Mar 18, 2024 - Real Estate

Minneapolis property values fall for the first time in a decade

Illustration of a real estate sale sign shaped like a downward point arrow

Illustration: Annelise Capossela/Axios

Most Minneapolis homeowners are getting a surprise as they open their property tax assessments arriving this month: The value of their house has fallen.

The big picture: Home value declines, coupled with even faster falling values of commercial property, could signal pain for the city's budget and for property taxpayers.

By the numbers: While home valuations in 2024 fell by a modest 1.2%, commercial values fell more acutely, by 8.7%.

Why it matters: The burden of who pays for city services has been shifting gradually toward homeowners since the onset of the pandemic and rise in remote work.

  • Homeowners' tax capacity was 47.4% in 2020. That number has climbed to 51.6% this year.
  • "Residential properties will bear a greater burden of taxes in payable 2025 than they did in payable 2024," city assessor Rebecca Malmquist told a city committee Monday.

What's happening: Downtown office towers aren't worth nearly as much as they were when people worked in person five days a week. Commercial values fell a whopping 13% between 2023 and 2024, according to the city assessor's annual report.

Case in point: The city's tallest skyscraper, IDS Center, had an assessed value of $319 million in 2021. It's now down to $194 million.

Between the lines: A decline in Minneapolis home values shouldn't be shocking, given the way higher interest rates have chilled the broader housing market, but it is the first time they've fallen in at least 10 years.

  • Median sales prices in the Twin Cities metro increased by just 1.4% in 2023, the smallest jump since 2011.
  • Suburban median sale prices tend to rise more than the city because of the high sales prices buyers pay for new builds of which Minneapolis has very few.

The other side: North Minneapolis is the only area where values rose in the city.

  • Malmquist said lower-priced homes are attracting more buyers because of their affordability, but the increased competition is also driving up prices.
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