First-Time Buyers Are Returning to the Twin Cities

Written by:

Steve Marcinuk

Date:

04 Jun 2026

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The Twin Cities real estate market sits at a crossroads familiar to many mid-sized metros across the country: steady corporate employment keeps demand alive, but persistent inventory shortages, elevated interest rates, and shifting buyer behavior are reshaping how deals actually get done. For professionals working this market every day, the picture is more nuanced than regional headlines suggest.

Brian Durham, Managing Broker and Team Owner at WeGo Real Estate Brokered by LPT Realty, has spent over 13 years in residential and commercial real estate in the Twin Cities, preceded by nearly a decade in banking and finance. That background informs a data-grounded perspective on what is driving the market today and where the pressure points remain.

A Market Held Together by Corporate Anchors

The Twin Cities benefits from a strong employment base that continues to underpin housing demand. Home to corporate headquarters including Target, Medtronic, and General Mills, with a significant banking presence, the metro has a degree of economic stability that many comparable markets lack.

That foundation shows up in the numbers. The average home price across the Twin Cities sits around $385,000, though that figure varies considerably by suburb. Some communities have effectively priced out entry-level buyers, with floor prices pushing well above $500,000.

The Rate Lock Reality

The most consistent theme shaping buyer behavior right now is the mortgage rate differential. A large share of existing homeowners are sitting on sub-4% mortgages, and the math of trading up, or even downsizing, into a 6.5% loan often doesn’t pencil out.

“Even if they downsize into a smaller, less expensive home, it can actually cost them more per month,” Durham explains. “So sometimes the advice I give is to not move, because it doesn’t make financial sense.”

This is not reluctance born of uncertainty alone. For many clients, it is simply the rational choice. Durham describes a growing pattern of homeowners choosing to renovate and adapt their current homes rather than sell, a reversal from the more transactional mindset that defined the market five or six years ago.

Where buyers are active, the motivation tends to be necessity. Relocations, family changes, and life transitions are driving most transactions, while discretionary moves remain subdued.

First-Time Buyers Are Coming Back

One segment showing renewed momentum is first-time buyers. After a period of sitting out, many renters appear to be recalibrating their expectations around rates and re-engaging with the purchase process.

Part of this return reflects a broader psychological adjustment. The expectation that rates would drop back to 3% or 4% has largely faded, and buyers who can afford current payments are increasingly choosing to move forward rather than wait. “They’re starting to see the value of owning something and building equity,” Durham notes.

His approach with these clients is straightforward: if the payment works today, get into the home and refinance later if conditions improve. He also points out that any significant rate drop would likely pull more buyers off the sidelines, pushing prices higher and eroding the affordability gains buyers are waiting for.

Inventory: More Listings, Still Not Enough

Overall listing inventory has increased in the Twin Cities, but the gains have not meaningfully addressed the underlying shortage, particularly at affordable price points. Much of the new construction activity is concentrated in higher price ranges, leaving the entry-level segment chronically undersupplied.

The state recently passed zoning and HOA-related changes that could affect development patterns, though the near-term impact remains uncertain. Some municipalities are already responding cautiously. Lakeville, where Durham lives, has implemented a one-year moratorium on new development while the implications of the state-level changes are assessed.

At the affordable end of the market, demand continues to outpace supply. Properties priced for first-time buyers are moving quickly, with some selling within ten days even during holiday weekends. At the affordable end of the market, demand continues to outpace supply. Properties priced for first-time buyers are moving quickly, with some selling with multiple offers. 

Where the Condo Market Is Struggling

Not every segment is performing the same way. The condo market in Minneapolis and St. Paul stands out as a notable weak spot, with inventory rising and price reductions becoming more common. Durham attributes this to an oversupply dynamic that has made it harder for sellers to hold firm on pricing.

Real estate performance in the Twin Cities is highly localized. The metro covers a large geographic area, and conditions in the urban core can look very different from those in the outer suburbs. “When you get into the suburbs, some of them can feel very different than the actual cityscape of Minneapolis and Saint Paul that you see on the news,” Durham says.

What Sellers Need to Hear

Seller behavior has adjusted alongside market conditions. Concessions and price reductions are more common than they were a few years ago, and sellers who enter the market with unrealistic expectations tend to sit longer than necessary. Durham’s approach centers on setting clear expectations before a listing goes live, walking clients through absorption rates, comparable inventory, and realistic timelines.

“If you’re setting the price right on the front end, and knowing what’s available in the neighborhood or the city, there shouldn’t be a whole lot of price reductions that need to happen,” he explains.

Post-inspection negotiations remain a common friction point. Many sellers want to move on without making repairs or offering significant concessions, which requires careful expectation-setting with both sides of a transaction before issues surface.

Investor Outlook

For investors considering the Twin Cities, Durham sees the most opportunity in multifamily development and long-term single-family rentals. Fix-and-flip activity is harder to execute through conventional channels, with the best opportunities typically coming through off-market networks rather than listed inventory.

“That’s where you need a good agent, a good broker that has the network,” he says, noting that the most attractive flip candidates rarely reach the open market.

Headwinds Worth Watching

Looking ahead, interest rates remain the variable with the most potential to move the market in either direction. Durham notes that broader borrowing costs, including auto loans and credit cards, factor into housing affordability as much as mortgage rates do, and the cumulative pressure on household budgets is real.

On a more constructive note, recent federal-level changes to HUD guidelines could reduce construction costs for builders. Durham estimates the prior requirements added $20,000 to $30,000 to the cost of a new build. Even a partial reduction in those costs could meaningfully affect monthly payments for buyers at the entry level.

What Comes Next

The Twin Cities market is unlikely to see dramatic movement in either direction without a meaningful shift in interest rates. The structural supports, corporate employment, steady population, and chronic undersupply at the entry level keep a floor under prices. But the rate lock effect continues to suppress turnover, and until that dynamic breaks, the market will likely remain defined by necessity-driven transactions and localized pockets of competition rather than broad momentum. For buyers willing to act now and for sellers willing to price realistically, opportunities exist, but patience and precision matter more than they have in years.

About the Expert: Brian Durham is Managing Broker and Team Owner at WeGo Real Estate Brokered by LPT Realty, with over 13 years in residential and commercial real estate in the Twin Cities, preceded by nearly a decade in banking and finance.

This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.