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. Our focus for real estate investment would be the Minneapolis housing market—entire twin city metro area—and we shall also share the top reasons to invest in this region. First of all, let's find out how is Covid-19 pandemic is affecting the real estate activity in the Minneapolis housing market.
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 entire Minnesota housing market slumped in May due to coronavirus pandemic causing a -24.2% decline in new listings and -20.4% decline in home sales (closed) as compared to May 2019, according to Minnesota Realtors®. Pending sales also dropped by 12.6%. The twin cities of Minneapolis and St. Paul. were below the state average as home sales dropped by 25.1% over there.
In June, the Minnesota housing market pulled up from the steep declines seen in May. Closed sales in June declined only -8.1% year over year, showing some recovery from the -20% declines seen last April and May. The twin city metro area saw a year-over-year decline of 12.7% in home sales—which was much better than May's drop of 25.1%. The Median Sales Price continued to uptick in June. It increased by 5.2 percent to $305,000.
The latest “MINNEAPOLIS HOUSING MARKET ANALYSIS” is given below.
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 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. through 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.
In 2016 Minneapolis had moved into the top 20 emerging real estate markets in the country. Now let’s take a close look at the Minneapolis real estate market trends and forecasts for 2020 & 2021 find out why it is one of the best places in the Midwest U.S. to invest in real estate.
Minneapolis Housing Market Trends & Statistics 2020
We shall now discuss some of the most recent housing trends in the twin cities of Minneapolis & St. Paul metro area and compare it with the past couple of years. We shall mainly discuss median home prices, inventory, economy, growth, and neighborhoods, which will help you understand the way the local real estate market moves in this region.
Minneapolis real estate has appreciated 31.09% over the last ten years, which is an average annual home appreciation rate of 2.74%, according to NeighborhoodScout.com. This puts Minneapolis in the top 20% nationally for real estate appreciation. Looking at just the latest twelve months, Minneapolis real estate appreciation rate has been at or slightly above the national average, at 5.03%.
Let us examine the 2019's annual housing report for the 16-County Twin Cities region released by the Minneapolis Area REALTORS®. With a strong economy and low mortgage rates, buyer activity was very strong in 2019. Supply and demand continued to favor sellers leading to a rise in prices. Pending sales increased 1.4 percent, finishing 2019 at 59,998. Closed sales were up 0.8 percent to end the year at 59,843.
Home prices in the twin cities houisng market were up compared to last year. The overall median sales price increased 5.7 percent to $280,000 for the year. Single Family Detached home prices were up 6.5 percent compared to last year, and townhouse-condo attached home prices were up 8.5 percent. Comparing 2019 to the prior year, the number of homes available for sale was lower by 19.6 percent. There were 7,431 active listings at the end of 2019. New listings increased by 0.2 percent to finish the year at 76,345.
As we entered into 2020, low-interest rates, low unemployment, and rising rents nationally drove the housing market up. Home prices in the twin cities continued to gain traction. The Median Sales Price increased by 4.2 percent to $270,000. Days on Market was up 1.5 percent to 66 days. Sellers were encouraged as Months Supply of Homes for Sale was down 16.7 percent to 1.5 months. There was a lot of optimism for the coming spring market until the novel Coronavirus hit the nation in March which led to the nationwide stay at home orders.
Impact of COVID-19 on The Minneapolis Housing Market
The impact of the COVID-19 pandemic was felt across the country from the last week of March. However, home prices in the Twin Cities region continued to gain traction in March's monthly report. The Median Sales Price increased 8.0 percent to $297,000. Days on Market was down 9.1 percent to 60 days. Sellers were encouraged as Months Supply of Homes for Sale was down 15.0 percent to 1.7 months.
In April, new listings in the Twin Cities region decreased 22.9 percent to 5,967. Pending Sales were down 20.1 percent to 4,612. Inventory levels fell 13.1 percent to 9,279 units. Prices continued to gain traction. The Median Sales Price increased by 8.9 percent to $305,000. Days on Market was down 17.5 percent to 47 days. Sellers were encouraged as Months Supply of Homes for Sale was down 18.2 percent to 1.8 months.
May continued with a slump in real estate activity. New listings in the Twin Cities region decreased 24.1 percent to 7,199. Pending Sales were down 13.9 percent to 5,828. Inventory levels fell by 20.3 percent to 9,744 units. Prices continued to gain traction in May as well. The Median Sales Price increased by 3.5 percent to $294,900. Days on Market was down 8.9 percent to 41 days. Sellers were encouraged as Months Supply of Homes for Sale was down 20.0 percent to 2.0 months.
Below is the latest report of the “Minneapolis Housing Market.” The source of this report is the Minneapolis Area REALTORS®. The report compares the Minneapolis housing metrics from June 2020 with June 2019.
|New Listings in Minneapolis dropped by 2.3% to 765.|
|Closed Sales in Minneapolis dropped by 18.2%.|
|Median Sales Price rose by 3.4% to $305,000.|
|Average Sales Price increased by 1.4% to $358,941.|
|Price Per Square Foot increased by 0.5% to $223.|
|Inventory of Homes for Sale dropped by 10.5%.|
|Months Supply of Inventory dropped by 4.3% to 2.2.|
Below is the latest report of the “16-County Twin Cities Housing Market” by the Minneapolis Area REALTORS®. The report compares the housing metrics of the 16-County Twin Cities Region from June 2020 with June 2019.
|New Listings in the 16-County Twin Cities Region dropped by 14.6% to 7,306.|
|Closed Sales in the 16-County Twin Cities Region dropped by -8.8% to 6,118.|
|Median Sales Price rose by 5.2% to $305,000.|
|Average Sales Price increased by 2.7% to $348,153.|
|Price Per Square Foot increased by 3.0% to $166.|
|Inventory of Homes for Sale dropped by -29.8%.|
|Months Supply of Inventory dropped by -33.3% to 1.8.|
For the month of May:
• Median Sales Price increased by 3.5% to $294,900
• Days on Market decreased by 8.9% to 41
• Percent of Original List Price Received decreased 0.4% to 99.6%
• Months Supply of Homes For Sale decreased by 16.0% to 2.1
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 June 2020 with June 2019.
|New Listings In St. Paul dropped by 5.4% to 488.|
|Closed Sales in the St. Paul dropped by -9.8% to 332.|
|Median Sales Price rose by 6.4% to $246,800.|
|Average Sales Price increased by 7.3% to $286,773.|
|Price Per Square Foot increased by 2.0% to $180.|
|Inventory of Homes for Sale dropped by -19.4%.|
|Months Supply of Inventory dropped by -22.7% to 1.7.|
Below is the latest report of the “Minnesota Housing Market.” The source of this report is the Minnesota Association of REALTORS®. The report compares the key housing statistics of the entire state of Minnesota from June 2020 with June 2019. Affordability also continued to drive the residential real estate market throughout Minnesota. Fueled by lower interest rates for home mortgages, the Affordability Index, a national measure of housing affordability, rose 7.2% in June.
|New Listings in the Minnesota housing market dropped by 12.1% to 10,993. In June 2019 the number was 12,506.|
|Closed Sales in the Minnesota housing market dropped by 8.1% to 8,954.|
|Median Sales Price rose by 3.4% to $273,000.|
|Percent of Original List Price Received drooped by 0.5% to 98.5%.|
|Days on Market Until Sale increased by 4.5% to 46.|
|Months Supply of Inventory dropped by 30.3% to 2.3.|
Minneapolis Real Estate Market Forecast 2020 – 2021
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 2020? Let us look at the price trends recorded by Zillow over the past few years. Since 2012, the median home prices in Minneapolis have appreciated by roughly 77.7% from $164,000 to $291,476, according to Zillow’s data.
The Zillow Buyer-Seller Index (BSI) currently lists the current market temperature as “warm” in Minneapolis – which is a sign of a seller’s real estate market. This is computed monthly. According to their index, 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.
Minneapolis home values have gone up by 3.3% over the past year and Zillow predicts they will fall within the next year. The latest Minneapolis real estate market forecast is that the home prices may decrease by 1.8%—in the next twelve months. It may be perhaps due to COVID-10 that has led to a situation in which supply exceeds demand, giving purchasers an advantage over sellers in price negotiations. That's how the prices remain flat or drop.
Here is the visual representation of historical Minneapolis home prices and the latest forecast until March 2021.
Here is a short and crisp Minneapolis housing market forecast for the 3 years ending with the 3rd Quarter of 2021. The accuracy of this forecast for Minneapolis is 87% and it is predicting a positive trend. LittleBigHomes.com estimates that the probability of rising home prices in Minneapolis is 87% during this period. If this price forecast is correct, the Minneapolis home values will be higher in the 3rd Quarter of 2021 than they were in the 3rd Quarter of 2018.
The change in home prices for Minneapolis-St. Paul-Bloomington, MN-WI are shown above for the three-time periods by LittleBigHomes.com. The highest annual change in the value of houses in the Minneapolis Real Estate Market was 22% in the twelve months ended with the 1st Quarter of 1979. The worst annual change in home values in the Minneapolis Market was -11% in the twelve months ended with the 1st Quarter of 2010. The Home Price Index indicates that the Minneapolis market is up 22% over the last 10 years. Home prices in the Minneapolis Real Estate Market have gained 7.51% over the last 12 months. Over the last thirty years, it is up to 205%.
|Time Period||Minneapolis Metropolitan Area Real Estate Appreciation|
|Last 5 Years||34%|
|Last 10 Years||22%|
|Last 20 Years||108%|
The question now is what happens moving forward. Is Minneapolis and the entire twin cities region going to remain a seller's real estate market amid the ongoing Coronavirus pandemic, which no one knows when it is going to end? These numbers can be positive or negative depending on which side of the fence you are — Buyer or Seller? While many have lost jobs, making them ineligible for a home mortgage, some sellers have taken their homes off the market. With the re-opening of the economy, the demand is rising again. While buyer activity continues to be robust, the decrease in the number of active listings indicates that new sellers are still not willing to put their homes on the market until the pandemic or its threat is completely over.
Many housing experts believe sellers remain reluctant to list their homes due to continued concerns over COVID-19, which was beginning to see a resurgence in June. At the same time, the industry is adapting to the current environment by conducting business using technologies such as virtual showings and e-signing to help buyers and sellers with their housing needs in the face of these challenges. Nationally, June showing activity was up notably from the COVID-19 depressed levels in recent months but was also up from June 2019, reflecting pent-up demand by prospective home buyers.
While the effects of COVID-19 in the broader economy continue, real estate activity is beginning to recover across much of the country as well as in the state of Minnesota. According to Freddie Mac, mortgage rates have been below 3.3 percent for more than four weeks and are hovering near all-time lows, spurring strong interest by buyers and lifting showing activity up 4% nationally versus a year ago in the final week of May. As the country is working on a phased reopening of the economy, real estate activity continued to strengthen in the Twin Cities region in June.
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. And that’s not going to happen. This region (and entire Minnesota) is very much skewed to sellers due to persistent imbalance in supply and demand. In June, the month's supply of inventory for the twin cities dropped by -33.3% to 1.8. Until sellers regain confidence, housing inventory will continue to be constrained during what is expected to be an active summer selling season. This will push the home prices up even though at a slower pace.
We think the Twin Cities housing market would be a balanced real estate market for the remainder of this year. Sales would decline over the coming months as well, especially if the metro areas continue to struggle with a sharp rise in coronavirus cases. Home prices, however, would remain steady from last year with no sharp rise or decline. That's a good indicator for homebuyers who cannot afford a home in the median price. This means you can probably buy a home for less than list price, and the seller might be willing to pay some or all of your closing costs.
For buyers in Minneapolis and the entire twin cities metro area, mortgage rates are at their lowest. Therefore, this is a good time for them to enter the market and scoop up their favorite deals. If buyer demand eases, we could see a positive influence on the low inventory of 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.
Nationally, the real estate market is heating up with an increase in home buying despite the COVID-19 pandemic. The real estate sector has been one of the most resilient areas of the economy during the severe economic shutdown. The latest housing market trend to be seen is that the lack of supply is leading to a decline in existing home sales even though new home sales have jumped nearly 13% year over year.
Please do not make any real estate or financial decisions based solely on the information found within this article. Real estate market forecasts given in this article are just an educated guess and should not be considered financial advice. Many variables could potentially impact the value of a home in Minneapolis in 2020 (or any other market) and some of these variables are impossible to predict in advance. Real estate prices are deeply cyclical and much of it is dependent on factors you can’t control.
Minneapolis Real Estate Market: Where Can You Find Homes For Sale?
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, the 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.
Currently, there are 495 homes for sale in Minneapolis, MN on Zillow, an online real estate database company. Additionally, there are 108 homes for rent. Under potential listings, there are about 27 Foreclosed and 161 Pre-Foreclosure homes. These are the delinquent properties that may be coming to the market soon but are not yet found on a multiple listing service (MLS).
- The median list price per square foot in Minneapolis $261, which is higher than the Minneapolis-St. Paul-Bloomington Metro average of $202.
- The median price of current listings is $309,650.
- The median price of homes that are sold out is $292,600, which indicates that homes are selling below their asking prices.
- The median rent price in Minneapolis is $1,795, which is higher than the Minneapolis-St. Paul-Bloomington Metro median of $1,699.
There are currently 1776 homes for sale and 999 homes for rent in Minneapolis, MN on Realtor.com, a real estate listings website. As we write this, the newly listed homes on Realtor.com are 216. According to their statistics, in June 2020, Minneapolis was a seller's real estate market, which means there were roughly more buyers than there were active homes for sale. The median list price of homes in Minneapolis, MN was $339.9K, trending up 6.2% year-over-year. The median listing price per square foot was $219. The median sale price was $307.3K.
Ideally, a buyer would prefer a sale to asking price ratio that’s closer to 90%. The sellers in Minneapolis have managed to hold good leverage in these negotiations in the past month. On average, they could sell homes for 100% of the asking price. A seller would always prefer scenarios that can yield a ratio of 100% or higher.
Minneapolis Housing Market: Foreclosure Statistics 2020
Here are some foreclosure statistics of the Minneapolis real estate market. As per the Minneapolis foreclosure data by Zillow, in Minneapolis 2.0 homes are foreclosed (per 10,000). This is greater than the Minneapolis-St. Paul-Bloomington Metro value of 0.8 and also greater than the national value of 1.2. The percent of delinquent mortgages in Minneapolis is 0.5%, which is lower than the national value of 1.1%. The percent of Minneapolis homeowners underwater on their mortgage is 6.3%, which is higher than Minneapolis-St. Paul-Bloomington Metro at 5.0%.
In June, the new listings for Lender-Owned properties in the twin cities dropped by 43.8%. These are foreclosure properties in which the financial institution has repossessed the home from the owner due to the nonpayment of mortgage obligations. Pending sales also dropped by 21.7% as compared to the previous year. Closed sales of foreclosure properties increased by 11.7% and the median sales price increased by 3,3% to $235,000.
New listings for Short Sales dropped by 16.7%. These are the properties with a unique arrangement where the financial institution and in-default homeowner work together to attempt to sell the home before it's foreclosed upon. Pending sales also dropped by 29.4% as compared to the previous year. Closed sales of short sales dropped by 64.3% and the median sales price rose by 1.7% to $240,000.
There are currently 290 properties in Minneapolis, MN that are in some stage of foreclosure (default, auction, or bank-owned) while the number of homes listed for sale on RealtyTrac is 2,487. In June, the number of properties that received a foreclosure filing in Minneapolis, MN was 33% lower than the previous month and 77% lower than the same time last year.
|Potential Foreclosures in Minneapolis||290 (RealtyTrac)|
|Homes for Sale in Minneapolis||2487|
|Median List Price||$289,900 (0% rise vs May 2019)|
According to RealtyTrac, in Minneapolis, the zip code with the highest foreclosure rate is 55409, where 1 in every 2527 housing units is foreclosed. So, you’d find a lot of distressed sellers in this area and get some discounted off-market deals. 55441 zip code has the lowest foreclosure rate, where 1 in every 8114 housing units becomes delinquent.
Minneapolis Real Estate Market: 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? Investing in real estate is touted as a great way to become wealthy. Many real estate investors have asked themselves if buying rental property in Minneapolis is a good 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 2020 forecast for answers on why to put resources into this market.
The home prices in the Minneapolis housing market will be on an upswing all through 2020. The Minneapolis home prices are expected to rise at a slower pace due to the COVID-19 pandemic. So you should consider investing in Minneapolis rental properties sooner, to avoid higher home prices down the road. 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 the 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 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 city’s share of the population that rents are growing. 96,087 or 55% of the households in Minneapolis, MN are renter-occupied while 77,829 or 44% are owner-occupied. And this trend will fuel demand for Minneapolis rental properties for years to come.
Rental Statistics: According to Rentjungle.com, as of June 2020, the average rent for an apartment in Minneapolis, MN is $1810 which is a 4.31% increase from last year when the average rent was $1,732, and a 3.15% decrease from last month when the average rent was $1867.
One-bedroom apartments in Minneapolis rent for $1491 a month on average (a 0.34% increase from last year) and two-bedroom apartment rents average $2344 (a 12.8% increase from last year). The average apartment rent over the prior 6 months in Minneapolis has increased by $140 (8.4%). One-bedroom units have increased by $85 (6%) and two-bedroom apartments have increased by $155 (7.1%).
The average rent for an apartment in Minneapolis is $1,588, a 3% increase compared to the previous year, according to RENTCafé. More than 50% of the apartments can be rented for $1,500 or less. 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 affordable and growing neighborhoods for renting in Minneapolis are:
- Cleveland, where the average rent goes for $840/month.
- Folwell, where renters pay $840/mo on average.
- McKinley, where the average rent goes for $840/mo.
- Brooklyn Center, where the average monthly rent is $1,053.
- Loring Park, where renters pay $1,394 on average.
- Whittier, where apartments go for $1,432/month.
- Uptown Minneapolis, with an average rent of $1,572.
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 rents students pay are 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 breach of 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.
Minneapolis Investment Properties: Real Estate Investment
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, large rental market, and 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. Linden Hills has a median listing price of $613,500, making it the most expensive neighborhood. Jordan is the most affordable neighborhood in Minneapolis, with a median listing price of $177,000.
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 top neighborhoods in Minneapolis having the highest real estate appreciation rates since 2000—List by Neigborhoodscout.com.
- City Center
- E Franklin Ave / Hiawatha Ave
- S 8th St / 11Th Ave S
- Central Ave SE / 1st Ave NE
- E Lake St / 3rd Ave S
- Jefferson St NE / 15th Ave NE
- W 28th St / Lyndale Ave S
- Hennepin Ave / Lyndale Ave S
- University Ave NE / 17th Ave NE
- Portland Ave / E 35th St
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.
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.
Is It The Right Time To Invest In Real Estate? – The national homeownership rate is on the decline for the first time since 2017. As demographics change and baby boomers retire, you’re seeing Millennials who may not be ready to buy houses. In 2018, Millennials made up about 22 percent of the population in the United States. They’re choosing to rent over buying a single-family home or an apartment. Rising home prices and shortage of starter homes have not left Millennials many choices but to delay homeownership. Moreover, it's even harder to take out a mortgage for those who have student loan debt.
Minneapolis | Minnesota Real Estate Investment Opportunities
The state shares a Lake Superior water border with Michigan and Wisconsin on the northeast. You can also invest in the Milwaukee, Wisconsin real estate market. Milwaukee is often written off as a rust belt city in decline. While it is an urban Midwest town that started to decline in the 1970s, it is seeing a kind of renaissance. Milwaukee metropolitan area is home to around 600,000 people. It hit its high of around 750,000 people in the 1960s before the population declined, but it is now a slow-growing city. The Milwaukee housing market is only going to see demand for homes grow as many Millenials continue to find work and try to start their own families. The area is attracting young adults, too, with 80% of those moving to the area saying it is because they came for a job.
Madison, Wisconsin is also good for real estate investment. Madison is often overlooked in favor of the largest city in Wisconsin, Milwaukee. Yet the city is both the state capitol and the second largest in the state. Madison, Wisconsin is home to roughly a quarter of a million people. However, the Madison housing market is much larger than this. Take suburbs into account, and the metro area is home to roughly 650,000 people. This metropolitan region is so large that it extends into parts of Iowa. There are many reasons to consider investing in the Madison real estate.
To the south of Minnesota lies the neighboring state of Iowa. Davenport is a mid-sized real estate market in Iowa, home to around a hundred thousand people. However, Davenport is part of a larger ‘Quad Cities Metropolitan Area' that includes Davenport and Bettendorf in Iowa, and Rock Island, Moline and East Moline in Illinois. Davenport is the third-most-populous city in Iowa. The Quad Cities region has a robust housing market, depending on which side of the river you land. There are several good reasons to invest in the Davenport Iowa real estate market.
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, the Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
Market Reports & Forecasts
Rental market | Landlord friendly