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Hoping for a drop in Minneapolis property prices in 2025? Don’t count on it.
Despite economic shifts, the Minneapolis market is poised for growth, with demand outpacing supply.
Let’s explore why property prices in this city are expected to rise in 2025.
We rely on solid, up-to-date data from multiple credible sources, ensuring our analysis is grounded in facts.
By examining this data closely, we draw our own conclusions, which we share at the end of this blog post. Enjoy the read!
This article gives you valuable insights, but remember, it’s not and will never be investment advice. We pull data from a range of sources to provide you with the most accurate picture possible, yet we can’t guarantee complete accuracy. Markets are difficult to predict. Make sure to do your own research and consult a professional before making any financial moves. Any risks or losses are your own responsibility.
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- Yes, investing in real estate is a solid option in 2025 in Minneapolis
1) In Minneapolis, there are about 0.46 homes for each person, which is quite limited
Signal strength: strong
In Minneapolis, there is approximately 0.46 home per inhabitant, which is relatively low compared to other cities. This indicates a potential housing shortage, as the demand for homes might exceed the supply.
One specific factor contributing to this is the strong local job market, particularly in sectors like healthcare and technology. These industries attract professionals who are looking to settle in the area, increasing the demand for housing.
As more people move to Minneapolis for these opportunities, the limited number of homes per person can drive up housing prices. This is because the competition for available homes becomes more intense, leading to higher bids and offers.
If the ratio of homes per inhabitant were to increase to around 0.6 or higher, it might suggest that the supply is catching up with demand, potentially stabilizing or even reducing housing prices.
Source: USCensus
2) Redfin considers the Minneapolis real estate market to be "very competitive"
Signal strength: strong
The fact that Redfin ranks the Minneapolis real estate market as "very competitive" is a strong indicator that housing prices are likely to rise in 2025. When a market is labeled as "very competitive," it means that there is a high demand for homes, often leading to bidding wars and offers above the asking price.
In Minneapolis, the most competitive properties are single-family homes in the suburbs, particularly in areas like Edina and Minnetonka. These areas are highly sought after because they offer good schools, family-friendly neighborhoods, and proximity to nature, making them ideal for families looking to settle down.
As more people look to buy in these areas, the demand continues to outpace supply, which naturally drives up prices. This trend is further supported by the fact that Minneapolis has a strong job market and a growing population, attracting more potential buyers to the area.
If the market were to become "less competitive," with more homes available than buyers, this would likely signal a stabilization or decrease in housing prices.
Source: Redfin
3) Home values in Minneapolis have risen by 4.0% since last year, and this trend may persist
Signal strength: strong
The fact that home values in Minneapolis have already changed by 4.0% since last year is a strong indicator of a rising trend in the housing market. This change suggests that demand is increasing, which often leads to higher prices.
Currently, the median home price in Minneapolis is around $322,117, and this figure is crucial for potential investors to consider. Additionally, the median sales price per square foot is around $224, which provides insight into the cost efficiency of properties in the area.
These statistics, combined with the recent price change, support the assumption that housing prices might continue to rise in 2025. If the trend continues, investing now could be beneficial as property values may increase further.
However, if home values were to decrease by a significant margin, it would signal a potential downturn, contradicting the current upward trend.
Source: Redfin
4) Three major websites confidently predict that home prices in Minneapolis will rise in 2025
Signal strength: strong
There are three major websites forecasting a positive growth for home prices in Minneapolis in 2025, which is a promising signal for potential investors.
Among these forecasts, Realtor is the most optimistic with a prediction of a 6.20% increase in home prices. Redfin follows with a 4% forecast, and Zillow predicts a 2.60% rise, showing a significant gap in their expectations.
While these forecasts are encouraging, it's important to approach them with caution as they are based on predictive models that can change. We will also rely on strong, reliable, and actual data to make a well-informed decision.
If these forecasts were to predict a decline in home prices, it would suggest a different market outlook.
Sources: ZillowForecasts, RedfinForecasts, RealtorForecasts
5) With a of just 6.5%, Minneapolis has a bustling and competitive market
Signal strength: moderate
The vacancy rate in Minneapolis is currently at 6.5%, which is considered very low. This low vacancy rate indicates that the housing market is highly occupied and competitive, meaning there is strong demand for housing.
When demand is high and supply is limited, it often leads to increased housing prices as more people compete for fewer available homes. In such a market, properties that are easily rented are typically well-maintained and located in desirable areas.
Specifically, modern apartments in the North Loop area of Minneapolis are in high demand. These properties are attractive to renters due to their proximity to amenities and vibrant community.
If the vacancy rate were to rise above 10%, it might indicate a shift towards a less competitive market, potentially stabilizing or decreasing housing prices.
Sources: NeighborhoodScout, DataUSA, USCensus
6) Minneapolis boasts a strong "Livability" score of 78, indicating it's a great place to live
Signal strength: moderate
The livability score of 78 in Minneapolis is considered good because it reflects a high quality of life, which is attractive to potential residents.
One reason for this score is the extensive park system that Minneapolis offers, providing ample recreational opportunities and green spaces. Additionally, the city is known for its strong educational institutions, which are a significant draw for families looking to settle in an area with good schools. Furthermore, Minneapolis boasts a vibrant arts and culture scene, making it appealing to those who value cultural experiences and community engagement.
These factors contribute to the city's desirability, which in turn can lead to an increase in demand for housing, potentially driving up prices. As more people are attracted to the area, the limited housing supply may not keep up with the growing demand, further pushing prices upward.
However, if the livability score were to drop below 70, it might indicate declining conditions, which could deter potential buyers and investors.
Source: AreaVibes
7) In Minneapolis, nearly half of all sales end up selling for more than the listing price
Signal strength: moderate
In Minneapolis, around 45% of sales close at a price higher than the listing price, which is a strong indicator of demand. When buyers are willing to pay more than the asking price, it often means that competition among buyers is fierce and they are eager to secure a property.
This kind of market behavior typically suggests that housing prices are on an upward trend, as sellers can expect to receive offers above their initial expectations. As a potential investor, this is a signal that the value of properties is likely to increase in the near future, making it a potentially profitable market.
Moreover, when a significant portion of sales consistently closes above the listing price, it reflects strong buyer confidence in the market and their willingness to invest more. This trend can be a compelling reason to consider investing in Minneapolis real estate, as it indicates a healthy and growing market.
However, if the percentage of sales closing above the listing price were to drop significantly, say below 20%, it might suggest a cooling market where prices could stabilize or even decrease.
Source: Zillow
8) In Minneapolis, the "median home price" is 26% lower than the national average
Signal strength: minimal
The fact that Minneapolis has a median home price 26% below the national average suggests that there is room for growth in the housing market. When a city's home prices are significantly lower than the national average, it often indicates that the market is undervalued, which can attract investors looking for opportunities.
In Minneapolis, the most expensive properties are likely to be luxury condos in the downtown area, where demand is high due to proximity to amenities and business centers. On the other hand, the cheapest properties are probably older single-family homes in neighborhoods like North Minneapolis, which may require renovation but offer potential for appreciation.
As the city continues to develop and attract new residents, the demand for housing is expected to increase, driving up prices. This trend is supported by the current price gap, which suggests that Minneapolis has the potential to catch up with the national average as more people recognize its value.
If the median home price in Minneapolis were to rise above the national average, it would indicate that the market might be overvalued and could signal a potential slowdown in price growth.
Source: Zillow
9) A local in Minneapolis could buy a house in about 4.0 years, which is reasonable
Signal strength: minimal
In Minneapolis, it currently takes around 4.0 years for a local to buy a house, which is considered reasonable. This indicates that the housing market is relatively accessible, suggesting that housing demand is stable and potentially increasing.
With a median household income of approximately $81,001, residents have a decent purchasing power. The median home price is about $322,117, which aligns well with the income levels, making homeownership feasible for many.
These factors together suggest that the housing market is balanced, with prices likely to rise as demand grows. If the time to buy a house were to increase significantly, it might indicate that housing prices are becoming less affordable.
For instance, if it took more than 6 years for a local to buy a house, it could signal that prices are too high, potentially deterring buyers.
Source: USCensus
10) Minneapolis boasts a strong employment rate of 71.9%
Signal strength: minimal
The employment rate in Minneapolis is at 71.9%, which is notably high compared to many other regions in the United States.
This high employment rate suggests that more people have stable incomes, which often leads to increased demand for housing as people look to buy homes. The major employment sectors in Minneapolis include healthcare, finance, and manufacturing, which are known for providing stable and well-paying jobs.
Companies like Target and UnitedHealth Group are major employers in the area, contributing to the robust job market. With more people employed, there is a greater likelihood that housing prices will rise as demand increases.
If the employment rate were to drop below 65%, it might indicate a weakening job market, which could lead to a decrease in housing demand.
11) In Minneapolis, home prices have steadily increased by an average of 5.4% each year over the past decade
Signal strength: minimal
The fact that home prices in Minneapolis have appreciated at an average rate of 5.4% over the last decade is a noteworthy signal for potential investors. This consistent growth suggests that there has been a steady demand and price increase in the housing market, which can create a favorable environment for future price rises.
While this historical data indicates a positive trend, it's important to remember that past performance doesn't guarantee future results. However, such a track record can still be a valuable indicator when considering future investments in the real estate market.
Investors often look at these trends to gauge the potential for continued appreciation in property values. If the average appreciation rate were to drop significantly, say below 2% over a similar period, it might suggest a different outlook.
Source: NeighborhoodScout
So, are prices going to climb in 2025 in Minneapolis? Absolutely
Minneapolis is poised for a rise in housing prices in 2025, driven by several compelling factors.
Firstly, the city has a limited housing supply with only 0.46 homes per person, indicating a potential shortage as demand grows. The strong local job market in sectors like healthcare and technology attracts professionals, further increasing housing demand. Additionally, Redfin's classification of the market as "very competitive" suggests high demand, often leading to bidding wars and offers above asking prices.
Moreover, home values have already risen by 4.0% since last year, and three major websites predict further increases, with Realtor forecasting a 6.20% rise. The low vacancy rate of 6.5% and a strong livability score of 78 make Minneapolis an attractive place to live, adding to the demand. With nearly 45% of sales closing above the listing price, it's clear that competition is fierce, and prices are likely to continue climbing.