The Minneapolis real estate market has followed the example set forth by national trends. Prices continue to rise because of a distinct lack of inventory, but demand persists. 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 Market Overview
Median Home Value: $266,100
1-Year Appreciation Rate: 2.8%
Median Home Value (1-Year Forecast): 0.9%
Median Rent: $1,795
Average Days On Market (Zillow): 57
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Median Home Price Minneapolis
The median home value in the Minneapolis real estate market is $266,100. In one year’s time (July 2018 to August 2019), the median home value in Minneapolis has appreciated 2.8%. The latest increase may be attributed to several factors, not the least of which is the area’s price-to-rent ratio. At 12.35, Minneapolis’ 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. Minneapolis’ 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 0.9%, or just a third of what residents saw over the last 12 months.
Minneapolis Foreclosure Statistics
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 554 foreclosures, each of which are in at least one of three stages of distress: default, auction or bank owned. Today’s foreclosures are 12% lower than last month and 39% lower than they were at this time last year.
At 63.7% of the distressed properties on RealtyTrac, the overwhelming majority of Minneapolis’ 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 36.3% of the distressed property market in Minneapolis is considered bank owned.
Minneapolis 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:
55430: 1 in every 914 homes is currently distressed
55411: 1 in every 1,035 homes is currently distressed
55412: 1 in every 1,037 homes is currently distressed
55444: 1 in every 1,095 homes is currently distressed
55429: 1 in every 1,763 homes is currently distressed
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 this year.
“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.
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 Minneapolis is best left for flippers and rehabbers. While rental properties are an option, the affordability of buying could limit their upside.
Minneapolis Real Estate Market Summary
The Minneapolis real estate market is currently highlighted by affordability. With a 12.35 price-to-rent ratio, it is more affordable to buy a home in Minneapolis 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 than Minneapolis. Truth be told, there’s a perfect storm brewing in Minneapolis for investors: incredible demand persists in an environment where prices are continuing to rise—albeit at a tempered pace.
Have you thought about investing in the Minneapolis real estate market? 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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