Housing demand is high and so is competition for land. Builders are looking for lots that will allow them to build product that fits today's buyer's needs, something attainable for an entry level buyer. All of these factors mean that builders are pushing new developments farther and farther outside of city limits.
In Dayton, developers propose building 1,700 new houses over the next 10 to 20 years, doubling the number that are now in the riverside town an hour northwest of downtown Minneapolis.
The stunning plan is one of several that have emerged in recent months to show how rising prices in the heart of the Twin Cities are pushing developers — and home buyers — back to the fringes of the metro region.
This shift comes a decade after the housing crash put the brakes on what had been a land grab. Homebuilding came to a standstill and land buyers put away their checkbooks. As the market recovered, developers concentrated on the urban core with a flurry of apartment building that remade downtown Minneapolis and St. Paul.
Now, there’s a new generation of younger home buyers on the hunt. Demand for lower-priced houses, which are easier to build in outlying areas with lower costs for land, appears insatiable.
“We now have a market where there is demand in areas that had no demand even two or three years ago,” said Jake Walesch, who is partnering with Dave Gonyea and Bill Ramsay on the project in Dayton. They have about 500 acres under contract.
Demand for inexpensive starter houses far exceeds supply in many parts of the metro area, so developers and homebuilders are scrambling to come up with ways to provide more economical options. The median sales price for a new house during October was $392,790, about $160,000 more than the price of an existing house, according to the Minneapolis Area Association of Realtors.
As a result, several developers have announced plans for sprawling subdivisions in outlying suburbs. In Rogers, Lennar proposed a 300-acre, 537-home development called Laurel Creek that would include entry-level row houses and quad-style townhouses that would start in the low- to mid-$200,000 range.
