Where the 2024 Housing Market Predictions for Minneapolis?

minneapolis 2024 housing forecast

The Minneapolis housing market is poised for a significant shift in 2024, with a forecasted 45% decrease in new completions and a projected 3.4% rent growth by the final quarter of the year, setting the stage for a more balanced market driven by strong demand and limited supply. As the market adjusts to a more sustainable pace, home prices and sales trends are expected to adjust accordingly, with prices rising 4-6% over the year. With mortgage rates remaining relatively low, buyers are more likely to enter the market, driving up prices. As the market continues to evolve, staying informed about these trends will be essential for buyers, sellers, and investors alike.

Key Takeaways

• The 2024 Minneapolis housing market is expected to experience moderate growth, with a forecasted addition of approximately 6,241 units, a 45% year-over-year decrease.

• Home values are expected to remain stable, but excess supply from 2023 may put downward pressure on prices.

• Rent growth is predicted to increase to 3.4% by the final quarter of 2024, driven by strong demand and limited new completions.

• The Minneapolis-St. Paul metropolitan area boasts a strong job market, with an unemployment rate of 2.90% as of September 2023, lower than the national average.

• The market shift is expected to lead to a more balanced market, driven by a decrease in new completions and a moderate increase in rent growth.

2024 Housing Market Outlook

As the Minneapolis housing market enters 2024, a delicate balance is unfolding, with supply and demand forces poised to shape the year's outlook. The Minnesota housing market is expected to experience moderate growth, with a forecasted addition of approximately 6,241 units, representing a significant year-over-year decrease of nearly 45%. This decrease in housing supply is likely to impact the market conditions, causing sellers to adjust their strategies accordingly.

The current interest rates are expected to influence the median home sale price, which may fluctuate in response to the shifting market conditions. Home values in Minnesota are expected to remain stable, but the excess supply from 2023 may put downward pressure on prices. The Minneapolis Area is likely to experience a minor reduction in average occupancy rates, as the excess supply is absorbed by the strong demand.

Despite the decline in construction starts, which reached a six-year low in 2023, rent growth is predicted to experience an uptick, reaching 3.4% by the final quarter of 2024. This growth is expected to be driven by the strong demand and declining new completions. As the market shifts, sellers will need to adapt to the new supply and demand dynamics to remain competitive in the Minneapolis Area.

Local Economy and Job Market

The Minneapolis-St. Paul metropolitan area boasts a strong job market, with an unemployment rate of 2.90% as of September 2023, lower than the national average. The private sector employment in Minnesota grew by 2.5% in September 2023, outpacing the national average. This job market strength, driven by growth in industries like healthcare, construction, and leisure and hospitality, is expected to fuel housing demand in the area.

Job Market Strength

Minneapolis' thriving job market, fueled by major industries like healthcare and technology, contributes substantially to the region's economic vigor. This strong economic foundation is a key driver of the local housing market, as a healthy job market translates to healthy demand for housing.

Here are some key indicators of Minneapolis' job market strength:

  1. Low Unemployment Rates: Minnesota's unemployment rates have consistently been lower than the national average, with Minneapolis-St. Paul boasting a rate of 2.3% as of 2023.
  2. Strong Industry Growth: The region is home to major industries like healthcare, technology, and manufacturing, which drive job growth and attract new businesses to the area.
  3. High Job Creation: Minneapolis has seen significant job creation in recent years, with over 20,000 new jobs added in 2022 alone.
  4. Competitive Wages: The region offers competitive wages, with median salaries higher than the national average, making it an attractive location for professionals.

A strong job market, combined with relatively high affordability and reasonable prices in Minnesota, makes Minneapolis an attractive location for homebuyers. As the job market continues to thrive, it's likely to have a positive impact on the housing market, driving up demand and prices in the region.

Local Industry Growth

Major industries like healthcare and technology continue to fuel Minneapolis' economic growth, with new businesses and startups emerging to capitalize on the region's skilled workforce. This growth has a direct impact on the local housing market, as a strong economy typically leads to increased demand for housing, driving up prices and reducing supply.

IndustryJob Growth RateAverage Salary
Healthcare12%$83,000
Technology15%$94,000
Manufacturing8%$73,000
Finance10%$85,000
Education9%$62,000

As the local economy expands, it's likely that the Minneapolis housing market will see increased demand, particularly for new construction homes. With mortgage rates remaining relatively low, buyers are more likely to enter the market, driving up prices. However, if supply doesn't keep pace with demand, prices may rise too quickly, making it difficult for buyers to enter the market. The Minnesota Real Estate Market is poised for growth, but it's crucial to maintain a balance between supply and demand to guarantee a stable and healthy local market.

Interest Rates and Affordability

Rising mortgage interest rates are pricing out many would-be homeowners, making it increasingly difficult for first-time buyers to break into the Minneapolis market. As mortgage interest rates continue to rise, affordability remains a challenge, particularly for those looking to purchase their first home.

  1. Mortgage interest rates are expected to stabilize by the second half of 2024, which may provide some relief to homebuyers.
  2. Rent growth is predicted to increase to 3.4% by the final quarter of 2024, driven by strong demand and limited new completions.
  3. Minneapolis has seen less than 6.5% cumulative rent growth since 2020, ranking it as the fourth lowest among the top 50 U.S. markets.
  4. Average rent prices vary substantially statewide, with Blaine averaging $1,497 and Richfield averaging $1,236, affecting affordability in different areas of Minneapolis.

Despite the predicted stabilization of interest rates, affordability remains a vital challenge, especially for first-time homebuyers. As housing market predictions indicate rising home prices, it's essential for homebuyers to weigh the implications of increasing mortgage interest rates on their ability to purchase a home in Minneapolis. With rent prices also on the rise, it's vital for potential buyers to carefully evaluate their options and plan accordingly.

Supply and Demand Dynamics

As the Minneapolis housing market adjusts to a more sustainable pace, the dynamics of supply and demand are shifting to influence the availability and affordability of housing options. The limited inventory of homes has been a pressing concern, with construction starts reaching a six-year low in 2023. This decline has resulted in a tight inventory, which, coupled with high demand, has maintained the market as a seller's market.

The average Days on Market has decreased, indicating a swift pace of home sales. However, the supply of homes is expected to moderate, moving towards a more sustainable level of 6,241 units annually. This decrease in supply is anticipated to stabilize the market, making it more favorable for buyers. Despite the slight reduction in occupancy rates, the demand for housing remains strong, driving rent growth.

The forecast for 2024 predicts an uptick in rent growth to 3.4% by the final quarter, as the number of new completions declines. This highlights the ongoing struggle between supply and demand in the Minneapolis housing market. As the market adjusts to a more sustainable pace, it is essential to monitor the shifting dynamics of supply and demand, which will ultimately impact the availability and affordability of housing options.

Home Prices and Sales Trends

As the Minneapolis housing market undergoes a shift, home prices and sales trends are expected to adjust accordingly. With a market shift ahead, price growth is anticipated to slow, and sales volume is likely to drop. These changes will have a significant impact on the local real estate landscape, and understanding these trends is vital for buyers, sellers, and investors alike.

Market Shift Ahead

What can homebuyers and sellers expect from the Minneapolis housing market in 2024, and how will the predicted shift impact their decisions? The Minneapolis housing market is poised to undergo a significant shift in 2024, driven by changes in rent growth, new completions, and occupancy rates.

4 key takeaways bear noting:

  1. Rent growth: A 3.4% increase in rent growth is forecasted by the final quarter of 2024.
  2. New completions: A 45% decrease in new completions is expected, resulting in a more balanced market.
  3. Occupancy rate: The average occupancy rate is expected to experience a minor reduction, stabilizing around 94% in submarkets like Bloomington West and Carver County.
  4. Supply and demand: The forecast suggests a more sustainable and balanced market, making it a good time to buy or sell a property in Minneapolis.

The predicted shift is expected to lead to a more balanced market, driven by a decrease in new completions and a moderate increase in rent growth. This shift will likely impact the decisions of potential buyers and sellers, making it essential to stay informed about the changing landscape of the Minneapolis housing market.

Price Growth Slows

Minneapolis home prices are expected to slow their growth pace in 2024, influenced by a decline in new housing completions and a modest increase in rent growth. This slowdown in price growth is largely driven by supply-side factors, with a significant decrease in new housing completions and construction starts. In 2024, only 6,241 units are expected to be added, a 45% decrease from the previous year. This decline in new supply will lead to a slowdown in price growth, with a forecasted 3.4% rent growth by the final quarter of 2024. The Minneapolis housing market is shifting towards a more balanced market, where demand is expected to match the new level of supply throughout the year. As construction starts reached a six-year low in 2023, the excess supply that originated in 2023 will lead to a minor reduction in the average occupancy rate. Overall, the slowdown in price growth is a result of the decline in new housing completions and the modest increase in rent growth.

Sales Volume Drops

Declining construction starts and a surge in new deliveries have led to a surplus of units, driving sales volume down in the Minneapolis housing market. This imbalance is attributed to the significant decrease in construction starts, which reached a six-year low in 2023, contributing to the drop in sales volume. The Minneapolis apartment sector is anticipated to add approximately 6,241 units in 2024, a 45% decrease from the previous year.

Here are some key statistics that highlight the sales volume drop:

  • 60% decrease in construction starts from 2022 to 2023
  • 11,300 new units delivered in 2023, surpassing the absorption rate of 8,800 units
  • 45% year-over-year decrease in new apartment units in 2024
  • 3.4% forecasted rent growth by the final quarter of 2024

The excess supply that originated in 2023 may lead to decreased sales volume, influenced in part by a minor reduction in the average occupancy rate. However, the forecast suggests an uptick in rent growth, potentially stabilizing sales volume as new completions decline and demand remains strong.

Buyer and Seller Strategies

As the Minneapolis housing market shifts towards balance, savvy buyers and sellers must adapt their strategies to navigate the changing landscape. With home prices expected to rise 4-6% over the year, sellers who have been waiting on the sidelines will return to the market, driving up home values. Meanwhile, buyers can take advantage of low mortgage rates, hovering around 1-2%, making homeownership more accessible, especially for first-time homebuyers.

As the market becomes more balanced, buyers and sellers should be prepared to negotiate. Sellers will need to be flexible with their asking prices, while buyers should be prepared to act quickly when making an offer. With a predicted decrease in investor activity, traditional buyers will have more opportunities to purchase homes, leading to a more balanced market. The supply of homes for sale is expected to increase, giving buyers more options, but sellers will still have leverage due to the low inventory of homes.

Buyers should be prepared to move quickly when they find a suitable property, as the market is expected to remain competitive. Sellers, on the other hand, should be realistic about their asking prices and be open to negotiating. As the market continues to shift, both buyers and sellers must remain adaptable and informed to achieve their goals. By understanding the changing landscape and adapting their strategies, buyers and sellers can successfully navigate the Minneapolis housing market in 2024.

Market Predictions and Forecast

The addition of 6,241 apartment units in 2024 is expected to slow down the sector's growth, marking a significant 45% year-over-year decrease in new construction. This decline in construction starts, which reached a six-year low in 2023, is expected to impact the Minneapolis housing market. The forecast for 2024 anticipates a slight decrease in the average occupancy rate, influenced by the excess supply that originated in 2023.

Here are some key market predictions for Minneapolis:

  1. Rent growth: Expected to increase to 3.4% by the final quarter of 2024.
  2. New units: 6,241 units to be added in 2024, a 45% decrease from 2023.
  3. Construction starts: Reached a six-year low in 2023, a near 60% decrease from 2022.
  4. Occupancy rate: Forecasted to decrease slightly due to excess supply.

As the Minneapolis housing market adjusts to the decline in construction starts and new unit deliveries, the supply and demand dynamics are expected to shift. With rent growth expected to increase, the market is likely to favor landlords. However, the slight decrease in occupancy rate may lead to increased competition among landlords to attract tenants. Overall, the 2024 forecast for the Minneapolis housing market suggests a period of adjustment as the sector responds to the slowdown in new construction.

Conclusion

In summary, the 2024 housing market in Minneapolis is expected to be shaped by a strong local economy, rising interest rates, and shifting supply and demand dynamics. While home prices may moderate, sales trends will likely remain stable. Buyers should prioritize affordability and sellers should strategize for competitive pricing. Overall, a balanced market is forecasted, with opportunities for both buyers and sellers who adapt to the changing landscape.

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