Minneapolis Real Estate Market Update – May 2025
The Minneapolis housing market is experiencing notable shifts this spring, influenced by evolving buyer demand, policy changes, and broader economic factors. Here's a comprehensive look at the latest developments:
Market Trends: Inventory Growth and Price Adjustments
As of mid-May, Minneapolis has seen a 6.32% month-over-month increase in active listings, totaling 1,245 properties. The median list price stands at $325,000, reflecting a 2.84% decrease from the previous month. Homes are spending an average of 54 days on the market, indicating a slight cooling compared to earlier in the year.
Despite higher mortgage rates—hovering around 7%—buyer activity remains steady, with a 1.8% increase in home sales compared to 2023. This resilience suggests that buyers are adapting to current financing conditions, possibly with the expectation of future refinancing opportunities.
Neighborhood Insights: Diverse Market Dynamics
Market conditions vary across Minneapolis neighborhoods. For instance, Northeast Minneapolis boasts strong occupancy rates of 95.8%, while downtown areas are slightly lower, with occupancy rates of 92.1% . These differences highlight the importance of localized market analysis for both buyers and sellers.
Rental Market: Stabilization Amid Limited Supply
The rental market in Minneapolis is showing signs of stabilization. As of April, the typical rent was $1,655, marking a 3.1% increase from April 2022 . However, new renter protections set to take effect in St. Paul next year—such as limiting landlords' ability to reject applicants based on criminal records or credit histories—may influence rental dynamics in the broader Twin Cities area.
Development Trends: Slowdown in New Construction
The pace of new housing construction in Minneapolis has slowed considerably. Housing permits have decreased significantly, from 3,500 units to just 800 units over the past year . This slowdown is attributed to factors such as high interest rates and an oversupply of new properties in certain areas. While this may lead to increased rents in the long term, it currently offers some relief in the form of vacancies, particularly in upscale apartment segments.
Looking Ahead: Market Outlook
Forecasts for home prices in the Twin Cities vary. Zillow predicts a modest 0.2% increase in home values, while Realtor.com anticipates a 6.2% rise. Local expert David Arbit projects a 4-5% increase, expecting higher sales volumes due to mortgage rate adjustments and wage growth.
Overall, the Minneapolis real estate market in May 2025 is characterized by increased inventory, stable buyer activity, and cautious optimism for price growth. Both buyers and sellers should stay informed and consider localized market conditions when making decisions.
Posted by Kris Schwab on
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