Minneapolis has an extremely low unemployment rate, lots of young residents and relatively affordable homes. Another bonus: Household income is high at $83,000, compared with about $64,000 nationally. The market's affordability and strong economy are attractive to Millennials and that market is the second largest in the country for home owning Millennial households.

The Twin Cities housing market is enjoying a strong start to the traditional hot buying and selling season, due in part to ongoing favorable interest rates and an improved economy.

For sellers, homes sold faster in 2014, with the average home now on the market for 78 days -- roughly half the time compared with 2008.

For buyers, the inventory of homes on the Twin Cities market shrank again, down 7 percent, and that helped move prices higher.

Home prices in Minneapolis will rise over the next year, with the median selling price increasing between 5 percent and 8 percent. New home construction will increase between 8 percent and 13 percent.

$247,500 Diamond Lake3 Beds  2 Baths 1,430 Sq. Ft. — **$247,500 Diamond Lake**
3 **Beds 2** **Baths** **1,430** **Sq. Ft.**

The housing market in the Twin Cities is stable, which is likely to make it appealing to investors. And the direction the market moves in Minneapolis-St. Paul will likely reflect the national market as a whole.

With buyer demand weak, investors should consider purchasing Minneapolis investment properties while prices are affordable and demand is high for rental housing.

Those looking to sell a home in Minneapolis will find conditions rather favorable. Accordingly, homes are now selling twice as fast as they were in 2008. However, buyers have found that inventory restrictions have driven up prices in the area. In fact, the active supply of homes in the area reached a 12-year low. The 7 percent drop in inventory has made it more difficult for buyers to find a home at the price they want.

When it comes to inventory and housing availability, the market is returning to more solid footing, the number of new listings and closed sales of lender-mediated properties is less than half of what it was in 2012. This positions the for-sale inventory to enjoy high values in 2015.

Homes purchased in the Minneapolis housing market one year ago have appreciated, on average, by $14,200. The national average was $12,783 over the same period. Homes purchased in the Minneapolis housing market three years ago have appreciated, on average, by $66,446. The national average was $55,406 over the same period. Homes purchased in the Minneapolis housing market nine years ago have appreciated, on average, by $17,564. The national average increased $3,419 over the same period.

Minneapolis rental rates are reaching record highs. However, it is the creation of new units that has investors excited. More than 110 apartment buildings have been added to the city since 2010. Rental rates in Minneapolis certainly explain the increase in apartment building projects. Accordingly, the Minneapolis housing market has recently cracked the list of top 10 most expensive rental markets in the country. Buy and hold investors may want to look into this market, specifically.

2015 is expected to witness sweeping changes in the Minneapolis housing market. For starters, home prices are expected to rise as much as 8 percent. Perhaps even more importantly, for this particular market, new listings could grow by as much as 12 percent. Such an increase in inventory should balance the market. That said; the number of home sales is expected to increase as well. An increase of home sales would be particularly encouraging, as last year’s numbers represented the second highest in a period of 10 years.

$202,000 Waite Park3 Beds 2 Baths 1,168 Sq. Ft. — **$202,000 Waite Park**
3 **Beds** 2 **Baths 1,168** **Sq. Ft.**

Of course, some neighborhoods will contribute to the city’s recovery more than others. The most popular neighborhoods in Minneapolis are Tangletown and Linden Hills. However, those looking to get into the market should consider Lowry Hill, Fulton and Loring Park as well.

The Minneapolis real estate investing market should benefit from the 5,527 homes that are currently in some state of distress. Of those homes that are in foreclosure, the great majority are bank-owned, or sitting on the books of institutional lenders as non-performing loans. In fact, 63.1 percent of all the foreclosed properties in Minneapolis are of a bank-owned nature. The remaining foreclosures are all scheduled to be placed up for auction in the near future. The total number of foreclosures in the Minneapolis housing market, however, has declined 61 percent over the course of a year.