The Minneapolis real estate market: stats & trends for 2021

A recent news release from the Minneapolis Area Realtors sums up everything there is to know about the current state of the real estate market in Minneapolis-St. Paul. According to the Association, new listings are flat, sales are up, price growth is strong, market times are fast, and supply levels are extremely low.

Not too long ago the StarTribune reported that the number of houses on the market for sale would rise and days on market would increase. But in fact, the exact opposite has occurred.

The biggest reason for the strong performance of the housing market in Minneapolis may have to do with a change in city zoning. 

Recently, Minneapolis became the first large city in the U.S. to end single-family zoning. The city now allows small multifamily property to be built on single-family lots, which could end up increasing the demand for people who want to live in a traditional house.

Minneapolis is located in southeastern Minnesota, along the banks of the Mississippi River near the Wisconsin border. Minneapolis, along with neighboring St. Paul, make up the Twin Cities metropolitan area, the 3rd-largest economy and populated region in the Midwest.

Minneapolis is the main business center between Chicago and Seattle and is home to a diverse economy of commerce, finance, transportation, healthcare, and technology. The Twin Cities has the 5th-highest concentration of major corporate headquarters and receives consistently high rankings as a great city to live, work, and play.

Read on to learn what makes the Minneapolis real estate market worth considering in 2021.

>>Explore Roofstock's Minneapolis investment properties here.

 

Population growth

Since recording a population of 382,578 in 2010, the city of Minneapolis is currently growing at a rate of 1.08% annually and its population has increased by 14.75% from 2010-20 (source). Below are some other key population stats that investors should consider as they evaluate Minneapolis.

Key population stats:

  • City of Minneapolis is home to more than 433,000 residents with over 3.6 million people living in the Minneapolis-St. Paul Twin Cities region.
  • Minneapolis is the largest city in Minnesota and the 46th-largest in the U.S.
  • Twin Cities is the 3rd-largest economy and population center in the Midwest, just behind Chicago and Detroit.
  • Forbes reports Minneapolis had a net inbound migration of 3,600 people.
  • Population of the Minneapolis-St. Paul region is projected to grow by 12% over the next ten years.
  • Generational shift is taking place in the working age population, with the number of Generation Z workers increasing nearly 3X state-wide by 2030.
  • Minneapolis is home to a labor pool of nearly 2 million people.
  • Median age in Minneapolis is 37.4 vs. U.S. median age of 38.5 years.

 

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Job market

Most of the state’s job growth last year was concentrated in the Twin Cities metro area. The Minneapolis MSA is home to 1.99 million workers, with employment growth increasing by 0.69% year-over-year. 

According to the BLS, the unemployment rent is down to 4.2% (Oct. 2020) and some of the job sectors showing the fastest signs of recovery include financial activities, and professional and business services.

Key employment stats:

  • GDP of Minneapolis-St. Paul-Bloomington, MN-WI MSA is more than $242.5 billion, according to the Federal Reserve Bank of St. Louis, and has grown by nearly 26% over the past ten years.
  • Job growth in Minneapolis last year was 0.794%.
  • Over the last five years, manufacturing jobs have grown by 8.3%, finance and insurance jobs by 7.0%, and computer and IT jobs by 11.2%.
  • Top industry sectors in Minneapolis are health and life sciences, food and water, headquarters and business services, financial services and insurance, and advanced manufacturing and technology.
  • Minneapolis-St. Paul is home to 16 Fortune 500 company headquarters, including UnitedHealth Group, Target, Best Buy, 3M, General Mills, Ecolab, Xcel Energy, and Thrivent Financial.
  • Major employers in the Minneapolis area include U.S. Bancorp, Ameriprise Financial, Wells Fargo, RBC Wealth Management, CenturyLink, and the Federal Reserve Bank of Minneapolis.
  • Major colleges and universities in the Minneapolis region include University of Minnesota, Augsburg University, Minneapolis Community and Technical College, and Metropolitan State University.
  • 94.2% of Minneapolis residents have a high school degree or higher, while 43.2% hold a bachelor’s degree or advanced degree.
  • Several interstate highways pass through Minneapolis, including I-94, I-494, and I-694.
  • Burlington Northern Santa Fe and Canadian National are two of the largest freight rail operators in the Twin Cities.
  • Minneapolis-St. Paul International Airport (MSP) is the 17th busiest airport for passengers and the 12th busiest for aircraft operations, and is the second largest hub for Delta Airlines. 

 

Real estate market

Buyers are streaming into the Minneapolis real estate market, with a shortage of inventory making multiple offers commonplace. 

According to KARE 11, the imbalance between supply and booming demand for homes in Minneapolis is creating intense competition among buyers. But it’s not only the city that is seeing the demand for housing increase. The Star Tribune notes that the jump in sales of homes in rural Minnesota is driven by people looking for property away from more populated areas.

Key market stats:

  • Zillow Home Value Index (ZHVI) for Minneapolis is $328,755 as of June 2021.
  • Homes values in Minneapolis increased by 8.6% over the last year.
  • Over the past five years home values in Minneapolis have increased by 38.8%.
  • Median listing price of a single-family home in Minneapolis is $329,900 based on the most recent research from Realtor.com (June 2021).
  • Median listing price per square foot of a home is $222.
  • Days on market (median) is 49.
  • Median sales price of a single-family home in Minneapolis is $346,300.
  • Sale-to-list price ratio is 102%, which means homes in Minneapolis are selling for more than the asking price on average.
  • Of the 88 neighborhoods in Minneapolis, Linden Hills is the most expensive with a median listing price of $787,500.
  • Most affordable neighborhood in Minneapolis is Whittier with a median listing price of $189,900.



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Attractive renters’ market

Minneapolis is ranked by WalletHub as one of the best cities for renters. The metropolitan area receives high ratings for rental market affordability and quality of life. The high percentage of millennials in Minneapolis and the attractive rental market helps to explain why there are more renter-occupied households here than homes occupied by owners.

Key market stats:

  • Average rent in Minneapolis is $1,587 per month based on the most recent analysis by RENTCafé (as of June 2021).
  • Rents in Minneapolis have declined by 1% year-over-year.
  • 85% of the rental units in Minneapolis rent for more than $1,000 per month.
  • Renter-occupied households in Minneapolis make up 55% of the occupied housing units.
  • Neighborhoods in Minneapolis that are most affordable for renters include Cleveland, Folwell, and McKinley where rents average $881 per month.
  • Neighborhoods in Minneapolis with the highest rents include Dinkytown, Marcy Holmes, and Prospect Park East River Road where rents run $1,872 per month.

 

Historic price changes & housing affordability

Two of the most important metrics real estate investors can use when analyzing housing markets are historic price changes and housing affordability. Changes in housing prices are an indicator of potential appreciation, while housing affordability data can help indicate how good a market is for rental property investment.

Each month Freddie Mac publishes its House Price Index (FMHPI) report with up-to-date data on the change in home prices for all markets across the U.S. The most recent FMHPI from Freddie for the Minneapolis-St. Paul-Bloomington, MN-WI MSA shows:

  • May 2016 HPI: 137.5
  • May 2021 HPI: 195.0
  • 5-year change in home prices: 41.8%
  • One-year change in home prices: 12.6%
  • Monthly change in home prices: 1.5%

Housing affordability research compares the median family income in an area to the median price of a single-family resale home. Using this ratio, housing markets are assigned a HAI – or housing affordability index – number that ranks how much income a family has to purchase a home, using a conventional mortgage with a 20% down payment.

The Housing Affordability Index from the National Association of Realtors uses 100 as a baseline affordability index number. The greater a market’s HAI is above 100, the more affordable a market is, everything else being equal.

Based on the NAR’s latest report, the HAI for the Minneapolis-St. Paul-Bloomington MSA was 184.1 in 2018, the most recent year available. This means that the median family has less than twice the income needed to purchase a median priced, single-family resale home in the Minneapolis metro area.

 

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Quality of life

There are so many good things about living in Minneapolis that it’s hard to know where to begin. There’s the riverfront skyline, art and theatre practically around every corner, year round festivals, and the infamous Juicy Lucy cheeseburger. 

Key quality of life stats:

  • Forbes ranks Minneapolis #21 in education, #32 as one of the best places for business and careers, and #104 for job growth.
  • Patch.com recently ranked Minneapolis-St. Paul as #6 among America’s best largest metro areas to live.
  • Minneapolis is one of the top 25 cities where millennials are moving last year to find good jobs and make more money, according to Business Insider.
  • In fact, WalletHub ranked Minneapolis as the 44th-best city to find a job.
  • Despite the abundance of jobs and culture, cost of living in the Twin Cities is only 3% above the national average.
  • Climate in Minneapolis is humid continental, with warm to hot humid summers and cold snowy winters.
  • The number of parks in Minneapolis-St. Paul make people oh so nice, as the New York Times recently observed.
  • Minneapolis was recently ranked as the 2nd fittest city in the U.S. and the 7th best city for runners, with more than 200 miles of trails.
  • Minneapolis Farmers Markets are open year round to bring fresh foods in from the nearby country farms.
  • Minneapolis Institute of Art has one of the most comprehensive collections in the world, and The Walker Art Center is one of the “big five” art museums in the U.S.
  • University of Minnesota Medical Center in Minneapolis, Mercy Hospital, and Mayo Clinic in nearby Rochester are rated as three of the best hospitals in the Minneapolis-St. Paul region.
  • NBA Minnesota Timberwolves, MLB Minnesota Twins, and NFL Minnesota Vikings are three of the championship-winning professional sports teams in the Twin Cities.

 

Get out the map

Where to begin your search? Roofstock created a heat map of Minneapolis based on our Neighborhood Rating, a dynamic algorithm that enables you to make informed investment decisions by measuring school district quality, home values, employment rates, income levels and other vital investment criteria.

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DARK GREEN: 4-5 star neighborhood
LIGHT GREEN: 3.5-4 star neighborhood
YELLOW: 2.5-3 star neighborhood
ORANGE: 2 star neighborhood
RED: 1 star neighborhood

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This article, and the Roofstock Blog in general, is intended for informational and educational purposes only, and is not investment, tax, financial planning, legal, or real estate advice. Roofstock is not your advisor or agent. Please consult your own experts for advice in these areas. Although Roofstock provides information it believes to be accurate, Roofstock makes no representations or warranties about the accuracy or completeness of the information contained on this blog.
Jeff Rohde

Author

Jeff Rohde

Jeff has over 25 years of experience in all segments of the real estate industry including investing, brokerage, residential, commercial, and property management. While his real estate business runs on autopilot, he writes articles to help other investors grow and manage their real estate portfolios.

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