Minneapolis boasts a competitive housing market compared to other cities in Minnesota. Fueled by a strong job market and a vibrant city atmosphere, Minneapolis attracts residents seeking an urban lifestyle.
In 2024, Minneapolis displays a combination of rising home prices, an increasing housing supply, and mixed sales trends. While there is a short-term increase in home sales, the long-term trend shows a decline.
Nevertheless, the market remains strong, with homes selling relatively quickly and sellers receiving a high percentage of their original list prices. Let's explore everything you need to know about the Minneapolis housing market, including current home values, key trends, and more.
How is the Minneapolis Housing Market Doing in 2024?
It is a hot seller's market in Minneapolis in 2024 with rising prices, fast sales, and low inventory.
Minneapolis Home Sales
In 2024, the Minneapolis housing market has seen a slight increase in home sales. Comparing May 2024 to May 2023, the number of closed sales rose by 2.5%, from 438 to 449. However, when examining the rolling 12-month period, there was a 7.5% decrease in closed sales, dropping from 4,677 to 4,324. This indicates a mixed trend, with a short-term uptick but a longer-term decline in sales activity.
Minneapolis Home Prices
Home prices in Minneapolis have continued to rise in 2024. The median sales price in May 2024 was $339,450, a 4.4% increase from May 2023's $325,000. Over the rolling 12-month period, the median sales price also saw a modest increase of 1.0%, from $318,950 to $322,000.
The average sales price showed a more significant increase, rising by 6.2% in May 2024 to $411,995, compared to $388,084 in May 2023. The average sales price for the rolling 12-month period increased by 2.1%, from $386,415 to $394,530.
Minneapolis Housing Supply
The housing supply in Minneapolis has expanded in 2024. The number of new listings in May 2024 was 647, a slight increase of 0.6% compared to 643 in May 2023. However, the rolling 12-month period saw a decrease in new listings by 4.1%, from 6,147 to 5,894. The inventory of homes for sale in May 2024 was 852, an increase of 8.1% from 788 in May 2023. The months supply of inventory also increased by 14.3%, from 2.1 months in May 2023 to 2.4 months in May 2024.
Minneapolis Housing Market Trends
Several notable market trends have emerged in the Minneapolis housing market in 2024. The price per square foot slightly decreased by 0.2% in May 2024 to $245, compared to $246 in May 2023. However, over the rolling 12-month period, it increased by 2.0% from $236 to $240.
The percent of original list price received in May 2024 was 100.1%, a slight decrease from 100.6% in May 2023. Over the rolling 12-month period, this percentage increased by 0.4%, from 98.7% to 99.1%. The days on market until sale improved, with homes selling faster in May 2024, averaging 48 days compared to 50 days in May 2023. For the rolling 12-month period, the average remained steady at 49 days.
Local Market Update – May 2024
- New Listings: 647 (May 2024), 643 (May 2023), +0.6%
- Closed Sales: 449 (May 2024), 438 (May 2023), +2.5%
- Median Sales Price: $339,450 (May 2024), $325,000 (May 2023), +4.4%
- Average Sales Price: $411,995 (May 2024), $388,084 (May 2023), +6.2%
- Price Per Square Foot: $245 (May 2024), $246 (May 2023), -0.2%
- Percent of Original List Price Received: 100.1% (May 2024), 100.6% (May 2023), -0.5%
- Days on Market Until Sale: 48 (May 2024), 50 (May 2023), -4.0%
- Inventory of Homes for Sale: 852 (May 2024), 788 (May 2023), +8.1%
- Months Supply of Inventory: 2.4 (May 2024), 2.1 (May 2023), +14.3%
Are Home Prices Dropping in Minneapolis?
Minneapolis real estate has historically been a solid investment, with appreciation rates generally keeping pace with the national average. Let's delve into the data and see how Minneapolis home values have fared over the years, including some recent trends.
Long-Term Appreciation
Looking at a broad timeframe, Minneapolis real estate has shown significant appreciation. Since the year 2000, home values have risen by an impressive 122.31%, translating to an average annual increase of 3.38% (neighborhoodscout). This indicates a steady and consistent growth in property value.
Recent Trends
The last few years have seen some fluctuations in Minneapolis real estate appreciation. Over the past five years, home values have increased by 28.11%, with an average annual appreciation rate of 5.08%. This is slightly below the national average but still shows positive growth.
However, it's important to note that there have been some recent quarters with negative appreciation. For instance, looking at data from Q3 2023 to Q4 2023, there was a decrease of -2.13% in home values, which translates to an annualized rate of -8.26%.
Market Analysis
Despite the recent dip, experts believe the Minneapolis housing market remains fundamentally strong. Here's a breakdown of some factors that contribute to this outlook:
- Steady Demand: Minneapolis continues to be a desirable place to live, with a vibrant job market, good schools, and a high quality of life. This consistent demand for housing helps support property values.
- Inventory Levels: While inventory has been increasing slightly, it remains lower than pre-pandemic levels. This limited supply can put upward pressure on prices in the long run.
- Interest Rates: Interest rates are a crucial factor in housing affordability. While they have risen recently, they are still historically low. This can make homeownership more accessible and potentially lead to continued demand.
Looking Forward
While short-term fluctuations are always possible, the long-term outlook for Minneapolis real estate appears positive. The city's strong fundamentals, coupled with steady demand and limited inventory, suggest that home values will continue to appreciate in the years to come. However, keeping an eye on interest rates and economic factors is always wise when making real estate investment decisions.
Minneapolis Housing Market Predictions 2024
The Minneapolis housing market has been on a steady rise in recent years, with home values appreciating and houses selling quickly. But what does the future hold? Let's delve into the data and predictions to see what experts expect for the Minneapolis housing market in 2024 and beyond.
Current Market Trends
- Home Values on the Rise: The average Minneapolis home value currently sits at $338,880, reflecting a 2.4% increase over the past year. This indicates a seller's market, where demand is outpacing supply.
- Fast Selling Homes: Homes in Minneapolis are going pending in around 19 days, signifying a competitive market with buyers ready to act quickly.
- Prices Still Fluctuating: The median sale price sits at $313,163, while the median list price is $351,667. This shows some variation in closing prices, with some homes selling above list price (38%) and others selling below (42.1%).
As depicted in this graph, home values have increased year-over-year. This upward trend is expected to persist, with forecasts indicating continued growth over the next year.
Looking Ahead: Predictions for 2024 and 2025
According to recent data by Zillow, the Minneapolis housing market is expected to see a slight decline in home prices over the next year. From the base date of May 31, 2024, here are the projected changes:
- June 30, 2024: -0.2%
- August 31, 2024: -1.2%
- May 31, 2025: -4.4%
Several factors contribute to these predicted declines in home prices:
- Interest Rates: Potential increases in interest rates could reduce buyers' purchasing power, leading to decreased demand.
- Economic Uncertainty: Economic challenges, such as inflation and employment instability, might affect consumer confidence and spending in the housing market.
- Housing Supply: An increase in the housing supply could lead to more competition among sellers, driving prices down.
Market Trends to Watch
Despite the predicted decline in home prices, certain market trends could influence the overall dynamics of the Minneapolis housing market:
- Migration Patterns: Changes in population trends, such as people moving into or out of Minneapolis, can significantly impact housing demand.
- Development Projects: New housing developments and infrastructure projects could attract more buyers and potentially stabilize the market.
- Rental Market: The performance of the rental market might influence buyers' decisions, as higher rental prices could push more people toward homeownership.
Should You Invest in the Minneapolis Real Estate Market?
Minneapolis, located in the state of Minnesota, is a major economic hub in the Midwest region of the United States. The city has a diverse economy with major industries including healthcare, finance, and manufacturing. With a population of over 400,000 and a metro population of over 3.6 million, Minneapolis has a strong demand for housing. If you are considering investing in real estate, here are 5 reasons why Minneapolis might be a good place to invest:
- Strong Rental Property Market: The rental property market in Minneapolis is strong, with high occupancy rates and steady rent growth. The city has a large number of renters, including students from the University of Minnesota, young professionals, and families. Additionally, the city has a strong job market, which supports a steady demand for rental properties.
- Diverse Economy: Minneapolis has a diverse economy that is not dependent on any one industry. The city is home to several Fortune 500 companies, including Target, Best Buy, and General Mills. The city's strong economy supports a steady demand for housing. The Metropolitan Council projects that Minneapolis will add 41,500 jobs by 2040, with much of the growth occurring in downtown Minneapolis.
- Affordable Real Estate Prices: Compared to other major cities in the United States, Minneapolis has relatively affordable real estate prices. This makes it an attractive market for real estate investors looking to maximize their return on investment.
- Strong Housing Market: Despite some recent fluctuations, Minneapolis has a strong housing market. According to Zillow, the median home value in Minneapolis hovers around $285K. Additionally, Minneapolis has a relatively low foreclosure rate, which indicates a stable market.
- Growing Population: The population of Minneapolis has been growing steadily over the past decade, driven by both natural growth and migration. This growing population supports a steady demand for housing in the city. The current metro area population of Minneapolis in 2024 is 3,014,000, a 0.8% increase from 2023. The metro area population of Minneapolis in 2023 was 2,990,000, a 0.78% increase from 2022. The metro area population of Minneapolis in 2022 was 2,967,000, a 0.71% increase from 2021.
- Big Student Market: One of the factors that make Minneapolis a great place for real estate investment is the massive student market. With the presence of several major universities and colleges, including the University of Minnesota, Minneapolis Community and Technical College, and Augsburg University, there is a large population of students in the area. These students require housing, which presents an opportunity for real estate investors to invest in rental properties. Investing in rental properties in Minneapolis can be a lucrative business as the demand for student housing is usually high. Additionally, the student market in Minneapolis is not limited to traditional students. The city also has a large number of professionals and individuals pursuing advanced degrees who require housing. This diverse population provides real estate investors with a wide range of opportunities to invest in rental properties.
- The Landlord-Friendliness of Minneapolis: Minneapolis is known for its pro-landlord laws and regulations, which provide a stable and predictable environment for property owners. This means that landlords have more control over their properties and can protect their investments more effectively. For example, the city has laws in place that allow landlords to evict tenants for non-payment of rent or other violations of the lease agreement. This can give landlords peace of mind knowing that they can take action if necessary to protect their property and rental income. Furthermore, the city has relatively low property taxes and a streamlined process for obtaining permits and licenses, making it easier for landlords to manage their properties. Additionally, the city's rental market is strong, with a high demand for rental properties due to the growing population and a large number of college students in the area. As a result, landlords in Minneapolis can expect to receive a steady stream of rental income, making it a desirable market for real estate investment.
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