Minneapolis, MN Real Estate Market Trends & Analysis [Updated 2020]

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The Minneapolis real estate market has followed the example set forth by national trends; that is to say things are moving in an incredibly encouraging direction. As a result, prices continue to rise in lieu of a distinct lack of inventory. Perhaps even more importantly, demand remains high in the face of historical appreciation. It is worth noting, however, that while appreciation continues into its seventh consecutive year, real estate in Minneapolis is still incredibly affordably. In fact, it’s more affordable to own a home in the Minneapolis housing market than to rent one, which bodes well for rehabbers. Minneapolis real estate investing should come out on the other end of the recovery better than ever.

Minneapolis Real Estate Market 2020 Overview

  • Median Home Value: $283,786

  • 1-Year Appreciation Rate: 3.4%

  • Median Home Value (1-Year Forecast): 3.5%

  • Average Days On Market: 67

  • Median Rent Price: $1,800

  • Price-To-Rent Ratio: 13.13

  • Percent With Negative Equity: 6.3%

  • Unemployment Rate: 3.0% (latest estimate by the Bureau Of Labor Statistics)

  • Population: 425,403 (latest estimate by the U.S. Census Bureau)

  • Median Household Income: $58,993 (latest estimate by the U.S. Census Bureau)

  • Percentage Of Vacant Homes: 8.83%

  • Foreclosure Rate: 1 in every 2,799 (3.5%)

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Minneapolis real estate investing

2020 Minneapolis Real Estate Investing

As recently as the first quarter of 2019, the Minneapolis real estate market ranked among the top cities where flipping rates increased the most. In a year where U.S. home flipping rates reached a nine-year high, Minneapolis saw a larger increase than the majority of the national housing market. According to Attom Data Solutions, there were only a handful of markets that saw larger increases in home flips in the first quarter of 2019 than the Minneapolis housing market.

“Along with Raleigh, Charlotte, and Milwaukee, other metro areas with a population of at least 1 million and a home flipping rate increasing in the double digits were San Antonio, Texas (up 47 percent); Houston, Texas (up 41 percent); Atlanta, Georgia (up 38 percent); Pittsburgh, Pennsylvania (up 36 percent); and Minneapolis, Minnesota (up 33 percent),” according to the latest Q1 2019 U.S. Home Flipping Report.

Just about everything has been going right for the Minnesota city in recent history, which begs the question: Is it a good time to buy a house in Minneapolis? Do current market conditions favor those who want to buy in the Minneapolis housing market?

The increased interest in Minneapolis real estate investing may be due, largely in part, to the area’s affordability. Again, real estate in Minneapolis has a price-to-rent ratio that favors buying; it’s more affordable to own a home in the Minneapolis real estate market than rent. As a result, there is inherently more demand for real estate investors to satiate. Consequently, it would appear as if this city is best left for flippers and rehabbers. While rental properties are an option, the affordability of buying could limit their upside. Even the best places to buy rental property in Minneapolis, while a viable option, may be better for flippers and wholesalers.

2020 Foreclosure Statistics In Minneapolis

A lot of people have one important question regarding real estate in Minnesota: How is the housing market in Minneapolis? The answer shouldn’t surprise anyone: it is doing really well. However, that’s not to say there isn’t room for improvement. According to data provided by RealtyTrac, a nationally recognized online marketplace for foreclosed and defaulted properties, the Minneapolis real estate market is home to about 537 foreclosures, each of which are in at least one of three stages of distress: default, auction or bank owned. Today’s foreclosures are 69.0% higher than the previous month and 47.0% higher than they were at this time last year. The Minneapolis real estate investing community should take note of these increases and adjust their marketing efforts accordingly.

At 73.6% of the distressed properties on RealtyTrac, the overwhelming majority of local foreclosures are of the auction variety. As their names suggest, auction homes have already been repossessed by lenders from defaulting homeowners and are to be placed up for auction. Consequently, Minneapolis real estate investors looking to acquire distressed homes may find auctions to be their best source of deals. The remaining 26.4% of the distressed property market is considered bank owned. Those interested in investing in the Minneapolis housing market should take note of these distributions to place the odds in their favor. Minneapolis real estate trends should continue for the foreseeable future.

Real estate investors should look in neighborhoods with the highest distributions of foreclosed properties if they want to acquire deals at a discount. According to RealtyTrac, the neighborhoods with the highest distribution of distressed homes are:

Foreclosures in Minneapolis

Data provided by RealtyTrac

2020 Median Home Prices In Minneapolis

The Minneapolis real estate investing community has seen a very positive trend regarding home values, which begs an important question: How much does it cost to buy a house in Minneapolis? The median home value in the Minneapolis real estate market is $283,786. In one year’s time (December 2018 to January 2020), the median home value has appreciated 3.4%. The latest increase may be attributed to several factors, not the least of which is the area’s price-to-rent ratio. At 13.13, the price-to-rent ratio suggests it is actually cheaper to buy a house than to rent one. As a result, it’s safe to assume more people are leaning towards purchasing than renting, which would lead to more demand. Attractive prices, in conjunction with a lack of available inventory, should explain the latest increases. As of July, single-family home inventory is incredibly low. With just 1.7 months of single-family inventory, the Minneapolis real estate market is about 4.3 months shy of a balanced market. That said, appreciation rates appear to be tempering. In the next year, prices are only expected to increase 3.5%.

Over the last two decades, however, some neighborhoods have contributed to the city’s appreciation rate more than others. In fact, here’s a list of the highest appreciating Minneapolis neighborhoods since 2000 (according to NeighborhoodScout):

  • City Center

  • W 28th St / Lyndale Ave S

  • E Lake St / 3rd Ave S

  • W Lake St / Lyndale Ave S

  • Portland Ave / E 35th St

  • France Ave S / W 44th St

  • Hennepin Ave / W Lake St

  • W 50th St / France Ave S

  • W Lake St / Nicollet Ave

  • Central Ave SE / 1st Ave NE

The Minneapolis real estate market is currently highlighted by affordability. With a 13.13 price-to-rent ratio, it is more affordable to buy a home than to rent one. As a result, the city is expected to experience an influx of buyers, which bodes incredibly well for real estate investors. In the first quarter of this year, in fact, few cities across the country saw their rate of investing increase more. Truth be told, there’s a perfect storm brewing for investors: incredible demand persists in an environment where prices are continuing to rise—albeit at a tempered pace. As a result, the Minneapolis housing market forecast looks as clear as ever.

Median home prices in Minneapolis

Data provided by Zillow

Minneapolis Real Estate Market: 2016 Summary

  • Median Home Price: $242,400

  • 1-Year Appreciation Rate: 6.3%

  • 3-Year Appreciation Rate: 22.4%

  • Unemployment Rate: 3.7%

  • 1-Year Job Growth Rate: 1.5%

  • Population: 407,207

  • Median Household Income: $69,111

Minneapolis Real Estate Investing 2016

Minneapolis real estate news was gaining a lot of positive momentum in 2016. Home prices and appreciation rates outperformed the national average during the second quarter, while home affordability remained strong compared to other markets. The median home price was $242,400 during the second quarter of 2016, as opposed to the national average of $239,167. Although home prices cooled considerably during the second quarter, prices were still up from the previous year.

As of July 2016, there were 6,840 properties in some stage of foreclosure. According to RealtyTrac, the number of foreclosures in the month of July was 1.0% higher than the previous month and 47.0% lower than the same period in 2015. The number of REO properties increased 56.6% from the previous month, but dropped 11.0% from the previous year. At the time, the Minneapolis housing market was one of the best places to find distressed properties.

A steady combination of increasing home prices and appreciation rates boosted the Minneapolis real estate market in 2016, but other factors also played a large role in the city’s expansion. The local economy in Minnesota was improving faster than the rest of the country, with unemployment rates and job growth easily surpassing the national average at the time. The unemployment rate was around 3.7% during the second quarter, as opposed to the national average of 4.9%. Although employment held up, job growth trailed the rest of the country. However, a growing economy in the second-half of 2016 made Minneapolis real estate investing an attractive industry.

Minneapolis Real Estate Market: 2015 Summary

  • Median Home Price: $219,100

  • 1-Year Appreciation Rate: 5.3%

  • Unemployment Rate: 3.6%

  • 1-Year Job Growth Rate: 1.7%

  • Population: 400,070

  • Median Household Income: $67,194

  • Average Days On The Market: 78

Minneapolis Real Estate Investing 2015

The Minneapolis housing market was holding its own amongst an economy that was still trying to find itself during the recovery. The recovery exhibited by the Twin Cities in 2014 was fully expected to transition over into 2015, as the strong, local economy was expected to promote the growth of the real estate sector—and transition it did. Nearly every market indicator was better than it was when the recession took hold. For all intents and purposes, the Minneapolis real estate market was the healthiest it had been in more than seven years.

Those looking to sell a home found conditions rather favorable. Accordingly, homes were selling twice as fast as they were in 2008. However, buyers quickly found that inventory restrictions drove up prices in the area. In fact, the active supply of homes in the area reached a 12-year low. The 7.0% drop in inventory made it more difficult for buyers to find a home at the price they wanted.

The strength of the Minneapolis housing market was buttressed by the equally impressive job sector it boasted at the time. In fact, the entire state of Minnesota received praise for the strength of its economy. The city already had a low unemployment rate of 3.6%—more than 2.0% below the national average. At less than 4.0%, the city had the lowest unemployment rate of any major metropolitan cities. However, while unemployment growth in the region was on par with the national average, it left plenty to be desired.

The diversity of the job sector was credited with the expansion of apartment building construction. Similar to the rest of the country, rental rates reached record highs. However, it is the creation of new units that had real estate investors excited.

Minneapolis Real Estate Investing Statistics In 2015

Minneapolis real estate investing statistics

Minneapolis County Map:

Map of minneapolis neighborhoods

Have you thought about investing in the Minneapolis real estate market? Does Minneapolis real estate investing interest you in the slightest? If so, what are you waiting for? We would love to know your thoughts on real estate in Minneapolis in the comments below:

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