it is hard to predict because market conditions shift block by block or house by house. 

“People are selling because of crime and people are buying because of affordability,” Scott said. “There are pockets of North where homes are sitting a little bit longer because of quality; it varies house to house. Your house could be one price but next door, someone pays $15,000 over the asking price. 

“North is still cheaper, that’s why people are calling.”

As of the middle of October, 186 homes in 55411 had sold this year with 74 listed for sale. In 55412, 293 sold with 99 active listings.

Scott said several properties are in such bad shape, speculators looking to buy as an investment won’t bid.

Similarly, Mahmoud and Beltmann-Swenson needed only to drive by a property to quickly scratch off the list. 

“A lot of the houses were rentals,” Belmann-Swenson said. “Landlords seeing the market were trying to get out. You could tell (these properties) were not well-loved.”  

Mahmoud said their exhaustive search made them feel “beaten down” by the market. It was what finally got them to call on the house on Vincent Avenue North they now call home.

They both come from families that made a lot of their own home fixes. Neither are afraid to roll up their sleeves. 

They have a list of projects that include a little landscaping and transforming the mustard-yellow exterior. They will make changes to their kitchens but can already scratch one thing off the list – starting a family. Their son, Ramy, was born in March and a playpen with colorful plastic balls has been added to the living room furniture.

“If you asked a kid to draw a house, that’s what our house looks like,” Mahmoud said. “We fell in love when we walked inside.”