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Comparison of Minnesota’s Real Estate Market to the National Real Estate Market

Minnesota Real Estate Market

How Does The Minnesota Real Estate Market Compare To The National Real Estate Market?

The national real estate market is experiencing a trend commonly referred to as a tale of two markets. Ideally, people who once wanted to purchase homes in large cities and primary markets are choosing to invest in smaller towns and tertiary markets. This rising pressure is leading to the rise in prices in the tertiary markets, making today the best time to invest in markets such as Minnesota.

As a combination of Minneapolis and St. Paul, the Twin Cities metropolitan area has been ranked as the first in the Midwest when it comes to presenting real estate investment opportunities. Other than being home to 19 Fortune 500 companies, the fact that builders in this area are building affordable homes makes Minnesota an attractive real estate investment market. The increase in buyer demand also makes Minnesota an inviting location for real estate investment. The question is, how does this market compare to the national average?

Read on to learn why investing in the Minnesota real estate market is a great choice:


Rentals Are In High Demand

Several metrics show that it is renting can be better than to own property in certain parts of Minnesota. This means there is an opportunity to thrive as an investor of rental properties. First, the Minneapolis population of people under the age of 44 is higher than the national average, a common sign that people a majority of this population will be looking to rent a property. Additionally, the Twin Cities have been experiencing a positive net migration from new residents looking to move into the cities.

This urban migration will result in higher population growth than the average. Second, both cities have appeared multiple times in the ’10 Best Places To Live In The US’ report created by the US News and World Report. About 65% of Minnesotans live within the Twin Cities.

A Strong Economy and Labor Force

Investing in a market with an improving economy and an active labor market is wise. The fact that more people will be encouraged to move into the area in search of work means that your investments are at lower risk due to low vacancy rates. Luckily, the Twin Cities tend to be Minnesota’s main economic drivers. Thanks to a thriving labor force, lower costs of living and higher wages, Minnesota is among the most business-friendly markets in the US.

According to a CNBC report, the labor force in the Twin Cities has been growing steadily over the last half-decade, with a growth rate of 4.6%. This growth is higher than the 4.1% national average. As for the job growth statistics, the expectation is that job growth will be as high as 38.8%, which is higher than the national average (38.0%). Since such statistics are bound to attract new residents, it might be wise to invest in the Minnesota real estate market, whether as a rental investment or to live in the area.

Property Prices Are Bound To Appreciate With Time

The median price for houses for sale in Minneapolis is at $300,000, which is higher than the national average, based on a report by Zillow. The report also predicts that the value of houses for sale will rise by 5.2% by the end of 2019. While this might be a positive indication for you as a real estate investor, it might also make potential homeowners opt for renting than buying their homes.

This increasing demand for rental properties is bound to drive up rental prices with time, making an investment in residential properties even more profitable. In the long-term, the expectation is that real estate will continue to appreciate, supported by the low unemployment rates and the strong economy of the Twin Cities.

Minnesota Is Inviting Investments for Airbnb

In the recent past, Airbnb has provided a profitable investment option for real estate investors looking to make some extra cash. However, a good number of big cities and primary real estate markets have been exercising strict regulations on short term rental properties. Lucky for you, areas such as Minneapolis are inviting enough for such investments.

In comparison to big markets nationally, such as New York and San Francisco, the regulations for Airbnb rentals in Minnesota are a little bit lax. Even better, renting out on Airbnb can produce a return on investment, according to Mashvisor’s Investment Property Calculator. The short-term rental model may offer you positives such as the occupancy rate, average pricing per square feet, median initial investment, and the expected return cash on cash. The trick is to pay attention to the local zoning laws, among other regulations, that might affect the profitability of your investment. It is crucial to give attention to the nitty-gritty details of how you set up your rentals.

Strong Economy Helps Real Estate

From having a strong economy to increasing demand for rental property, Minnesota is a gold mine for real estate investors. Even better, when compared to the national real estate market, there are a variety of aspects that make buying houses for sales in the Twin Cities outstanding investments. If you are searching for real estate investment insights like the ones above, reach out to us to learn about making wise real estate investments. We help our clients through a diverse number of real estate investment options.

About Transition Realty

Farmington Real Estate Agent Steve Lehmeyer Transition Realty owner Steve Lehmeyer specializes in helping people manage real estate transactions in the Minneapolis/St. Paul area. His experience in the Minnesota real estate market spans 20 years. Steve and his team work with clients to buy & sell single-family homes, townhouses, condos, lake homes, and investment property.  Download a free home search app for your smartphone or search the MLS at