Executive Summary 2Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Executive Summary
Housing Market Area Description
Known as the “Twin Cities,” the Minneapolis-St. Paul-Bloomington,
MN-WI Housing Market Area (hereafter, the Minneapolis HMA)
is coterminous with the metropolitan statistical area of the same
name and includes 14 counties in Minnesota and 2 in Wisconsin.
The “twin cities” of Minneapolis and St. Paul are the largest cities
in the HMA and are the primary cities in Hennepin and Ramsey
Counties, respectively. For purposes of this analysis, the HMA is
divided into two submarkets: (1) the Central Counties submarket,
which includes Hennepin and Ramsey Counties, and (2) the
Suburban Counties submarket, which includes Anoka, Carver,
Chisago, Dakota, Isanti, Le Sueur, Mille Lacs, Scott, Sherburne,
Sibley, Washington, and Wright Counties in Minnesota, and Pierce
and St. Croix Counties in Wisconsin.
The current population of the HMA is estimated at 3.67 million.
Tools and Resources
Find interim updates for this metropolitan area, and select geographies nationally,
at PD&R’s Market-at-a-Glance tool.
Additional data for the HMA can be found in this report’s supplemental tables.
For information on HUD-supported activity in this area, see the Community Assessment Reporting Tool.
Executive Summary 3Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Market Qualifiers
Notes: Total demand represents the estimated production necessary to achieve a balanced market at the end of the forecast period. Units are under
construction as of June 1, 2019. The forecast period is June 1, 2019, to June 1, 2022.
Source: Estimates by the analyst
3-Year Housing Demand Forecast
Sales Units Rental Units
Central Counties Submarket
Total Demand 9,550 15,250
Under Construction 780 10,850
Suburban Counties Submarket
Total Demand 15,050 5,525
Under Construction 1,650 3,000
Minneapolis HMA
Total Demand 24,600 20,775
Under Construction 2,430 13,850
Nonfarm payrolls totaled 2.01 million during the
12 months ending May 2019, with growth of 9,300
jobs, or 0.5 percent, well below the 1.3-percent
growth rate, or 25,300 jobs, added during the
previous 12-month period. By contrast, from
2010 through 2017, payrolls grew by an average
of 34,500 jobs annually, an average annual
growth rate of 1.9 percent. The unemployment
rate averaged 2.8 percent during the 12 months
ending May 2019, down from 2.9 percent during
the previous 12-month period. During the 3-year
forecast period, nonfarm payroll growth is
expected to continue at an average annual
rate of 0.5 percent.
Sales housing market conditions in the Minneapolis
HMA are currently slightly tight, with an estimated
2.4-month supply of homes for sale. In the Central
Counties submarket, sales housing conditions
are slightly tight, and in the Suburban Counties
submarket, conditions are more balanced. During
the 12 months ending May 2019, 70,750 new
and existing homes were sold in the HMA, 950
sales above the 69,800 home sales recorded a
year earlier. At the same time, the average sales
price for all home sales was $298,300, nearly 5
percent higher than the average sales price a year
earlier. During the 3-year forecast period, demand
is estimated for 24,600 homes; the 2,430 homes
currently under construction will satisfy a portion
of that demand.
The overall rental housing market in the
Minneapolis HMA is slightly tight, with an estimated
vacancy rate of 4.7 percent, down from 7.6 percent
in April 2010. Similar conditions exist throughout
the HMA with current estimated vacancy rates of
5 percent or less in both submarkets. The apartment
market is tight, with a vacancy rate of 2.9 percent
as of the first quarter of 2019, up from 2.8 percent
a year earlier. The average apartment asking rent
was $1,305, nearly 5 percent above the average
asking rent a year earlier. During the 3-year forecast
period, demand is estimated for 20,775 new units;
the 13,850 units currently under construction will
satisfy a portion of that demand during the first
2 years of the forecast period.
Economy
Strong: Economic conditions remain
strong in the Minneapolis HMA,
although the rate of job growth
slowed considerably during the past year.
Rental Market
Slightly Tight: Despite record-high
levels of rental housing development
since 2010, rental housing market
Sales Market
Slightly Tight: Relatively low levels of
new single-family home construction
have not kept pace with demand since
TABLE OF CONTENTS
Economic Conditions 4
Population and Households 10
Home Sales Market Conditions 14
Rental Market Conditions 22
Terminology Definitions and Notes 29
the mid-2010s; particularly acute is the shortage
of houses for sale at entry-level price points.
conditions in the HMA have been slightly tight
as compared with balanced conditions during
2010, due to strong rental household growth.
Mining, Logging, & Construction 4%
Manufacturing 10%
Wholesale 5%
Retail 9%
Transportation & Utilities 4%
Information 2%
Financial Activities 7%
Professional & Business Services 16%
Health 15%
Education 2%
Leisure & Hospitality 9%
Other Services 4%
Federal 1%
State 3%
Local 8%
Government
12%
Education
& Health
Services
17%
Trade 14%
Total
2,010.1
Notes: Total nonfarm payroll is in thousands. Percentages may not add to 100 percent due to rounding. The
current date is June 1, 2019.
Source: U.S. Bureau of Labor Statistics
Figure 1. Current Nonfarm Payroll Jobs in the Minneapolis HMA, by Sector
Economic Conditions
4Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Primary Local Economic Factors—
A Stable Base of Employers
The Minneapolis HMA is the largest metropolitan area in the state of Minnesota
and includes the state capital (in St. Paul). Because of these attributes, the
HMA relies on several industries and sectors that provide generally stable
employment, including (state) government, trade, and health care, which are
three of the four largest sectors or subsectors in the HMA (Figure 1). Included
in the government sector is the University of Minnesota, which is the third
largest employer in the HMA, with 26,450 direct jobs (Table 1). The University
of Minnesota, with five campuses statewide, including its largest campus in
Minneapolis, east of downtown and the Mississippi River, had an estimated
economic impact (statewide) of approximately $8.6 billion annually and
supported more than 77,000 jobs as of 2017 (University of Minnesota). State
government payrolls averaged 65,800 during the 12 months ending May 2019,
a gain of 500 jobs, or nearly 1 percent from a year earlier.
The wholesale and retail trade sector is currently the third largest employment
sector in the HMA. Opened in 1992, the Mall of America (MOA) is in suburban
Bloomington, Minnesota, south of Minneapolis in Hennepin County. The MOA
includes 5.6 million square feet of retail space and is the largest single retail and
entertainment destination in North America (Mall of America). The MOA includes
more than 520 retail stores, more than 60 dining options, an indoor theme park,
and a 1.3-million-gallon aquarium. The MOA generates more than $2 billion in
economic impact for the state of Minnesota annually and employs more than
Economic Conditions
Largest sector: Education and health services
During the 12 months ending May 2019, the rate of payroll job growth
in the Minneapolis HMA fell to the lowest annual rate since early 2011.
Table 1. Major Employers in the Minneapolis HMA
Name of Employer Nonfarm Payroll Sector Number of Employees
Allina Health System Education & Health Services 27,650
Target Corp. Wholesale & Retail Trade 26,700
University of Minnesota Government 26,450
HealthPartners Education & Health Services 22,500
Fairview Health Services
Education & Health Services 22,000
Wells Fargo & Co. Financial Activities 20,000
UnitedHealth Group Education & Health Services 15,750
CHS Inc. Manufacturing 12,150
U.S. Bancorp Financial Activities 12,000
Land O’Lakes, Inc. Manufacturing 10,000
Note: Excludes local school districts.
Source: Moody’s Analytics.
Economic Conditions 5Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
11,000 workers year-round, increasing to 13,000 workers during peak seasons.
The MOA is located directly south of the Minneapolis International Airport and
is the southern terminus of the Metro Transit Blue Line light rail.
The education and health services sector is the largest nonfarm payroll sector
in the HMA and the only sector to have job growth every year since 2000.
Since 2000, jobs have increased an average of 3.1 percent annually, compared
with 0.6-percent average annual growth for total nonfarm payrolls. Steady
population growth in the HMA contributes to demand for jobs in this service-
providing sector, and major healthcare providers are 4 of the 10 largest
employers in the HMA.
The U.S. Bank Stadium contributes to jobs in the leisure and hospitality sector
by spurring tourism; recent examples include the National Collegiate Athletics
Association (NCAA) “Final Four” men’s basketball tournament playoffs in April
2019 and Super Bowl LII in February 2018. Super Bowl LII attracted 100,000
visitors to the HMA and included an economic impact estimated at $450 million.
Figures for the NCAA Final Four suggest more than 90,000 visitors and a $140
million economic impact. In addition, the stadium has spurred investments
estimated at $1.1 billion in the near-eastside area of downtown Minneapolis,
where the stadium is sited.
Current Conditions—Nonfarm Payrolls
Economic conditions in the Minneapolis HMA have been strong since 2010,
although the rate of job growth declined significantly during the past year.
During the 12 months ending May 2019, nonfarm payroll jobs increased
by 9,300, or 0.5 percent from a year earlier, to 2.01 million (Table 2). By
comparison, jobs grew 1.3 percent during the 12-month period ending May
2018. The primary reason for slowed job growth is a lack of qualified workers;
as of the fourth quarter of 2018, approximately 76,550 jobs were available,
more than 11 percent higher than available jobs a year earlier (Figure 2).
Significant job expansions have become less common in the HMA as
employers have been discouraged by a lack of qualified workers.
Table 2. 12-Month Average Nonfarm Payroll Jobs (1,000s)
in the Minneapolis HMA, by Sector
12 Months
Ending
May 2018
12 Months
Ending
May 2019
Absolute
Change
Percentage
Change
Total Nonfarm Payroll Jobs 2,000.7 2,010.1 9.3 0.5
Goods-Producing Sectors 277.7 282.5 4.8 1.7
Mining, Logging, & Construction 80.8 82.9 2.1 2.6
Manufacturing 196.8 199.6 2.8 1.4
Service-Providing Sectors 1,723.0 1,727.5 4.5 0.3
Wholesale & Retail Trade 284.9 286.7 1.7 0.6
Transportation & Utilities 75.3 75.4 0.1 0.1
Information 38.0 37.4 -0.6 -1.5
Financial Activities 148.5 150.2 1.7 1.2
Professional & Business Services 324.9 325.1 0.2 0.1
Education & Health Services 334.5 335.1 0.5 0.2
Leisure & Hospitality 188.9 190.0 1.1 0.6
Other Services 79.2 79.1 -0.1 -0.1
Government 248.9 248.6 -0.3 -0.1
Notes: Based on 12-month averages through May 2018 and May 2019. Numbers may not add to totals due to
rounding. Data are in thousands.
Source: U.S. Bureau of Labor Statistics
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2Q 2008
4Q 2008
2Q 2009
4Q 2009
2Q 2010
4Q 2010
2Q 2011
4Q 2011
2Q 2012
4Q 2012
2Q 2013
4Q 2013
2Q 2014
4Q 2014
2Q 2015
4Q 2015
2Q 2016
4Q 2016
2Q 2017
4Q 2017
2Q 2018
4Q 2018
Available Jobs
Figure 2. Available Jobs in the Seven-County Twin Cities Region
2Q = second quarter. 4Q = fourth quarter.
Note: Data are for the seven-county Twin Cities region including Anoka, Carver, Dakota, Hennepin, Ramsey,
Scott, and Washington Counties.
Source: Minnesota Department of Employment and Economic Development, Job Vacancy Survey
Economic Conditions 6Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Job growth in the goods-producing sectors significantly exceeded the service-
providing sectors during the most recent 12 months. The two fastest-growing
sectors were the mining, logging, and construction and the manufacturing
sectors, which increased 2.6 percent and 1.4 percent, with growth of 2,100
and 2,800 jobs, respectively. The mining, logging, and construction sector has
grown 4.9 percent annually, on average, since 2011, nearly three times as fast as
total nonfarm payrolls in the HMA (Figure 3). Modest increases in sales housing
construction since 2011 and significant increases in multifamily construction
have contributed to job growth in this sector. During 2018, residential building
permits for single-family and multifamily residences were at the highest levels
since 2006, contributing to increased jobs in the construction subsector. Growth
in the manufacturing sector included an expansion by Winnebago Industries,
which added approximately 75 manufacturing jobs at its Eden Prairie (Hennepin
County) site in late 2018. Minnetronix Medical Incorporated, a medical equipment
manufacturer located in St. Paul, added approximately 100 jobs during 2018
and expects to increase employment by 30 to 40 jobs annually during the
next 3 years. The Minneapolis HMA includes more than 40 medical device
manufacturers with more than 100 employees each (Minnesota Department of
Employment and Economic Development). Service-sector job growth was led by
the financial activities and the wholesale and retail trade sectors, which added
1,700 jobs each, or gains of 1.2 and 0.6 percent, respectively. The number of jobs
in the leisure and hospitality sector increased by 1,100, or 0.6 percent. Declining
sectors during the past year include the information sector, the government
sector, and the other services sector, which recorded job losses of 600, 300,
and 100 jobs each, or 1.5 percent, 0.1 percent, and 0.1 percent, respectively.
Current Conditions—Unemployment
During the 12 months ending May 2019, the unemployment rate in the
Minneapolis HMA averaged 2.8 percent, down from 2.9 percent a year earlier,
and well below the 3.8-percent national rate (Figure 4). The unemployment
rate in the Minneapolis HMA peaked at 7.8 percent during the summer of 2010,
shortly after the end of the Great Recession, but has declined in all but 1 year
since. The rate has been below 5.0 percent since 2013 and is currently only
slightly higher than the recent low of 2.7 percent in 2000.
-10 -5 0 5 10 15 20 25 30 35 40 45 50 55
Change in Jobs (%)
Total Nonfarm Payroll Jobs
Goods-Producing Sectors
Mining, Logging, & Construction
Manufacturing
Service-Providing Sectors
Wholesale & Retail Trade
Transportation & Utilities
Information
Financial Activities
Professional & Business Services
Education & Health Services
Leisure & Hospitality
Other Services
Government
Figure 3. Sector Growth in the Minneapolis HMA,
2011 to Current
Note: The current date is June 1, 2019.
Source: U.S. Bureau of Labor Statistics
10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
NationMinneapolis HMA
May-00
May-01
May-02
May-03
May-04
May-05
May-06
May-07
May-08
May-09
May-10
May-11
May-12
May-13
May-14
May-15
May-16
May-17
May-18
May-19
Unemployment Rate
(%)
9.7
7.8
Figure 4. 12-Month Average Unemployment Rate
in the Minneapolis HMA and the Nation
Note: 12-month moving average.
Source: U.S. Bureau of Labor Statistics
Economic Conditions 7Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Historic Trends
2003 Through 2006
From 2003 through 2006, job growth averaged 1.0 percent, or 17,300 jobs
added annually. By comparison, national nonfarm payroll jobs grew an average
of 1.1 percent annually. Growth averaging 18,900 jobs annually in the service-
providing sectors offset an average decline of 1,700 jobs annually in the goods-
producing sectors because manufacturing jobs fell by 1,900, or 0.9 percent,
annually. Manufacturing sector layoffs were widespread in the HMA, and
impacted jobs in food, machinery, and medical equipment manufacturing. In the
service-providing sectors, the education and health services sector added an
average of 9,200 jobs annually, with growth averaging more than 4.0 percent.
The professional and business services sector added 5,200 jobs, or 1.9-percent
average annual growth, and the leisure and hospitality sector added 3,300 jobs
annually, or 2.1 percent. Figure 5 shows the 12-month average nonfarm payroll
count in the Minneapolis HMA from 2000 to the current date.
2007 Through 2010
This period encompassed the onset of the Great Recession, during which time
the national economy contracted and impacted economic conditions in the
Minneapolis HMA. Nonfarm payrolls in the HMA fell by an average of 22,300
annually or 1.2 percent; by contrast, nationally, payroll jobs declined an average of
1.1 percent. All sectors except the education and health services sector in the HMA
declined during this period with the most significant losses in the goods-producing
and trade sectors; these sectors declined by annual averages of 15,600 and
6,800 jobs, or 5.8 and 2.5 percent, respectively, during the period. In the goods-
producing sectors, the losses were nearly evenly split, averaging 7,700 annually
in the mining, logging, and construction sector, and averaging 7,900 annually
in the manufacturing sector, declines averaging 10.5 and 4.0 percent annually,
respectively. Residential building permitting had begun to fall sharply during 2005
and remained low during the period from 2007 through 2010. In the manufacturing
sector, job dislocations were varied and numerous during this period; during
2008, Graco closed a plant in Minneapolis that manufactured industrial valves,
eliminating 280 jobs. ADC, a manufacturer of telephone apparatuses, closed
plants in Eden Prairie (Hennepin County, Minnesota) and Shakopee (Scott County,
Minnesota), eliminating 200 total jobs. Food manufacturing jobs, medical device
manufacturing jobs, and others also declined. The education and health services
sector grew an average
of 7,900 jobs, or 3.1 percent, only slightly slower than
growth during the previous period.
2011 Through 2017
Nonfarm payrolls began to increase in the HMA in February 2011. Nonfarm
payrolls rose an average of 34,500 annually from 2011 through 2017, averaging
1.9 percent. Goods-producing jobs grew at a 2.5-percent annual rate, faster
than the 1.8-percent rate of growth for service-providing jobs; however,
service sector jobs increased an average of 28,100 annually, or 1.8 percent,
compared with 6,400 jobs added, or 2.5 percent, on average, in the goods-
producing sector. In the goods-producing sector, jobs in the mining, logging,
2,100
2,000
1,900
1,800
1,700
1,600
National Recession Nonfarm Payrolls
Nonfarm Payrolls (in Thousands)
May-00
May-01
May-02
May-03
May-04
May-05
May-06
May-07
May-08
May-09
May-10
May-11
May-12
May-13
May-14
May-15
May-16
May-17
May-18
May-19
Note: 12-month moving average.
Sources: U.S. Bureau of Labor Statistics; National Bureau of Economic Research
Figure 5. 12-Month Average Nonfarm Payrolls in the Minneapolis HMA
Economic Conditions 8Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
and construction sector expanded by 3,600 annually, or 5.5 percent, primarily
in the construction subsector; net in-migration into the HMA rose strongly and
residential construction increased to meet the housing needs of new residents.
The construction of U.S. Bank Stadium, which opened in 2016, southeast of
downtown Minneapolis and adjacent to the combined portion of the Blue and
Green Metro Transit train lines, created an estimated 8,000 construction jobs
during its 2.5-year construction period.
The education and health services sector and the professional and business
services sector led gains in the service-providing sector. The two sectors
grew by averages of 8,300 and 7,000 jobs annually, or 2.8 and 2.4 percent,
respectively. Numerous expansions at hospitals and healthcare providers in
the HMA occurred, including Fairview Health Services in Princeton (Sherburne
County, Minnesota), and Fairview Southdale Hospital in Edina (Hennepin County,
Minnesota), as well as Allina Health System’s new “Mother-Baby Center” in St.
Paul. Additional growth occurred in the leisure and hospitality and the wholesale
and retail trade sectors, which grew by 4,300 jobs and 3,600 jobs annually,
average growth rates of 2.5 and 1.3 percent, respectively. The government
sector added an average of 600 jobs, or 0.2 percent, annually with job growth
for local governments averaging 1,300 jobs annually, more than offsetting
declines in federal and state government jobs. The information sector was the
only sector to lose jobs from 2011 through 2017, falling an average of 300 jobs
annually, or 0.8 percent.
Commuting Patterns
The Central Counties submarket is the employment center in the HMA, accounting
for approximately 66 percent of all jobs in the HMA during 2018 (Table 3). That
figure is down slightly, from 68 percent during 2010 and 70 percent during 2001
as employers have become increasingly likely to relocate to less expensive parts
of the HMA. Approximately 87 percent of workers who live in the Central Counties
submarket work in either Hennepin or Ramsey County, 11 percent commute to
Employment Forecast
During the 3-year forecast period, nonfarm payrolls are expected to increase
at an average annual rate of 0.5 percent, with growth likely hindered by a lack
of qualified workers to fill jobs. Construction sector jobs will continue to grow
because of continued demand for housing going forward. Manufacturing sector
jobs are likely to remain stable despite TreeHouse Foods’ announcement in May
the Suburban Counties submarket, and 2 percent commute to areas outside the
16-county HMA. By comparison, 41 percent of workers who live in the Suburban
Counties submarket commute into the Central Counties submarket for work,
whereas 55 percent work in the Suburban Counties submarket, and 4 percent
commute to jobs outside of the HMA (U.S. Census Bureau, estimates as of July 1,
2015; Table 4). Anoka and Dakota Counties, which are directly to the north and
the south of the Central Counties submarket, respectively, combine to account for
approximately 48 percent of the jobs in the Suburban Counties submarket.
Central Counties Suburban Counties
66 34
Table 3. Estimated Percent Share of Covered Employment
by Submarket During 2018
Source: U.S. Bureau of Labor Statistics, with estimates by the analyst
Worker Residence
Central Counties
(%)
Suburban Counties
(%)
Location
of Primary
Job
Central Counties 87 41
Suburban Counties 11 55
Outside the HMA 2 4
Table 4. Jobs by Place of Worker Residence
Source: U.S. Census Bureau, 2015 Journey to Work
Economic Conditions 9Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
2019 to close a plant in Minneapolis that manufactures snacks, thus eliminating
120 jobs. Job growth is expected to continue in the education and health services
sector, but at lower rates than recently. Jobs are expected to be added at the
University of Minnesota Health Center and Regions Hospital in St. Paul, which are
both undertaking expansions, although Blue Cross and Blue Shield of Minnesota
recently announced the elimination of approximately 60 jobs at its location
in Eagan (Dakota County). Some expansions are expected in the professional
and business services sector. Technology-consulting firm Wipro announced the
development of a new technology hub in Minneapolis that is expected to create
100 jobs by 2021. New York-based financial-technology startup company DailyPay,
Inc., selected Minneapolis as its second location, and plans to hire 100 workers by
2020. Offsetting these growth announcements, Thrivent Financial announced the
closure of its Brightpeak Financial division and is expected to eliminate 60 jobs in
Minneapolis. The continued decline in the number of unemployed residents is of
some concern as a shortage of available labor, for both skilled and unskilled jobs,
may dampen future economic growth.
Population and Households 10Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Current population: 3.67 million
Population and Households
The rate of population growth in the Minneapolis HMA has been
consistent since 2000; however, the allocation of population growth
between the two submarkets has shifted significantly since 2010.
Population Trends
As of June 1, 2019, the population of the Minneapolis HMA was estimated at more
than 3.67 million. Population growth has averaged 1.0 percent annually since April
1, 2010, unchanged from the rate during the period from April 1, 2000, to April
1, 2010 (Table 5). Net in-migration has increased significantly as a share of total
population growth since 2010, while population growth has accelerated in the
Central Counties submarket and slowed in the Suburban Counties submarket.
2000 to 2010
From 2000 to 2006, the population in the HMA grew an average of 32,400
annually, or 1.0 percent, and net in-migration contributed 17 percent of this growth,
or 5,600 people, on average, each year. The remaining population growth, totaling
26,800 people on average each year, came from net natural change. From 2006 to
2010, encompassing declining economic conditions in the HMA resulting from the
Population
Quick Facts
2010 Current Forecast
Population
3,348,859 3,674,000 3,772,000
Average Annual Change
31,700 35,450 32,650
Percentage Change
1.0 1.0 0.9
Household
Quick Facts
2010 Current Forecast
Households
1,299,635 1,427,000 1,465,000
Average Annual Change
13,900 13,950 12,500
Percentage Change
1.1 1.0 0.9
Notes: Average annual changes and percentage changes are based on averages from 2000 to 2010, 2010 to
current, and current to forecast. The forecast period is from the current date (June 1, 2019), to June 1, 2022.
Sources: 2000 and 2010—2000 Census and 2010 Census; current and forecast—estimates by the analyst
Table 5. Minneapolis HMA Population and Household Quick Facts
Great Recession, population growth fell slightly, to an average of 30,550 annually,
or 0.9 percent, and net in-migration fell to an average of 2,750 people annually,
or only 9 percent of the increase in population.
2010 to Current
Starting in 2010, when the HMA began an ongoing, 9-year period of job growth,
net in-migration increased strongly, averaging 9,950 people annually from 2010
to 2014, and increasing to 14,350 people annually from 2014 to the current
date. Despite the increase in net in-migration, the rate of population growth has
remained stable, at 1 percent annually because net natural change has declined.
From 2010 to 2014, net in-migration contributed nearly 30 percent of total
population growth in the HMA—a rate that has risen to nearly 40 percent since
2014. Figure 6 shows components of population growth in the HMA since 2000.
Notably, from 2010 to 2018, net in-migration was primarily international migration,
which accounted for more than 90 percent of migrants into the Minneapolis HMA
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
-5,000
2000-2001
2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
2015-2016
2016-2017
2017-2018
2018-Current
Current-Forecast
Net MigrationNet Natural Change
Population Growth
Figure 6. Components of Population Change in the Minneapolis HMA,
2000 Through the Forecast
Notes: Net natural change and net migration totals are average annual totals over the time period. The
forecast period is from the current date (June 1, 2019), to June 1, 2022.
Sources: U.S. Census Bureau; current to forecast—estimates by the analyst
Population and Households 11Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
(U.S. Census Bureau, Population Estimates Program). Although immigrants from
Mexico are the largest contributor to the foreign-born population in the HMA,
immigrants from Asia including the Hmong and immigrants from Africa, notably
from Somalia and Ethiopia, are significantly represented in the HMA as well.
Age Cohort Trends
Local officials indicate a decline in the share of the population in the prime
working age, defined as persons age 18 through 64, is contributing to lower
economic growth in the HMA. The data supports this; Figure 7 shows the
proportion of the population in various age cohorts, estimated in 2010, 2014,
and 2017. The fastest growth is estimated to have occurred in the over age-
65 cohort; the population age 18 through 39 has declined modestly, and the
population age 40 through 64 has declined slightly faster. Combined, the prime
working age population in the HMA has declined from 64 percent to 62 percent
of the total population between 2010 and 2017.
Central Counties Submarket
The population of the Central Counties submarket is currently estimated at 1.84
million, or 50 percent of the population in the HMA (Figure 8). The population of
the submarket has risen an average of 19,300 annually since 2010, a growth rate
averaging 1.1 percent; this rise represents a sharp increase from the previous
decade, when the population increased an average of only 3,375 annually, or
0.2 percent. Average annual net natural change in the submarket has declined
since 2010, and net in-migration has accounted for all the increased population
growth. Since 2010, net in-migration to the submarket has averaged 7,350
people annually. By comparison, from 2000 to 2010, net out-migration from the
submarket averaged 9,125 people annually. Recent economic growth has had a
significant impact in the Central Counties submarket, and numerous development
initiatives focused in the downtowns of Minneapolis and St. Paul have made
the submarket more attractive to residents. In 2014, Metro Transit, the public
transportation system in the HMA, opened the Green Line, which runs parallel
35
30
25
20
15
10
5
0
2014 20172010
Under 18 18-39 Years 40-64 Years 65 Years and Over
Population
(%)
Source: 2010, 2014, and 2017 American Community Survey, 1-year data
Figure 7. Population by Age in the Minneapolis HMA
Suburban CountiesCentral Counties
50% 50%
Note: The current date is June 1, 2019.
Source: Estimates by the analyst
Figure 8. Current Population by Submarket
Population and Households 12Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
to Interstate 94 and University Avenue for much of its length and connects
downtown Minneapolis to downtown St. Paul. Between 2010 and 2017, the
population of the census tracts adjacent to the Green Line and the Blue Line,
which opened in 2004 and connects downtown Minneapolis to the Minneapolis
International Airport and the MOA, increased at an average annual rate of
2.3 percent, more than twice as fast as the HMA’s growth rate of 1.0 percent
(American Community Survey, 5-year data; Map 2).
Suburban Counties Submarket
The population of the Suburban Counties submarket is also currently estimated
at 1.84 million. Unlike in the Central Counties submarket, where the rate of
population growth has increased compared with the previous decade, the rate
of population growth has declined since 2010, although this decline has slowed
since 2015. Population growth in the submarket averaged 28,300 annually, or
1.9 percent from 2000 to 2010; since 2010, the average rate of growth declined
to 0.9 percent annually, or an average of only 16,200 people. From 2000 to 2006,
net in-migration to the submarket averaged 19,550 people annually, contributing
to average population growth of 34,100 people annually, or 2.3 percent. From
2006 through 2011, including the period of economic decline and the start of
the recovery in the HMA, net in-migration into the submarket fell dramatically,
averaging 2,900 people annually, and the rate of population growth more than
halved, falling to 1.0 percent, or growth averaging 17,100 people annually. As
economic conditions continued to improve, net in-migration into the Suburban
Counties submarket fell to an average of 2,850 people annually from 2011 to
2015, and population growth slowed to an average of only 0.8 percent annually,
or 14,300 people. Population growth has accelerated to an average of 1.1 percent
since 2015, however, as housing costs have risen in the areas closer to the
economic core of the HMA. Net in-migration to the submarket has increased
to an average of 8,750 people annually, since 2015.
Household Trends
The Minneapolis HMA contains an estimated 1.43 million households, with
slightly more than 52 percent residing in the Central Counties submarket, where
the average household size is relatively small; approximately 48 percent in the
Suburban Counties submarket, where families represent a larger share of the
Map 2. Average Annual Population Change by Census Tract
in the Minneapolis HMA, 2012–2017
Source: 2012–2017 American Community Survey, 5-year data
Population and Households 13Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
total population. By tenure, an estimated 69.5 percent of households in the
HMA are homeowners, down from 71.6 percent in 2010 (Figure 9). The decline
in homeownership is largely a result of the housing crisis in the late 2000s,
with both new and existing households more likely to rent since 2010 than in
the previous decade. Since 2010, household growth has averaged 1.0 percent
annually in the HMA, or 13,950 new households annually, relatively unchanged
from 1.1 percent annual growth, or 13,900 households annually during the previous
decade. Since 2010, renter households in the HMA have increased 1.8 percent
annually, on average, compared with owner household growth averaging 0.7
percent annually. During the previous decade, renter households rose an average
of 1.5 percent annually, and owner households grew an average of 1.0 percent
annually. By submarket, households have increased an average of 1.0 percent
in each submarket since 2010, equal to 7,225 households added, on average,
in the Central Counties submarket, and 6,700 households added annually in the
Suburban Counties submarket.
RenterOwner
Current20102000
Homeownership Rate
72.6
Households
Homeownership Rate
(%)
73.0
72.5
72.0
71.5
71.0
70.5
70.0
69.5
69.0
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
71.6
69.5
Sources: 2000 and 2010–2000 Census and 2010 Census; current—estimates by the analyst
Figure 9. Households by Tenure and Homeownership Rate
in the Minneapolis HMA
Suburban CountiesCentral Counties
48% 52%
Note: The forecast period is from June 1, 2019, to June 1, 2022.
Source: Estimates by the analyst
Figure 10. Share of Forecast Population Growth by Submarket
Forecast
The anticipated slowdown in economic growth during the 3-year forecast period
is expected to result in slowed population growth. The population of the HMA is
expected to reach 3.77 million by June 1, 2022, growth of 0.9 percent, or 32,650
annually. By submarket, population growth rates are expected to average 0.9
percent annually in the Central Counties submarket and 0.8 percent annually
in the Suburban Counties submarket. Approximately 52 percent of the forecast
population growth is expected to occur in the Central Counties submarket
(Figure 10). Households are expected to expand by an average of 0.9 percent
annually in each submarket and the HMA, with annual increases of 6,650 in the
Central Counties submarket and 5,850 in the Suburban Counties submarket,
totaling 12,500 households added annually in the HMA.
Home Sales Market Conditions 14Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Current Conditions
The home sales market in the Minneapolis HMA is currently slightly tight, with an
estimated 0.9-percent vacancy rate, down from 1.9 percent in April 2010, when
conditions were slightly soft (Table 6). During May 2019, there was a 2.5-months’
supply of single-family detached homes for sale and a 2.1-months’ supply of
condominium units for sale; a year earlier, the corresponding figures were
supplies of 2.4 months and 2.1 months (Minneapolis Area Realtors
®
[MAR]).
MAR further reports that home sales are hampered by a lack of supply,
particularly acute at the lower price levels. Current prices for both new and
existing home sales are at all-time highs, which would typically incentivize
Market Conditions: Slightly Tight
Sales housing market conditions in the HMA have tightened since
2010 because of stronger population growth and a shortage of
available inventory for sale.
Home Sales
Quick Facts
Minneapolis HMA Nation
Vacancy Rate 0.9% NA
Months of Inventory 2.4 3.3
Total Home Sales 70,750 6,003,000
1-Year Change 1.3% -1.8%
New Home Sales Price $433,500 $410,400
1-Year Change 2% 0%
Existing Home Sales Price $284,700 $310,200
1-Year Change 5% 2%
Mortgage Delinquency Rate 0.7% 1.4%
NA = data not available.
Notes: Vacancy rate is as of the current date, June 1, 2019. Home sales and prices are for the 12 months
ending May 2019. Months of inventory and mortgage delinquency data are as of May 2019.
Sources: Home sales and prices—Metrostudy, A Hanley Wood Company; delinquency rate—CoreLogic, Inc.
Table 6. Home Sales Quick Facts in the Minneapolis HMA
potential sellers to list their home, although many homeowners are concerned
they will not find another home to buy. Rising costs for land, materials, and labor
are identified as hindrances to increasing new home production in the HMA.
Home Sales
Home sales, including new and existing single-family homes, townhomes,
and condominiums, totaled 70,750 during the 12 months ending May 2019, an
increase of 930 sales or 1.3 percent above the sales total from a year earlier
(Metrostudy, A Hanley Wood Company). Figure 11 shows home sales by type in
the HMA. The increase in sales occurred despite a significant decline in real
estate owned (REO) sales, which fell by 1,075 sales, or more than 31 percent. Both
new home sales and regular (non-distressed) resales rose during the past year,
increasing 9 percent and 2 percent, to 6,300 and 62,100 sales, respectively.
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
May-06
May-07
May-08
May-09
May-10
May-11
May-12
May-13
May-14
May-15
May-16
May-17
May-18
May-19
Sales Totals
New Sales REO Sales
Regular Resale Sales
REO = real estate owned.
Source: CoreLogic, Inc., with adjustments by the analyst
Figure 11. 12-Month Sales Totals by Type in the Minneapolis HMA
Home Sale Prices
The average home sales price in the Minneapolis HMA during the 12 months
ending May 2019 was $298,300, approximately $14,050, or 5 percent, higher
than the average sales price a year earlier, and more than 9 percent above the
Home Sales Market Conditions
Sales Market—Minneapolis HMA
Home Sales Market Conditions 15Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
prerecession high of $273,400 in 2006. By sales type, the average price of new
home sales was $433,500, and for regular resale homes, the average sales price
was $286,700, gains of 2 percent and 4 percent from a year earlier, respectively.
Both sales prices represent record highs for the HMA. Figure 12 shows average
home sales prices, by type of sale, in the Minneapolis HMA.
500,000
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
New Sales Regular Resale Sales REO Sales
Average Sales Price
($)
May-06
May-07
May-08
May-09
May-10
May-11
May-12
May-13
May-14
May-15
May-16
May-17
May-18
May-19
REO = real estate owned.
Source: CoreLogic, Inc., with adjustments by the analyst
Figure 12. 12-Month Average Sales Price by Type of Sale in the Minneapolis HMA
REO Sales and Delinquent Mortgages
During the 12 months ending May 2019, REO sales totaled 2,375, nearly one-
third fewer than the 3,450 REO sales a year earlier, and a fraction of the peak
of 19,350 in 2009 (CoreLogic, Inc., with adjustments by the analyst). As a
proportion of all resale sales, REO sales contributed 4 percent during the current
12-month period, down from 5 percent a year ago and well below the 41-percent
figure in 2009. As of May 2019, approximately 0.7 percent of all mortgages in
the HMA were seriously delinquent or transitioned into REO status, down from
0.9 percent a year earlier and well below the high of 6.3 percent in January
2010. (CoreLogic, Inc.). The current rate in the HMA is slightly lower than the
0.8-percent rate for the state of Minnesota and nearly one-half the national
rate of 1.4 percent.
Housing Affordability
Homeownership in the Minneapolis HMA is moderately affordable, although
affordability has generally trended downward since early 2013. Excess inventory,
present in the HMA during 2010 and 2011, has been mostly absorbed and
low levels of inventory have put upward pressure on purchase prices since
the mid-2010s. The National Association of Home Builders (NAHB) and Wells
Fargo Housing Opportunity Index (HOI) for the HMA, which represents the
share of homes sold that would have been affordable to a family earning the
local median income, was 78.6 during the first quarter of 2019, down slightly
from 78.9 percent a year earlier (Figure 13). During the most recent quarter,
84 metropolitan areas out of 239 metropolitan areas measured, or 35 percent
of the metropolitan areas in the nation, had greater housing affordability than
the HMA. From 2009 through 2012, the HOI for the Minneapolis HMA was
comparatively high, averaging 85.0 during the period, although affordability
has since declined with home sales prices rising faster than incomes despite
increased production of single-family homes, townhomes, and condominiums.
90
85
80
75
70
65
60
1Q 2008
1Q 2009
1Q 2010
1Q 2011
1Q 2012
1Q 2013
1Q 2014
1Q 2015
1Q 2016
1Q 2017
1Q 2018
1Q 2019
NAHB Opportunity Index
1Q = first quarter. NAHB = National Association of Home Builders.
Source: NAHB/Wells Fargo
Figure 13. Minneapolis HMA Housing Opportunity Index
Sales Market—Central Counties Submarket 16Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
In December 2018, the city of Minneapolis adopted “Minneapolis 2040,” its most
recent comprehensive plan for housing and development. It includes 14 goals
and 100 policy proscriptions and was developed from a recognition that long-
term projections suggest the HMA will need to add approximately 14,000 new
housing units annually to keep up with expected population growth and housing
demand. The plan includes a proposal to eliminate single-family zoning entirely
in the city of Minneapolis, allowing duplex and triplex units to be built throughout
the city, as well as a proposal to allow three- to six-story buildings along certain
transit corridors. Both are designed to encourage additional sales housing
development, particularly of higher density projects. As of June 1, 2019, the plan
has been approved by the Minneapolis City Council, but has not been approved
by the Metropolitan Council, the local regional planning office that recently offered
amendments to the document.
Construction Activity
Construction of single-family homes and condominiums in the Minneapolis HMA,
as measured by units permitted, has increased modestly since recent low levels,
but remains low compared with levels of construction during the previous decade.
During the 12 months ending May 2019, approximately 8,825 single-family homes
and condominiums were permitted in the HMA, slightly above the 8,800 units
permitted a year earlier. During 2003 and 2004, the number of sales housing
units permitted averaged 26,150 annually, and fell sharply, declining 35 percent
annually, to 4,625 units permitted during 2008. From 2008 through 2011, the
number of sales housing units permitted remained low, averaging 4,325 annually,
before increasing modestly, averaging gains of 13 percent annually, to 9,250
homes permitted during 2017. Figure 14 shows sales housing permitting activity
in the Minneapolis HMA.
30,000
25,000
20,000
15,000
10,000
5,000
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
CondominiumsSingle-Family Homes/Townhomes
Notes: Includes single-family homes, townhomes, and condominiums. 2019 includes data through May 2019.
Sources: U.S. Census Bureau, Building Permits Survey; 2000 through 2017—final data and estimates by the
analyst; 2018 and 2019—preliminary data and estimates by the analyst
Figure 14. Average Annual Sales Housing Permitting Activity
in the Minneapolis HMA
Forecast
During the 3-year forecast period, demand is estimated for 24,600 new single-
family homes, townhomes, and condominiums in the HMA (Table 7). The 2,430
homes currently under construction will satisfy some of this demand. Demand is
expected to be strongest during the first year because of existing, unmet demand,
which is likely to carry over into the second and third year of the forecast period.
Table 7. Demand for New Sales Units in the Minneapolis HMA
During the Forecast Period
Sales Units
Demand 24,600 Units
Under Construction 2,430 Units
Note: The forecast period is June 1, 2019, to June 1, 2022.
Source: Estimates by the analyst
Current Conditions
The sales housing market in the Central Counties submarket is slightly tight, with
an estimated sales vacancy rate of 0.8 percent, down from 2.1 percent in April
2010 (Table 8). The current homeownership rate in the submarket is estimated
at 60.7 percent, down from 63.3 percent in 2010 because of strong renter
household growth. The foreclosure crisis shifted some owners into rental housing
Sales Market—Central Counties
Submarket
Sales Market—Central Counties Submarket 17Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
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U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Home Sales
New home sales in the Central Counties Submarket totaled 1,625 sales during the
12 months ending May 2019, nearly 9 percent more than the 1,475 sales reported
a year earlier (Metrostudy, A Hanley Wood Company). New home sales fell by
an average of 25 percent annually from 2006 through 2011, when a recent low
level of 910 new sales occurred. Since 2011, new home sales have increased
modestly, with growth averaging 7 percent annually, to 1,400 sales during 2017
although new home sales activity remains well below the peak levels of the mid-
2000s. Regular (non-distressed) resale home sales have, by contrast, recovered
Home Sales
Quick Facts
Central Counties
Submarket
Minneapolis
HMA
Vacancy Rate 0.8% 0.9%
Months of Inventory 2.1 2.4
Total Home Sales 31,700 70,750
1-Year Change 0.3% 1.3%
New Home Sales Price $511,200 $433,500
1-Year Change -1% 2%
Existing Home Sales Price $308,000 $284,700
1-Year Change 4% 5%
Mortgage Delinquency Rate 0.7% 0.7%
Notes: Vacancy rate is as of the current date, June 1, 2019. Home sales and prices are for the 12 months
ending May 2019. Months of inventory and mortgage delinquency data are as of May 2019.
Sources: Home sales and prices—Metrostudy, A Hanley Wood Company; delinquency rate—CoreLogic, Inc.
Table 8. Home Sales Quick Facts in the Central Counties Submarket
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Sales Totals
New Sales REO Sales
Regular Resale Sales
May-06
May-07
May-08
May-09
May-10
May-11
May-12
May-13
May-14
May-15
May-16
May-17
May-18
May-19
REO = real estate owned.
Source: CoreLogic, Inc., with adjustments by the analyst
Figure 15. 12-Month Sales Totals by Type in the Central Counties Submarket
in the late 2000s and early 2010s; the rate of seriously delinquent mortgages and
mortgages that transitioned into REO status peaked in the submarket in January
2010, at 5.8 percent of all outstanding mortgage loans. Despite strengthening
economic conditions, many new residents in the submarket continue to rent
rather than own due in part to the relatively high cost of sales housing and
scarcity of available sales housing units in the submarket. During the 12 months
ending May 2019, approximately 31,700 homes were sold, slightly more than the
31,600 home sales a year earlier; the average sales price was $318,500, nearly 4
percent more than the average sales price a year earlier.
to prerecession levels. During the 12 months ending May 2019, regular resales
totaled 28,900, nearly 2 percent more than the 28,400 sales recorded a year
earlier. Regular resales averaged 26,500 during 2005 and 2006 before falling
to a recent low of 12,350 sales during 2011. Since 2011, regular resales have
recovered and averaged 27,750 sales annually from 2015 through 2017. REO sales
totaled 1,200 during the 12 months ending May 2019, more than 30 percent fewer
than were reported a year earlier; REO sales at this time accounted for nearly
4 percent of all existing home sales. REO sales reached a recent peak of 9,900
sales during 2009, when they accounted for 41 percent of all existing home sales.
Figure 15 shows home sales by type in the Central Counties submarket.
Sales Prices
Although new home sales totals remain low compared with prerecession levels,
new home sales prices are much higher than prerecession levels. During the
12 months ending May 2019, the average new home sales price was $511,200,
approximately 1 percent below the $516,900 average sales price a year earlier,
but nearly 43 percent higher than the prerecession high of $358,600 in 2008.
New home sales prices reached their recent low average of $298,800 during
2010 but increased significantly beginning the following year with average gains
Sales Market—Central Counties Submarket 18Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Condominium Sales Activity
Sales of condominium and other attached units are notably more prevalent
in the Central Counties submarket than in the Suburban Counties submarket.
Sales of new and existing condominium units averaged 8,975 during the 12
months ending May 2019, nearly 29 percent of all new and existing sales in the
submarket, and an increase of 2 percent from condominium sales totals a year
earlier. Also, during the 12 months ending May 2019, the average sales price
was $229,000, or 6 percent above the average sales price a year earlier. Total
550,000
500,000
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
New Sales Regular Resale Sales REO Sales
Average Sales Price
($)
May-06
May-07
May-08
May-09
May-10
May-11
May-12
May-13
May-14
May-15
May-16
May-17
May-18
May-19
REO = real estate owned.
Source: CoreLogic, Inc., with adjustments by the analyst
Figure 16. 12-Month Average Sales Price by Type of Sale
in the Central Counties Submarket
of 13 percent annually from 2011 through 2014, when the average new home
sales price was $493,600. Since 2014, new home sales prices have been stable,
averaging $509,300 annually during 2015, 2016, and 2017. Regular resale home
sales’ average prices have also surpassed prerecession levels, and averaged
$310,100 during the 12 months ending May 2019, more than 3 percent above the
average sales price a year earlier. Regular resale average prices reached a recent
low during 2009, when the average was $244,100. Prices for regular resale homes
remained modest during 2010, 2011, and 2012, averaging $253,100 during each of
those 3 years. After 2012, appreciation in regular resale prices occurred, averaging
slightly more than 3 percent annual growth, to $293,000 during 2017. Figure 16
shows average sales prices in the Central Counties submarket by sales type.
condominium sales remain below the levels in 2005 and 2006, when 9,850 and
9,075 sales occurred, which represented 30 and 29 percent of total sales in the
HMA, respectively. Current average condominium sales prices are also below
prerecession values, which averaged a relatively stable $241,900 annually during
2005, 2006, and 2007, before declining to a low level of $167,700 during 2011.
Construction Activity
Single-family home construction, as measured by the number of building permits
authorized, has trended upward since 2010, but is below prerecession highs.
Single-family homes permitted averaged 3,325 homes annually from 2001
through 2004, declined to an average of 2,800 homes annually during 2005 and
2006, and then fell sharply, with declines averaging 33 percent annually, to a
recent low level of 790 homes permitted during 2009. The subsequent recovery
in single-family permitting has been more modest than the decline, with gains
averaging 13 percent annually, to 2,150 homes permitted during 2017. During
the 12 months ending May 2019, approximately 2,100 single-family homes have
been permitted in the submarket, down slightly from 2,125 homes permitted a
year earlier (preliminary data; Figure 17). Permitting of condominium units also is
6,000
5,000
4,000
3,000
2,000
1,000
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
CondominiumsSingle-Family Homes/Townhomes
Notes: Includes single-family homes, townhomes, and condominiums. 2019 includes data through May 2019.
Sources: U.S. Census Bureau, Building Permits Survey; 2000 through 2017—final data and estimates by the
analyst; 2018 and 2019—preliminary data and estimates by the analyst
Figure 17. Average Annual Sales Housing Permitting Activity
in the Central Counties Submarket
Sales Market—Suburban Counties Submarket 19Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Table 9. Demand for New Sales Units in the Central Counties Submarket
During the Forecast Period
Sales Units
Demand 9,550 Units
Under Construction 780 Units
Note: The forecast period is June 1, 2019, to June 1, 2022.
Source: Estimates by the analyst
Current Conditions
The sales housing market in the Suburban Counties submarket is balanced, with
a current vacancy rate estimated at 1.0 percent, down from 1.7 percent during
April 2010 (Table 10). Despite slowed population growth since 2010, significantly
lower sales housing construction has contributed to improving conditions in
the submarket, allowing the market to reach the current balanced state. The
homeownership rate in the submarket is estimated at 79.2 percent, down from
80.7 percent during 2010. Although some new households in the submarket have
chosen to rent rather than buy housing, foreclosure rates, which peaked at 6.7
percent during early 2010, were modestly higher in this submarket than in the
Central Counties submarket and have contributed to a decline in the homeownership
rate since 2010. During the 12 months ending May 2019, total home sales were
39,050, more than 2 percent above the 38,200 sales from a year earlier; at the same
time, the average sales price for all homes in the submarket was $281,900, or more
than 6 percent higher than the average sales price a year earlier.
Home Sales
Quick Facts
Suburban Counties
Submarket
Minneapolis
HMA
Vacancy Rate 1.0% 0.9%
Months of Inventory 2.7 2.4
Total Home Sales 39,050 70,750
1-Year Change 2.2% 1.3%
New Home Sales Price $406,500 $433,500
1-Year Change 4% 2%
Existing Home Sales Price $265,700 $284,700
1-Year Change 6% 5%
Mortgage Delinquency Rate 0.8% 0.7%
Notes: The vacancy rate is as of the current date, June 1, 2019. Home sales and prices are for the 12 months
ending May 2019. Months of inventory and mortgage delinquency data are as of May 2019.
Sources: Home sales and prices—Metrostudy, A Hanley Wood Company; delinquency rate—CoreLogic, Inc.
Table 10. Home Sales Quick Facts in the Suburban Counties Submarket
below prerecession highs, with most multifamily development in the submarket
being built for renter occupancy. Permitting for condominium units in the Central
Counties submarket fluctuated during the prerecession period, with a peak of
2,625 units permitted during 2005, after which condominium permitting fell,
reaching a recent low of 5 units permitted during 2010. Since 2010, permitting
for condominium units continues to fluctuate, but remains comparatively low.
Approximately 140 condominium units were permitted during the 12 months
ending May 2019, compared with 330 units permitted during the previous year.
Notable Recent Developments
New single-family home construction in this submarket tends to be outside
the cities of Minneapolis and St. Paul. Locations with significant homebuilding
include the southern suburban Hennepin County communities of Bloomington,
Edina, and Plymouth in western Hennepin County. In Plymouth, in suburban
Hennepin County, Camelot Nine includes six home designs on 80 lots; homes
start at $393,990 and offer three to six bedrooms and two and a half to five
bathrooms and start at 1,700 square feet. Currently, 72 of 80 home sites are
sold, built, and occupied. Eleven Condominiums in Minneapolis has recently
secured construction financing and is scheduled to break ground in late summer
2019. The 41-story tower will be east of downtown Minneapolis and include 118
units. Initial prices have yet to be released.
Forecast
During the 3-year forecast period, demand is estimated for 9,550 units, with an
estimated 780 units currently under construction (Table 9). Demand will likely
be strongest during the first year of the forecast period.
Sales Market—Suburban Counties
Submarket
Sales Market—Suburban Counties Submarket 20Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Sales Totals
New Sales REO Sales
Regular Resale Sales
May-06
Jan-07
Sep-07
May-08
Jan-09
Sep-09
May-10
Jan-11
Sep-11
May-12
Jan-13
Sep-13
May-14
Jan-15
Sep-15
May-16
Jan-17
Sep-17
May-18
Jan-19
REO = real estate owned.
Source: CoreLogic, Inc., with adjustments by the analyst
Figure 18. 12-Month Sales Totals by Type in the Suburban Counties Submarket
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
Average Sales Price
($)
New Sales Regular Resale Sales REO Sales
May-06
May-07
May-08
May-09
May-10
May-11
May-12
May-13
May-14
May-15
May-16
May-17
May-18
May-19
REO = real estate owned.
Source: CoreLogic, Inc., with adjustments by the analyst
Figure 19. 12-Month Average Sales Price by Type of Sale
in the Suburban Counties Submarket
Home Sales
New home sales in the Suburban Counties submarket totaled 4,675 during the
12 months ending May 2019, an increase of nearly 9 percent from a year earlier.
This figure was less than one-half the prerecession high. From 12,100 new home
sales during 2005, sales activity subsequently dropped to a recent low level
of 2,025 sales during 2011, an average decline of nearly 26 percent annually.
Beginning in 2012, new home sales increased by an average annual rate of
15 percent to 3,050 sales during 2014. In the subsequent 3 years, new home
sales increased by an average of 11 percent annually to 4,175 new sales during
2017. By contrast, regular resales have surpassed prerecession levels. During
the 12 months ending May 2019, regular resale sales totaled 33,200, more than
3 percent above the total a year earlier, and 1 percent above the prerecession
high of 32,800 sales during 2005. Regular resale sales averaged 13,750
annually from 2008 through 2011, before increasing steadily by an average of
16 percent annually, to 32,600 sales during 2017. REO sales in the Suburban
Counties submarket totaled 1,175 during the 12 months ending May 2019, nearly
one-third fewer than the sales count a year earlier and only 3 percent of all
existing home sales, down from 5 percent a year ago. REO sales peaked at
10,150, or 43 percent of all existing home sales during 2011. Figure 18 provides
home sales counts by sales type in the Suburban Counties submarket.
Sales Prices
Average home sales prices, for all sales types, currently exceed prerecession
highs due in part to the relatively modest increases in new supply since 2010.
For new home sales during the 12 months ending May 2019, the average sales
price in the Suburban Counties submarket was $406,500, nearly 4 percent above
the average sales price a year earlier, and significantly above the prerecession
high of $302,100 averaged during 2006. From a low average sales price of
$261,300 during 2009, average new home sales prices have risen steadily,
averaging gains of 5 percent annually, to $386,900 during 2017. The average
sales price for regular resale homes during the 12 months ending May 2019 was
$266,400, nearly 6 percent above the average price a year earlier, and 9 percent
above the prerecession high average of $243,800 during 2006. Figure 19 provides
average home sales prices by sales type for the Suburban Counties submarket.
Construction Activity
Sales housing construction activity, as measured by the number of units
permitted, has been nearly all single-family homes in the submarket since the
mid-2000s. During 2003 and 2004, an average of 20,900 sales housing units
was permitted each year, 84 percent of which were for single-family homes;
Sales Market—Suburban Counties Submarket 21Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
25,000
20,000
15,000
10,000
5,000
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
CondominiumsSingle-Family Homes/Townhomes
Notes: Includes single-family homes, townhomes, and condominiums. 2019 includes data through May 2019.
Sources: U.S. Census Bureau, Building Permits Survey; 2000 through 2017—final data and estimates by the
analyst; 2018 and 2019—preliminary data and estimates by the analyst
Figure 20. Average Annual Sales Housing Permitting Activity
in the Suburban Counties Submarket
Recently Completed Developments
More development in the submarket is occurring in counties closer to the
economic core of the HMA, including Dakota, Scott, Carver, and Washington
Counties, all in Minnesota. Located in Victoria (Carver County), where the
population grew an estimated 3.2 percent annually from 2010 to 2017 (ACS
5-year), Whispering Hills Townhomes includes 144 newly constructed townhome
units, with nearly 60 units sold. Homes range in size from 1,750 to 2,377 square
feet; include three or four bedrooms and two or three bathrooms, with two-car
garages; and start at $279,990. In Prior Lake (Scott County) Haven Ridge includes
162 home sites, with 25 closed and occupied and 20 more under contract.
Single-family homes with two to four bedrooms and two to three bathrooms,
including two- and three-car garages, start at $365,990.
Forecast
During the 3-year forecast period, demand is estimated for 15,050 new sales
units (Table 11). The 1,650 units under construction will satisfy a portion of this
demand. Given some current unfilled sales demand, it is likely to be stronger
in the first year of the forecast period and diminish during years 2 and 3.
Table 11. Demand for New Sales Units in the Suburban Counties Submarket
During the Forecast Period
Sales Units
Demand 15,050 Units
Under Construction 1,650 Units
Note: The forecast period is from June 1, 2019, to June 1, 2022.
Source: Estimates by the analyst
since 2005, construction of condominium units has declined somewhat, and
approximately 94 percent of all sales housing units permitted have been for
single-family homes. Beginning in 2005, sales housing permitting fell rapidly,
with declines averaging 37 percent annually, to 3,175 units permitted during 2008.
From 2009 through 2011, units permitted averaged only 3,050 annually, the
lowest recent levels. Since 2012, permitting has increased modestly, but remained
relatively low, compared with permitting levels during the previous decade. From
2012 through 2017, the number of sales housing units permitted averaged 5,525
annually. During the 12 months ending May 2019, approximately 6,700 sales
housing units have been permitted in the submarket, slightly fewer than the 6,675
sales housing units permitted a year earlier (preliminary data). Figure 20 shows
sales housing permitting in the Suburban Counties submarket since 2000.
Rental Market Conditions 22Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Rental Market Conditions
Market Conditions: Slightly Tight
The rental housing market has been balanced to tight since the early
2010s, and the apartment vacancy rate has been at or below 5 percent
every quarter since 2012.
Current Conditions and Recent Trends
Rental housing market conditions in the Minneapolis HMA are currently slightly
tight, with an overall estimated vacancy rate of 4.7 percent, down from 7.6 percent
in April 2010 (Table 12). Despite relatively high levels of multifamily construction,
as measured by the number of multifamily units permitted, strong net in-migration
and increased renter household growth spurred by the housing crisis have kept
vacancy levels low and rents steadily rising (Figure 21). Twenty-five percent of all
renter households in the HMA live in single-family homes, modestly higher than
the 23-percent rate in 2010, and 63 percent of all renter households live in larger
apartment buildings with five or more units, like the rate in 2010, according to
Rental Construction Activity
Since 2012, rental permitting in the HMA has been at the highest levels since the
mid-1980s with the 12,950 units permitted during 2018 representing the highest
annual figure on record. From 2005 through 2010, including the Great Recession
that impacted the national and local economies, multifamily permitting averaged
1,875 units permitted annually. As population growth accelerated, multifamily
permitting rose to 3,000 units in 2011 before increasing sharply to an average of
7,075 units from 2012 through 2017, as apartment vacancy rates remained low and
rents rose. During the 12 months ending May 2019, approximately 11,250 rental
Rental Market—Minneapolis HMA
Rental Market
Quick Facts
2010
(%)
Current
(%)
Rental Vacancy Rate
7.6 4.7
Occupied Rental Units by Structure
Single-Family Attached & Detached
23 25
Multifamily (2–4 Units)
12 11
Multifamily (5+ Units)
64 63
Other (Including Mobile Homes)
1 1
Notes: The current date is June 1, 2019. 2010 data are from April 2010. Current data for “occupied rental units
by structure” are 2017 American Community Survey, 1-year data, the most recent data available.
Source: American Community Survey, 1-year data
Table 12. Rental Market Quick Facts in the Minneapolis HMA
the 2017 ACS. Renter households living in larger apartment buildings with five or
more units are more prevalent in the Central Counties submarket, closer to the
economic core of the HMA. The apartment market in the Minneapolis HMA is tight,
with a vacancy rate of 2.9 percent during the first quarter of 2019, up slightly from
2.8 percent a year earlier (RealPage, Inc., with adjustments by the analyst). The
average rent for an apartment in the HMA was $1,305 during the first quarter of
2019, nearly 5 percent above the average rent a year ago.
1Q = first quarter.
Source: RealPage, Inc.
Figure 21. Apartment Rents and Vacancy Rates in the Minneapolis HMA
1,400
1,300
1,200
1,100
1,000
900
1Q 2013
1Q 2014
1Q 2015
1Q 2016
1Q 2017
1Q 2018
1Q 2019
Average Monthly Rent
($)
Vacancy RateAverage Monthly Rent
Vacancy Rate
(%)
4.0
3.7
3.4
3.1
2.8
2.5
Rental Market Conditions 23Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
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units have been permitted in the HMA, significantly above the 6,800
units permitted a year earlier (preliminary data); Figure 22 shows average
annual rental permitting activity in the Minneapolis HMA, and Map 3 shows
new apartment developments started since 2017 by number of units.
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Notes: Includes apartments and units intended for rental occupancy. 2019 includes data through May 2019.
Sources: U.S. Census Bureau, Building Permits Survey; 2000 through 2017—final data and estimates by the
analyst; 2018 and 2019—preliminary data and estimates by the analyst
Figure 22. Average Annual Rental Permitting Activity in the Minneapolis HMA
Housing Affordability: Rental
Rental housing is modestly affordable in the Minneapolis HMA, primarily because
median renter household income outpaced rent increases in 5 of 7 years from
2010 to 2017. This was partially because of the shortage of workers, discussed
earlier, applying upward pressure on wages in the HMA. The HUD Rental
Affordability Index, a measure of median renter household income relative to
qualifying income for the median-priced rental unit, has generally risen since
reaching a low in 2010 with median renter household incomes rising an average
of 5.0 percent annually from 2010 to 2017, whereas median gross rents rose an
average of only 3.2 percent during the period (Figure 23).
Map 3. Completed Projects in the Minneapolis HMA Since 2010
Source: McGraw-Hill Construction Pipeline database, with adjustments by the analyst
Rental Market—Central Counties Submarket 24Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Note: The forecast period is from June 1, 2019, to June 1, 2022.
Source: Estimates by the analyst
Rental Units
Demand 20,775 Units
Under Construction 13,850 Units
Table 14. Demand for New Rental Units in the Minneapolis HMA
During the Forecast Period
Current Conditions and Recent Trends
The rental housing market in the Central Counties submarket is currently slightly
tight, with an estimated rental vacancy rate of 4.5 percent, down from 7.5
percent during 2010, when conditions were slightly soft. Significantly increased
population growth since 2010 in the submarket has led to a tightening of the
rental housing market, despite record numbers of new apartment construction.
Housing is generally higher density in the submarket than the HMA as a whole,
“Cost burden,” or when households spend more than 30 percent of their income
on rent, is another measure of housing affordability. In the Minneapolis HMA, cost-
burdened households spending 30-49 percent of their income on rent represent
21.6 percent of all renter households, below the national average of 22.0 percent.
Severely cost-burdened households, or those spending more than 50 percent of
their income on rent, account for 43.7 percent of renter households in the HMA,
earning less than HUD Area Median Family Income (HAMFI), and only 22.5 percent
of all renter households. Both figures are below the respective national averages
of 50.2 and 23.8 percent. It is important to note, however, that 31.7 percent of
renter households in the HMA with income below 50 percent of the HAMFI pay
between 30 and 49 percent of their income for rent, compared with only 25.7
percent of renter households nationwide. Table 13 compares cost-burdened renter
households at different income levels with the national averages.
One reason for the comparative affordability of rental housing the Minneapolis
HMA is increasing incomes since 2010, which is partially attributable to a shortage
of qualified workers. In an effort to expand the pool of affordable rental housing,
in April 2018, the city of Minneapolis adopted the 4d Affordable Housing Incentive
Program, which provides property tax breaks in exchange for developers
maintaining affordable rent levels in their non-subsidized apartments, using the
HUD Area Median Income standards.
Cost Burdened Severely Cost Burdened
Minneapolis
HMA
Nation
Minneapolis
HMA
Nation
Renter Households with Income <50% HAMFI 31.7 25.7 43.7 50.2
Total Renter Households 21.6 22.0 22.5 23.8
Table 13. Percentage of Cost-Burdened Renter Households by Income
in the Minneapolis HMA, 2011–2015
HAMFI = HUD Area Median Family Income.
Note: “Cost-burdened” households spend between 30–49 percent of their income on rent and “severely cost-
burdened” households spend over 50 percent of their income on rent.
Sources: Consolidated Planning/CHAS Data; 2011–2015 American Community Survey, 5-year estimates; huduser.gov
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Median Gross Rent and Income Growth (%)
HUD Renter Affordability Index
106
104
102
100
98
96
94
92
90
88
86
10
8
6
4
2
0
-2
-4
Median Income ChangeGross Rent Change
Renter Affordability Index
Source: American Community Survey, 1-year data
Figure 23. Minneapolis HMA Rental Affordability
Forecast
During the 3-year forecast period, demand is estimated for 20,775 units; the
13,850 units currently under construction will satisfy a portion of that demand
during the first 2 years of the forecast period (Table 14).
Rental Market—Central Counties
Submarket
Rental Market—Central Counties Submarket 25Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Rental Construction Activity
After a lull in rental production from 2005 through 2010, when the number of
units permitted averaged only 1,150 annually, rental permitting in the Central
Counties submarket has increased dramatically (Figure 25). During the
previous decade, population and household growth was comparatively low,
and multifamily permitting was relatively limited with an average of 1,225 units
permitted each year from 2005 through 2007 and an average of only 1,050
1,400
1,300
1,200
1,100
1,000
900
1Q 2013
1Q 2014
1Q 2015
1Q 2016
1Q 2017
1Q 2018
1Q 2019
Average Monthly Rent
($)
Vacancy RateAverage Monthly Rent
Vacancy Rate
(%)
5.0
4.4
3.8
3.2
2.6
2.0
1Q = first quarter.
Source: RealPage, Inc.
Figure 24. Apartments Rents and Vacancy Rates
in the Central Counties Submarket
Apartment Market Conditions
The apartment market in the Central Counties submarket is also slightly tight,
with a vacancy rate of 3.2 percent during the first quarter of 2019, up slightly
from 3.1 percent a year earlier (RealPage, Inc., with adjustments by the analyst;
Figure 24). The apartment vacancy rate has not been above 5 percent since
before 2010, and rents rose an average of nearly 5 percent annually from
the first quarter of 2013 to the first quarter of 2019. Within the submarket, the
highest asking rents are in the RealPage, Inc.-defined “Downtown Minneapolis/
University” area, where asking rents averaged $1,620 during the first quarter
of 2019, an increase of less than 1 percent from a year earlier; this area also
and comparatively fewer renter households live in single-family homes in
this submarket (19 percent) than in the overall HMA, with a larger share (68
percent) of renter households living in apartment buildings with five or more
units. Table 15 shows quick facts about the rental housing market in the Central
Counties submarket. The Twin Cities campus at the University of Minnesota is
in Minneapolis, east of the Mississippi River and downtown Minneapolis. During
the fall term of 2018, total enrollment at the Twin Cities campus was 51,700
students, and student households account for an estimated 5 percent of renter
households in the submarket. Student households contribute to demand for
rental units in the submarket, and many new apartment properties built along
transit lines also attract student renters.
Rental Market
Quick Facts
2010
(%)
Current
(%)
Rental Vacancy Rate
7.5 4.5
Occupied Rental Units by Structure
Single-Family Attached & Detached
19 19
Multifamily (2–4 Units)
13 12
Multifamily (5+ Units)
68 68
Other (Including Mobile Homes)
0 0
Notes: The current date is June 1, 2019. Current data for “occupied rental units by structure” are 2017
American Community Survey, 1-year data, the most recent data available. 2010 data are from April 2010.
Source: American Community Survey, 1-year data
Table 15. Rental Market Quick Facts in the Central Counties Submarket
had the highest vacancy rate among the market areas that make up this
submarket, at 5.0 percent, up from 4.5 percent a year earlier. During the past
year, more than 1,400 new apartment units have entered the market in this
area. In the RealPage, Inc.-defined “Bloomington” area, which includes the city
of Bloomington, nearly 820 new apartment units entered the market during
2016 and 2017, and none since. Despite the number of new units in the area,
the apartment vacancy rate fell from 4.9 percent to 3.3 percent. Bloomington
includes the MOA and the current southern terminus of the Metro Transit Blue
Line light rail.
Rental Market—Suburban Counties Submarket 26Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
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Current Conditions and Recent Trends
The overall rental housing market in the Suburban Counties submarket is
currently balanced, with an estimated rental vacancy rate of 5.0 percent, down
from 7.6 percent during 2010, when conditions were slightly soft. Housing in the
submarket is generally less dense than in the Central Counties submarket, and
a significantly higher percentage of renter households live in single-family
homes in the submarket (37 percent) than in the Central Counties submarket
(19 percent). That difference has increased since 2010 because of the continued
Recent Developments
An estimated 10,850 new rental units are under construction in the Central
Counties submarket. Since 2010, approximately 83 percent of rental units built
in the submarket were in Hennepin County with approximately 48 percent of
the rental units built in the submarket in the city of Minneapolis. Significant
development has continued in Minneapolis, much of which is along the Blue and
Green lines of Metro Transit light rail. In addition, new apartment development
Note: The forecast period is from June 1, 2019, to June 1, 2022.
Source: Estimates by the analyst
Rental Units
Demand 15,250 Units
Under Construction 10,850 Units
Table 16. Demand for New Rental Units in the Central Counties Submarket
During the Forecast Period
units permitted from 2008 through 2010 during the Great Recession. Since 2010,
multifamily permitting has increased significantly in response to strong renter
household growth in this submarket. The number of rental units permitted more
than doubled during 2011, to 2,900, and nearly doubled again, to 5,475 units
permitted during 2012, before averaging 5,775 units annually from 2013 through
2017. During the 12 months ending May 2019, an estimated 7,950 rental units
were permitted in the Central Counties submarket, significantly above the 4,425
units permitted a year earlier.
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Notes: Includes apartments and units intended for rental occupancy. 2019 includes data through May 2019.
Sources: U.S. Census Bureau, Building Permits Survey; 2000 through 2017—final data and estimates by the
analyst; 2018 and 2019—preliminary data and estimates by the analyst
Figure 25. Average Annual Rental Permitting Activity
in the Central Counties Submarket
is occurring in southern Hennepin County, including the cities of Edina,
Bloomington, and Eden Prairie. In downtown Minneapolis, 365 Nicollet opened
in late 2018 and includes 370 apartments, studio through three-bedroom units,
with rents starting at $1,610, $2,010, and $2,700 for studio, one-, and two-
bedroom units, respectively. Three-bedroom rents were not available. In Edina
(Hennepin County), Aria Apartments is under construction with completion
scheduled for the summer of 2019. This property includes 174 units in one six-
story building, and rents start at $1,495, $1,595, $2,395, and $3,545 for studio,
one-, two-, and three-bedroom apartments, respectively.
Forecast
During the 3-year forecast period, demand is estimated for 15,250 new rental
units in the submarket; the 10,850 units currently under construction will satisfy
a significant portion of this demand (Table 16).
Rental Market—Suburban Counties
Submarket
Rental Market—Suburban Counties Submarket 27Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
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effects of the Great Recession and its impacts on the sales housing market;
increased levels of foreclosures have led to formerly owner-occupied homes
entering the rental housing market (Table 17). Total household growth has been
relatively slow in the Suburban Counties submarket since 2010, averaging
1 percent annually; renter household growth has been higher, averaging 1.8
percent annually, which has contributed to tightening rental housing market
conditions despite an increase in multifamily units constructed.
Rental Market
Quick Facts
2010
(%)
Current
(%)
Rental Vacancy Rate
7.6 5.0
Occupied Rental Units by Structure
Single-Family Attached & Detached
33 37
Multifamily (2–4 Units)
9 8
Multifamily (5+ Units)
56 53
Other (Including Mobile Homes)
2 1
Notes: The current date is June 1, 2019. Current data for “occupied rental units by structure” are 2017
American Community Survey, 1-year data, the most recent data available. 2010 data are from April 2010.
Source: 2017 American Community Survey, 1-year data
Table 17. Rental Market Quick Facts in the Suburban Counties Submarket
Apartment Market Conditions
The apartment market in the Suburban Counties submarket is tight, with a
vacancy rate of 2.3 percent during the first quarter of 2019, unchanged from
a year earlier (RealPage, Inc., with adjustments by the analyst; Figure 26). The
apartment vacancy rate has not been above 3.5 percent since before 2010, and
rents have risen an average of 4 percent annually from the first quarter of 2013
to the first quarter of 2019. Among RealPage, Inc.-defined market areas in the
submarket, the highest rents are in the Eden Prairie/Shakopee/Chaska area,
where rents averaged $1,303 as of the first quarter of 2019, an increase of 6.2
percent from the same quarter a year earlier. The largest rent increase during the
past year was in the Anoka County area, where the asking rent rose 6.3 percent,
to a first quarter 2019 value of $1,147, and the lowest apartment vacancy rate was
in the East St. Paul area, where the apartment vacancy rate was 2.6 percent.
Rental Construction Activity
Rental construction activity in the Suburban Counties submarket was
comparatively low from 2005 through 2013; this period encompasses the time
leading up to the Great Recession and its impacts on economic conditions in the
Minneapolis HMA and the change from quite strong population and household
growth in the latter part of the previous decade to much lower growth levels in
the early part of the current decade. Despite these economic and demographic
changes, multifamily permitting was relatively steady, averaging 740 units
permitted annually, including a spike in production during 2010 when 1,100 units
were permitted. During 2014, multifamily permitting increased strongly, to 2,700
units permitted (Figure 27). Permitting slowed modestly during 2015 and 2016
before increasing again, reaching 3,650 units permitted during 2018. During the
12 months ending May 2019, approximately 3,275 new rental units have been
permitted in the submarket, more than 37 percent above the units permitted
a year earlier.
1,300
1,200
1,100
1,000
900
1Q 2013
1Q 2014
1Q 2015
1Q 2016
1Q 2017
1Q 2018
1Q 2019
Average Monthly Rent
($)
Vacancy RateAverage Monthly Rent
Vacancy Rate
(%)
4.0
3.5
3.0
2.5
2.0
1Q = first quarter.
Source: RealPage, Inc.
Figure 26. Apartments Rents and Vacancy Rates
in the Suburban Counties Submarket
Rental Market—Suburban Counties Submarket 28Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Notes: Includes apartments and units intended for rental occupancy. 2019 includes data through May 2019.
Sources: U.S. Census Bureau, Building Permits Survey; 2000 through 2017—final data and estimates by the
analyst; 2018 and 2019—preliminary data and estimates by the analyst
Figure 27. Average Annual Rental Permitting Activity
in the Suburban Counties Submarket
Recent Developments
An estimated 3,000 new rental units are under construction in the Suburban
Counties submarket. Since 2010, one-third of new apartments permitted in the
Note: The forecast period is from June 1, 2019, to June 1, 2022.
Source: Estimates by the analyst
Rental Units
Demand 5,525 Units
Under Construction 3,000 Units
Table 18. Demand for New Rental Units in the Suburban Counties Submarket
During the Forecast Period
submarket were in Dakota County, 21 percent were in Anoka County, and 14
percent in Washington County. Recently opened in the spring of 2019 in Apple
Valley (Dakota County), Springs at Cobblestone Lake includes 196 townhouse
units. Rents start at $1,305, $1,544, $1,690, and $2,045 for studio, one-, two-, and
three-bedroom units, respectively; some units include garages. In Ramsey (Anoka
County), Affinity at Ramsey is an independent-living senior-apartment property
with 174 units that is scheduled to open in the fall of 2019. Rents for studio,
one-, and two-bedroom units start at $1,525, $1,645, and $1,925, respectively.
Forecast
During the 3-year forecast period, demand is estimated for 5,525 new rental
units in the submarket; the 3,000 units currently under construction will satisfy
a significant portion of this demand (Table 18).
Terminology Definitions and Notes 29Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Terminology Definitions and Notes
A. Definitions
Demand
The demand estimates in the analysis are not a forecast of building activity. They are the estimates of the total housing production needed to achieve a
balanced market at the end of the 3-year forecast period given conditions on the as-of date of the analysis, growth, losses, and excess vacancies. The
estimates do not account for units currently under construction or units in the development pipeline.
Other Vacant
Units
In this analysis conducted by the U.S. Department of Housing and Urban Development (HUD), other vacant units include all vacant units that are not available
for sale or for rent. The term therefore includes units rented or sold but not occupied; held for seasonal, recreational, or occasional use; used by migrant
workers; and the category specified as “other” vacant by the Census Bureau.
Building Permits
Building permits do not necessarily reflect all residential building activity that occurs in an HMA. Some units are constructed or created without a building
permit or are issued a different type of building permit. For example, some units classified as commercial structures are not reflected in the residential building
permits. As a result, the analyst, through diligent fieldwork, makes an estimate of this additional construction activity. Some of these estimates are included in
the discussions of single-family and multifamily building permits.
Distressed Sales Short sales and real estate owned (REO) sales.
Seriously
Delinquent
Mortgages
Mortgages 90+ days delinquent or in foreclosure.
Home Sales/
Home Sales
Prices
Includes single-family home, townhome, and condominium sales.
Terminology Definitions and Notes 30Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Duplex and
Triplex Units
Single structures with two or three living units.
Rental Market/
Rental Vacancy
Rate
Includes apartments and other rental units such as single-family homes, multifamily homes, and mobile homes.
Forecast Period 6/1/2019–6/1/2022—Estimates by the analyst
Cost Burdened Spending more than 30 percent of household income on housing costs.
Net Natural
Change
Resident births minus resident deaths.
B. Notes on Geography
1.
The metropolitan statistical area definition noted in this report is based on the delineations established by the Office of Management and Budget (OMB) in the
OMB Bulletin dated February 28, 2013.
2. Urbanized areas are defined using the U.S. Census Bureau’s 2010 Census Urban and Rural Classification and the Urban Area Criteria.
3. The census tracts referenced in this report are from the 2010 Census.
Terminology Definitions and Notes 31Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Comprehensive Housing Market Analysis as of June 1, 2019
Comprehensive Housing Market Analysis Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
C. Additional Notes
1.
The NAHB Housing Opportunity Index represents the share of homes sold in the HMA that would have been affordable to a family earning the local median
income, based on standard mortgage underwriting criteria.
2.
This analysis has been prepared for the assistance and guidance of HUD in its operations. The factual information, findings, and conclusions may also be
useful to builders, mortgagees, and others concerned with local housing market conditions and trends. The analysis does not purport to make determinations
regarding the acceptability of any mortgage insurance proposals that may be under consideration by the Department.
3.
The factual framework for this analysis follows the guidelines and methods developed by the Economic and Market Analysis Division within HUD. The analysis
and findings are as thorough and current as possible based on information available on the as-of date from local and national sources. As such, findings or
conclusions may be modified by subsequent developments. HUD expresses its appreciation to those industry sources and state and local government officials
who provided data and information on local economic and housing market conditions.
Cover Photo iStock
Contact Information
Gabriel Labovitz, Economist
Chicago HUD Regional Office
312-913-8014
