Minneapolis, Minnesota, sits immediately east of the state capital of St. Paul to form the metropolitan area known as the Twin Cities. Minneapolis is the larger of the two cities, with an estimated population of roughly 407,000 people, up from about 383,000, according to 2010 census data. It had a median household income of about $50,800 as of 2014, with an owner-occupied housing rate of 48.6%. The real estate market in Minneapolis experienced a long downturn in home prices in the aftermath of the 2007-2008 financial crisis. While price declines in Minneapolis were not as steep as those in some other large cities in the United States, the downturn extended over more than four years. As of April 2016, prices fluctuated at a level just below pre-recession highs.

Market Insights

The median price for residential property in Minneapolis reached an all-time high of $225,000 in the second half of 2007. A long softening in prices ensued, reaching a brief bottom at $152,500 in early 2012, an overall decline of more than 32%. The bottom was short-lived, however, as prices began a three-year upward trend, culminating in a return to the $225,000 median price level in August and September 2014. Since then, prices have flattened, softening slightly in the winter months and strengthening again in the summer. The median price stood at $210,000 in April 2016.

Sales volumes follow a similar seasonal pattern, spiking in the summer months and falling back in the winter. The summer of 2015 saw the highest sales volumes in nine years with more than 1,600 home sales in September. Prior to the recession, summer sales volumes regularly approached and sometimes exceeded 2,000 homes per month.

Property and Transfer Taxes

Property tax in Minnesota funds county and city government, school districts, capital projects, and a wide variety of local public services, including libraries, parks, fire protection, watershed management and public health services. Minneapolis property tax is administered by Hennepin County. Most property taxes are assessed on the net tax capacity (NTC) of a given property. Calculation of the NTC for a residential property depends on its market price, as certain exemptions are available on properties valued under $413,800. Additionally, Minnesota places an added tax burden on residential property valued in excess of $500,000. On an average basis across market values and property locations, the effective tax rate on residential property in Hennepin County was roughly 1.32% in 2015. Minnesota counties charge a real estate transfer tax equal to 0.33% of a property's actual market value. This charge is known locally as a deed tax.

Most Expensive Neighborhoods

The Southwest neighborhood surrounding Lake Harriet Park is the most expensive neighborhood in Minneapolis. In the first quarter of 2016, it produced a median sale price of $354,000, up about 6.5% compared to the first quarter of 2015. Immediately to the north, the Calhoun Isles neighborhood posted a first-quarter median sale price of $350,000, tumbling 8% compared to the year prior. Showing strong year-on-year growth, the neighborhoods around the University of Minnesota campus produced a median price of $315,000, a jump of 21.4%.

Top Real Estate Websites

For regular real estate news and analysis, Minnesota's leading newspaper, the Star Tribune, is a great place to start. The paper maintains a housing and real estate portal on its website at StarTribune.com, providing access to daily coverage of real estate markets in Minneapolis and across the state. TwinCities Business, a locally published newsmagazine, offers insightful analysis and perspective on commercial and residential real estate trends in the real estate section of its website at TCBMag.com. Although targeted primarily at professional real estate agents, the Minneapolis Area Association of Realtors (MAAR) website is a terrific source for free monthly, quarterly and annual market reports covering the greater Twin Cities region. Its website is available at MPLSRealtor.com. Local real estate agents also maintain websites offering local home listings and other resources, as do national websites such as Zillow, Redfin and Trulia.

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