Minneapolis Real Estate Market: Prices, Trends, Forecast 2022-2023

This article has been updated to reflect recent changes in the Minneapolis real estate market due to the coronavirus pandemic. We'll be discussing the housing market trends for the Twin Cities Metro Area in 2022. Our focus for real estate investment would be the Minneapolis housing market—the entire twin city metro area—and we shall also share the top reasons to invest in this region.

Minneapolis–Saint Paul is a major metropolitan area and is commonly known as the Twin Cities after its two largest cities—Minneapolis and Saint Paul. They’re separated by the Mississippi River. The waterfront is home to many cultural landmarks and coveted waterfront real estate. The Twin Cities housing market remains strong, with the median price reaching $375,000 in July 2022, a 7.1 percent increase from last year, according to new data from the Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®.

<<<READ: Minnesota Housing Market: Prices & Forecast>>>

The ongoing inventory shortage is primarily to blame, though the housing inventory in July increased by 13.3 as compared to last year. The housing supply is now 1.7 months, which is still a sign of a strong seller's market. Given a chronically undersupplied market with strong demand, home prices are expected to rise further, albeit at a slower pace due to rising mortgage rates.

Buyers spend approximately $205 per square foot on average. The Twin Cities currently has less than seven weeks' worth of inventory, whereas a balanced market has four to six months' worth. However, over a decade of underbuilding has resulted in fierce competition for the majority of listings.

Despite lower inventory levels, there are signs that supply is beginning to stabilize as the inventory of homes for sale is up 13.9% from last July. Sellers sold 20.2 percent fewer homes than in July of last year. The declines are due in part to the exceptional strength of the 2021 market and also a reaction to rising mortgage rates.

Minneapolis–Saint Paul Housing Market Trends (Describes Twin Cities)

Here are the most recent housing statistics in Minneapolis–St. Paul–Bloomington MN-WI metropolitan area. The area is commonly known as the Twin Cities after its two largest cities, Minneapolis, the most populous city in the state, and its neighbor to the east, Saint Paul, the state capital. With a strong economy and low mortgage rates, buyer activity was very strong last year. Supply and demand continued to favor sellers leading to a rise in prices.

In the 16-County metro area surrounding the Twin Cities, where the housing market has been particularly hot, the number of closed sales fell 20.2 percent to 5,442 in July 2022 as compared to last year. The source of this report is the Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®.

• In July 2022, the number of new listings in the Twin Cities decreased by 17 percent to 6,845.
• The number of days on the market increased by 15.8% to 22 days.
• Price Per Square Foot increased 5.8% to $205.
• The median sales price increased 7.1% to $375,000.
• The average sales price increased 7.4% to $434,254.
• Months Supply of Inventory increased by 13.3% to 1.7 months.

Minneapolis Housing Market Trends (Describes City's Housing Stats)

The median list price of homes in Minneapolis, MN was $325K in August 2022, trending up 4.9% year-over-year, according to Realtor.com The median sale price was $340K. The Sale-to-List Price Ratio is 100%, which means that on average, homes in Minneapolis, MN sold for approximately the asking price in August. Minneapolis is a seller's market, which means the total sales-to-total listings ratio is above 0.2. It also means that more people are looking to buy than there are homes available.

Below is the latest report of the Minneapolis Housing Market which compares the Minneapolis housing metrics from July 2022 with July 2021.

• In July 2022, the number of new listings in Minneapolis decreased by 22.1 percent.
• The number of days on the market increased by 11.1% to 30 days.
• Price Per Square Foot increased 0.3% to $239.
• The median sales price increased 2.6% to $330,000.
• The average sales price increased 3.2% to $396,617.
• Months Supply of Inventory decreased by 4.8% to 2.0 months.

Saint Paul Housing Market Trends (Describes City's Housing Stats)

According to Redfin, a real estate company, the St. Paul housing market is very competitive. Many homes get multiple offers, some with waived contingencies. The average homes sell for about 2% above the list price and go pending in around 14 days. Hot listings on the market can sell for about 7% above the list price and go pending in around 7 days.

In July 2022, St. Paul home prices were up 7.4% compared to last year, selling for a median price of $290K. On average, homes in St. Paul sell after 15 days on the market compared to 12 days last year. There were 377 homes sold in July this year, down from 478 last year.

Below is the latest report of the “St. Paul Housing Market” released by the Minneapolis Area REALTORS®. The report compares the St. Paul housing metrics from July 2022 with July 2021.

• In July 2022, the number of new listings in St. Paul decreased by 23.7 percent.
• The number of days on the market increased by 4.5% to 23 days.
• Price Per Square Foot increased 2.8% to $204.
• The median sales price increased 5.8% to $285,500.
• The average sales price increased 6.3% to $329,562.
• Months Supply of Inventory remained the same at 1.6 months.

Minneapolis Metro Area Housing Market Forecast 2022 & 2023

The Minneapolis housing market is shaping up to continue the trend of the last few years as one of the hottest markets in the United States. It is also one of the hottest real estate markets for investing in rental properties. What are the Minneapolis real estate market predictions for 2022 & 2023? Let us look at the price trends recorded by Zillow over the past few years. Since the last decade (Sept 2012), the typical home value in the Minneapolis-St. Paul-Bloomington Metro has appreciated by about 100.7% (Zillow Home Value Index).

Minneapolis metro area home values have gone up by 9.4% over the past year alone. There exists a limited supply of homes in Minneapolis, and buyers are forced to compete often resulting in higher prices and/or quicker sales that tend to benefit sellers. In other words, based on the last month’s key housing market indicators, the demand is exceeding the supply, giving sellers an advantage over buyers in price negotiations. There are fewer homes for sale than there are active buyers in the marketplace.

• The typical home value of homes in Minneapolis-St. Paul-Bloomington Metro is $377,399, up 9.4% over the past year.
• The Minneapolis Metro housing market forecast ending with July 2033 is positive.
• Despite the market cooling off, Zillow predicts that Minneapolis MSA home values may grow by 0.6% by July 2023.
• If this forecast is correct, Minneapolis Metro home prices will be higher in the 2nd Quarter of 2023 than they were in the 2nd Quarter of 2022.
• Minneapolis (city) home values have gone up 3.9% over the past year ($342,239 as of July 2022).
• Saint Paul's home values have gone up 6.6% over the past year ($292,905 as of July 2022).
• Bloomington home values have gone up 7.4% over the past year ($364,100 as of July 2022).

The real estate activity continues to slow down in the Twin Cities region in this peak home-buying season. Supply is growing during the worst inventory shortage in decades. Median Sales Price is still higher than last year. Days on market are down marginally compared to 2021. In a balanced real estate market, it would take about five to six months for the supply to dwindle to zero.

In terms of months of supply, Minneapolis, or the entire twin cities housing market can become a buyer’s real estate market if the supply increases to more than five months of inventory. In any case, that isn't going to happen, at least not in the next twelve months. This region (and entire Minnesota state) is very much skewed to sellers due to a persistent imbalance in supply and demand. Thus, the housing inventory continues to be constrained.

The mortgage rates have been increasing in 2022. If buyer demand continues to ease, we could see a positive influence on the low inventory of the Twin Cities region while at the same time seeing a negative impact on sales. Also, if listings linger on the market for longer, buyers have a special edge in negotiating sales prices.

As a result, buyers who enter the market at this should have more options than usual when it comes to choosing a property. So they should take advantage of scooping up their favorite deals which otherwise are taken away by seasoned investors in the bidding wars. Whether you’re looking to buy or sell, timing your local market is an important part of real estate investment.

Minneapolis Real Estate Investment: Is It A Good Place For Investment?

Now that you know where Minneapolis is, you probably want to know why we’re recommending it to real estate investors. Is Minneapolis a Good Place Real Estate Investment? You need to drill deeper into local trends if you want to know what the market holds for the year ahead. We have already discussed the Minneapolis housing market forecast for answers on why to put resources into this market.

Let’s talk a bit about Minneapolis and the surrounding metro area before we discuss what lies ahead for investors and homebuyers. With a population of roughly 3.5 million, Minneapolis is the 16th largest metropolis in the United States. This city by the water is known for great cultural organizations that draw a diverse array of residents interested in the performing arts, theatre, music, and writing. Six Fortune 500 companies make their headquarters within the city limits of Minneapolis including Target and Pepsi Americas.

Minneapolis by itself is home to more than four hundred thousand people, making it the largest city in the state of Minnesota and the larger of the Twin Cities. The Twin Cities metro area includes more than three and a half million people, making it the sixteenth largest metro area in the U.S. and the third largest in the Midwest. But unlike much of the Rust Belt, Minneapolis is going strong. This is but one reason to take another look at the Minneapolis housing market.

If you are a home buyer or an investor in the Twin Cities real estate market, you'd know that it has a track record of being one of the best long-term real estate investments in the U.S. over the last ten years or so. In fact, in the Midwest United States, the Minneapolis housing market ranks highest when it comes to a positive market outlook. Inventory is a significant problem throughout Minnesota. The twin city metro area is a strong seller's market due to a persistent shortage of housing supply.

Minneapolis has a mixture of owner-occupied and renter-occupied housing. One or two-bedroom single-family detached homes are the single most common housing type in Minneapolis, according to Neighborhoodscout.com. Other types of housing that are prevalent in Minneapolis include large apartment complexes or high-rise apartments ( 39.84%), duplexes, homes converted to apartments or other small apartment buildings ( 13.14%), and a few row houses and other attached homes ( 3.90%).

Single-family detached homes account for roughly 42.25% of Minneapolis's housing units. At the national level, single-family rental homes have grown up to 30% within the last three years. Almost all the housing demand in the US in recent years has been filled by single-family rental units. With 2020 being, theoretically, in the middle of a boom, there are still 4 years for residential construction to surge. Most likely, a housing shortage will remain in 2020, keeping home prices high.

In 2016 Minneapolis had moved into the top 20 emerging real estate markets in the country. It is one of the best places in the Midwest U.S. to invest in real estate. Minneapolis real estate has appreciated 86.27% over the last ten years, which is an average annual home appreciation rate of 6.42%, according to NeighborhoodScout.com. This puts Minneapolis in the top 30% nationally for real estate appreciation.

Looking at just the latest twelve months, Minneapolis real estate appreciation rate has been at 9.36%, which is lower than appreciation rates in most communities in America. The home prices in the Minneapolis housing market will be on an upswing all through 2022. In the latest quarter, NeighborhoodScout's data show that house appreciation rates in Minneapolis were at 0.70%, which equates to an annual appreciation rate of 2.82%. Let’s take a look at the number of positive things going on in the Minneapolis real estate market which can help investors who are keen to buy an investment property in this city.

Minneapolis' Strong Job Market

We touched on the strong Minneapolis job market. The Twin Cities job market has been revived by a wave of jobs in the life sciences, biotechnology, and medicine. This has helped to give workers in Minneapolis an average annual salary of six thousand dollars higher than the national average. The city even made a “The Ladders” list for cities with the most $100,000 plus jobs.

That fuels the demand for Minneapolis rental properties at the more expensive end of the market. Yet their location on the Mississippi River and other transit routes contribute to a diverse job ecosystem, where employers like 3G and General Mills maintain manufacturing and food processing hubs. People move here from across Minnesota in search of work, since their unemployment rate is consistently one full percentage point lower than the national average.

Minneapolis' Strong Demand for Housing

Housing markets can be large and declining – Detroit being a shining example, Minneapolis is notable for being a growing city, driving demand for properties in the Minneapolis real estate market. The population growth is driven by both migrations to the area by those seeking jobs and demographic momentum. This is why the Minneapolis housing market is expected to see home price appreciation this year despite the ongoing pandemic.

The month's supply of housing inventory in Minneapolis, the twin cities region, and the entire state of Minnesota is very tight. This entire region is a strong seller's real estate market. One of the defining features of older Rust Belt cities is that they’ve been heavily built up for decades. In the case of the Minneapolis housing market, geography and existing construction constrain the new housing supply.

They can’t build on water or build out in the direction of St. Paul. The city already has suburbs, but people don’t want to move too far out from the urban core where most jobs exist. This forces builders to tear down old buildings to bring new, denser development to the Minneapolis housing market. That is more expensive than building new homes on the farmland. All of this constrains new construction. It also explains why many houisng experts think home prices will rise in the next twelve months.

The Minneapolis Rental Market is Growing

The median sales price in Minneapolis is around $305,000 as of June 2020. It means you can buy several properties in the Minneapolis housing market for the cost of one home in a “hot” market like San Francisco or Los Angeles. The median rental price in Minneapolis is roughly $1,800. This is higher than the Minneapolis metro area rental rate of $1700. Given the appreciation seen in the Minneapolis real estate market, we can expect rental rates to increase faster than the rate of inflation because new construction isn’t going to meet demand.

The Minneapolis real estate market is affordable compared to several booming rental markets across the country. However, the fact remains that the rental market in Minneapolis is growing. Many would-be homebuyers cannot afford to buy their first home, so they have to rent. Students who stay to work compete with economic migrants and the children of locals.

Compounding the matter are the Millennials who watched parents lose homes in the 2007 housing bust and choose to rent though they could afford a home. This explains why the share of the people that rent is growing. 55% of the households in Minneapolis, MN are renter-occupied while 44% are owner-occupied. And this trend will fuel demand for Minneapolis rental properties for years to come. More than 50% of the apartments can be rented for $1,500 or less.

Current Rental Statistics: As of September 12, 2022, the average rent for a 1-bedroom apartment in Minneapolis, MN is $1,215. This is a 2% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Minneapolis remained flat. The average rent for a 1-bedroom apartment decreased by -2% to $1,215, and the average rent for a 2-bedroom apartment decreased by -1% to $1,700.

• The average rent for a 2-bedroom apartment in Minneapolis, MN is currently $1,700, a 0% increase compared to the previous year.
• The average rent for a 3-bedroom apartment in Minneapolis, MN is currently $1,950, a 3% increase compared to the previous year.
• The average rent for a 4-bedroom apartment in Minneapolis, MN is currently $2,400, a 9% increase compared to the previous year.

According to RENTCafé,  the average size for a Minneapolis, MN apartment is 786 square feet, but this number varies greatly depending on unit type, with cheap and luxury alternatives for houses and apartments alike. Studio apartments are the smallest and most affordable, 1-bedroom apartments are closer to the average, while 2-bedroom apartments and 3-bedroom apartments offer more generous square footage.

The Zumper Minneapolis Metro Area Report analyzed active listings last month across 4 metro cities to show the most and least expensive cities and cities with the fastest growing rents. The Minnesota one bedroom median rent was $1,179 last month. Maple Grove was the most expensive city with one bedrooms priced at $1,510 while St Paul was the most affordable city with one bedroom priced at $1,050.

The best place to buy rental property is about finding growing markets. Cities like Maplewood, St. Paul, and Roseville are good for investors looking to get started with rental property ownership at an affordable price. These cities look good for rental property investment this year as rents are growing over there. These trends provide a macro look at the growing rental demand.

Each real estate market has its own unique supply-demand dynamics with unique neighborhoods that present opportunities for investors. Here are the best areas to invest in a rental property in the Minneapolis Metro Area in 2022. Most of these places have the same things in common, including rising rents and increasing property values.

The Fastest Growing Cities For Rents in Minneapolis Metro Area (Y/Y%)

• Maple Grove had the fastest growing rent, up 11% since this time last year.

The Fastest Growing Cities For Rents in Minneapolis Metro Area (M/M%)

• Minneapolis rent increased 3.3% last month, making it the fastest growing.
• St. Louis Park was second with rent climbing 1.8%.

The Massive Student Market

Any university creates an excellent opportunity for real estate investors. Every college brings in a large number of students who will need to rent a property close to the university. The rent students pay is based on demand for the school, not the state of the local economy. For investors targeting this niche, Minneapolis rental properties are a great addition to your investment portfolio because of the diverse opportunities this market provides. Because of the university, there are lots of students and activities and venues that specifically cater to the student population.

There are many colleges in Minneapolis itself. The University of Minnesota campuses in the area are some of the largest public university campuses in the US. Augsburg College hosts more than three thousand students. Smaller arts and technical colleges dot the town. Because so many colleges are in the middle of the city, downtown Minneapolis rental properties could be advertised to students at several schools. Then, if the local college of arts and design closes, you don’t have to worry about who else may rent the units.

The University area is very popular with young people and provides not only great nightlife and entertainment but plenty of parks and recreational facilities to enjoy during the day. Housing, from houses for rent to apartments and condos are affordable and near inexpensive restaurants, bars, cafes, and bookstores.

The Landlord-Friendliness of Minneapolis

Many states in the Midwest are more tenant-friendly than landlord-friendly. The Minneapolis housing market, though, is more landlord-friendly. There are limits on late fees, and interest is required on deposits. However, no rental license is required by the state, and there isn’t a grace period set in stone for late rental payments. You can protect your income from Minneapolis rental properties by evicting tenants not only for nonpayment of rent but committing illegal acts on the premises, staying after the lease has ended, and breaching the lease. Just make sure the lease agreement says what actions constitute a breach of lease for which they could be evicted.

The (Relatively) Low Taxes in Minnesota

Houses in Minnesota face an average 1.19% property tax rate. This is very close to the national average of 1.21%. Wisconsin’s tax rate is in this same range, but their higher average property values mean they pay far more in property taxes than those in the cheaper Minneapolis real estate market. Minnesota’s reputation as a high tax state is driven by its higher sin taxes on alcohol and cigarettes and higher than the average sales tax rate. Neither of these affects most real estate investors. Its income taxes are thirteenth highs in the U.S., but it is a bargain compared to states like Illinois. Then again, Illinois has the second-highest property taxes in the country.

The Upward Long-Term Trajectory

Both Wisconsin and Minnesota are seeing growth while much of the Rust Belt deteriorates. However, Minnesota’s policies have led to faster job growth, wage growth, and population growth than Wisconsin. Yet the state has continued to rank well in rankings for quality of life. That makes the Minneapolis real estate market a better deal than the property is theoretically more business-friendly Wisconsin.

Maybe, you have done a bit of real estate investing in Minneapolis or the twin cities region but want to take things further and make it into more than a hobby on the side. It’s only wise to think about how you can and should be investing your money. In any property investment, cash flow is gold. Should you consider Minneapolis real estate investment?

Minneapolis offers an ideal mix of a strong job market, affordable real estate, a large rental market, and a limited housing supply. These factors will drive up property values and rental rates growing at a healthy clip for years. The entire twin cities region is a great place to invest in real estate.

Good cash flow from Minneapolis rental property means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt. Therefore, finding the best investment property in Minneapolis in a growing neighborhood would be key to your success.

When looking for real estate investment opportunities in Minneapolis or anywhere in the country, the generally accepted standard is to purchase a property that will give you a modest but minimum of 1% profit on your investment. An example would be: at $120,000 mortgage or investment cost, $1200 per month rental. That would be the ideal equation for example. Even with rent increases, buying a $500,000 investment property in Minneapolis is not going to get you $5000 per month on rent.

When looking for the best real estate investments in Minneapolis, you should focus on neighborhoods with relatively high population density and employment growth. Both of them translate into high demand for housing. If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable.

The neighborhoods should be close to basic amenities, public services, schools, and shopping malls. A cheaper neighborhood in Minneapolis might not be the best place to live in. A cheaper neighborhood should be determined by these factors – Overall Cost Of Living, Rent To Income Ratio, and Median Home Value To Income Ratio. It depends on how much you are looking to spend and if you are wanting smaller investment properties or larger deals in Class A neighborhoods.

There are about 699 schools in Minneapolis—231 elementary schools, 176 middle schools, 202 high schools, and 90 private & charter schools. The Minneapolis school system offers a wide range of school choices, from charter schools to great public schools, to those specializing in STEM education. There are 264 neighborhoods in Minneapolis.

Some of the best or popular neighborhoods in Minneapolis are Calhoun-Isles, Camden, Northeast Park, Powderhorn, and Downtown East. Camden is located in the north corner of the city, on the east bank of the Mississippi, is composed of several small neighborhoods. It is one of Minneapolis' most diverse neighborhoods.

There's a great mix of middle and working-class families and housing is rated as affordable.   Northeast Park is becoming popular with young people, provides affordable housing options for every budget. The area has a variety of residential areas, industrial areas and old mills, historic churches, established and new retail areas.

Here are the top neighborhoods in Minneapolis having the highest real estate appreciation rates since 2000—List by Neigborhoodscout.com.

1. Downtown East
2. Central Minneapolis East
3. Ventura Village
4. Elliot Park South
5. Lyn-Lake
6. Powderhorn Northwest
7. Powderhorn West
8. Bryant
9. Powderhorn North
10. Phillips

Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.

NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Minneapolis and the Twin Cities region.

Consult with one of the investment counselors who can help build you a custom portfolio of Minneapolis turnkey properties. These are “Cash-Flow Rental Properties” located in some of the best neighborhoods of Minneapolis.

Not just limited to Minneapolis or Twin Cities of Minnesota but you can also invest in some of the best real estate markets in the United States. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete Minneapolis turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.

Let us know other than the Twin Cities region which housing markets you consider best for real estate investing!

---

Remember, caveat emptor still applies when buying a property anywhere. Some of the information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US. 

References

Market Reports & Forecasts
https://www.mplsrealtor.com/
http://maar.stats.10kresearch.com/reports/lmu
https://www.mnrealtor.com/buyers-sellers/marketreports
https://www.zillow.com/Minneapolis-mn/home-values
https://www.littlebighomes.com/real-estate-minneapolis.html
https://www.realtor.com/realestateandhomes-search/Minneapolis_MN/overview
https://www.neighborhoodscout.com/mn/minneapolis/real-estate

Foreclosures
http://maar.stats.10kresearch.com/docs/fss/2020-06/x/report?src=page
https://www.realtytrac.com/statsandtrends/mn/hennepin-county/minneapolis

Job Growth
https://realestate.usnews.com/places/minnesota/minneapolis-st-paul/jobs
https://www.theladders.com/career-advice/these-are-the-15-cities-with-the-most-100k-jobs-in-december-2018
https://www.jsonline.com/story/news/politics/2018/05/08/its-liberal-minnesota-vs-gop-wisconsin-study-economic-growth/590813002

Rental market | Landlord friendly
https://www.collegesimply.com/colleges-near/minnesota/minneapolis
https://www.avail.co/education/laws/minnesota-landlord-tenant-law
https://www.landlordology.com/10-cities-to-buy-rental-property
https://www.minnpost.com/economy/2018/02/why-it-s-extremely-difficult-buy-first-home-minnesota-right-now
https://www.minnpost.com/metro/2019/03/a-majority-of-minneapolis-households-now-rent-their-homes

Low Taxes
https://smartasset.com/taxes/minnesota-property-tax-calculator
https://www.usatoday.com/story/money/taxes/2018/04/06/states-highest-and-lowest-taxes-3-6/48294400