Top 5 Residential Real Estate Investment Markets in Minnesota

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By Trent Seigfried Updated May 24, 2024
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Edited by Michael Yessis

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Eveleth is home to the best residential real estate investment market in Minnesota.

The 55734 zip code in Eveleth presents the greatest opportunity for investors among the 952 individual real estate markets in Minnesota we evaluated. We looked at property values, population trends, and six other metrics for each market. We used that data to calculate each market's InvestScore.

Top 5 Minnesota residential real estate markets

RankCity InvestScore Affordability Property value appreciation
1Eveleth1002.236.71%
2Duluth99.33.144.43%
3Luverne98.53.137.69%
4Austin97.32.750.61%
5Long Prairie96.53.452.81%
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1. Eveleth

We've identified the 55734 zip code in Eveleth as Minnesota's best real estate investment market. Here's why.

πŸ”Ž Key data about Eveleth

Data pointValueRank in state (of 952 markets)
Zip code55734N/A
InvestScore 100Highest
Typical property value $139,369[1]3rd lowest
Five-year appreciation 36.71%[2]92nd highest
Household income $62,692[3]209th highest
Affordability ratio 2.22nd most affordable
Five-year population growth 7.9%[4]66th highest
Unemployment rate 1.7%[5]22nd lowest
Property taxes $1,083[6]2nd lowest
Educational attainment 23.9%[7]192nd highest
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Eveleth (zip code 55734) is the best residential real estate investment market in Minnesota. It has the 92nd highest property value appreciation among markets we evaluated, with a 36.71% appreciation of the typical property over the last five years.

Eveleth is the 2nd most affordable market among the 952 Minnesota markets we evaluated, with an affordability ratio of 2.2.

2. Duluth

The 55804 zip code in Duluth is Minnesota's second-best residential real estate investment market.

πŸ”Ž Key data about Duluth

Data pointValueRank in state (of 952 markets)
Zip code55804N/A
InvestScore 99.32nd highest
Typical property value $318,949[8]102nd lowest
Five-year appreciation 44.43%[9]39th highest
Household income $103,176[10]70th highest
Affordability ratio 3.125th most affordable
Five-year population growth 8.8%[11]51st highest
Unemployment rate 1.3%[12]15th lowest
Property taxes $3,089[13]116th lowest
Educational attainment 51.9%[14]58th highest
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The 55804 zip code in Duluth features a typical property value of $318,949, the 102nd lowest in the state.

Property values have appreciated 44.43% over the past five years, the 39th highest increase among evaluated markets in the state. Duluth homes have an affordability ratio of 3.1, the 25th most affordable in the state.

3. Luverne

The 56156 zip code in Luverne comes in at No. 3 in our ranking of residential real estate investment markets in Minnesota.

πŸ”Ž Key data about Luverne

Data pointValueRank in state (of 952 markets)
Zip code56156N/A
InvestScore 98.53rd highest
Typical property value $238,631[15]41st lowest
Five-year appreciation 37.69%[16]86th highest
Household income $77,813[17]144th highest
Affordability ratio 3.122nd most affordable
Five-year population growth 8.5%[18]56th highest
Unemployment rate 2.3%[19]42nd lowest
Property taxes $1,379[20]7th lowest
Educational attainment 29.1%[21]158th highest
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With a typical property value of $238,631, Luverne's 56156 zip code features the 41st lowest property values in the state.

Luverne homes have an affordability ratio of 3.1, the 22nd most affordable among the markets we evaluated.

4. Austin

The 55912 zip code in Austin ranks No. 4 among Minnesota's residential real estate investment markets.

πŸ”Ž Key data about Austin

Data pointValueRank in state (of 952 markets)
Zip code55912N/A
InvestScore 97.34th highest
Typical property value $168,758[22]8th lowest
Five-year appreciation 50.61%[23]11th highest
Household income $63,467[24]11th highest
Affordability ratio 2.710th most affordable
Five-year population growth 1.4%[25]164th highest
Unemployment rate 3.6%[26]114th lowest
Property taxes $1,486[27]8th lowest
Educational attainment 24.4%[28]186th highest
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Property values in Austin's 55912 zip code have seen the 11th highest increase among evaluated markets in the state, with an appreciation of 50.61% over the past five years.

Austin's affordability ratio of 2.7 makes it the 10th most affordable among the 952 markets we evaluated.

5. Long Prairie

The 56347 zip code in Long Prairie rounds out our top five residential real estate investment markets in Minnesota.

πŸ”Ž Key data about Long Prairie

Data pointValueRank in state (of 952 markets)
Zip code56347N/A
InvestScore 96.55th highest
Typical property value $231,425[29]36th lowest
Five-year appreciation 52.81%[30]7th highest
Household income $68,919[31]7th highest
Affordability ratio 3.448th most affordable
Five-year population growth 14.1%[32]17th highest
Unemployment rate 4.4%[33]157th lowest
Property taxes $1,699[34]18th lowest
Educational attainment 11.3%[35]238th highest
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Property values in Long Prairie's 56347 zip code rose 52.81% over the last five years, ranking the city 7th highest among evaluated markets in Minnesota.

Long Prairie homes have an affordability ratio of 3.4, the 48th most affordable among the markets we evaluated.

How we rank residential real estate markets in Minnesota

We evaluated 952 markets on eight metrics, and then assigned an InvestScore based on their weighted and combined rankings. Each market corresponds to a specific zip code in Minnesota.

What is InvestScore?

InvestScore is a score on a scale of 0 (worst in state) to 100 (best in state) that estimates the residential real estate investment potential of a given market. It takes into account a suite of key data points for each city.

  • Typical property value: This measures the typical home value in this zip code, according to the Zillow Home Value Index. It reflects the typical value for homes in the 35th to 65th percentile range, including all homes, with the numbers smoothed and seasonally adjusted. We prefer lower property values, which indicate both more room for growth and a greater ease of purchase. We assign a weight of 20% to typical property values.
  • Property value appreciation: This measures how much property values have increased in the area over the past five years, according to the Zillow Home Value Index. We prefer a higher appreciation, as it indicates better returns on housing. However, past performance isn't indicative of future results. We assign a weight of 20% to property value appreciation.
  • Median household income: This is the inflation-adjusted median household income in the zip code, according to U.S. Census American Community Survey data. We prefer a higher household income, as it indicates local residents have more income to spend on housing. We assign a weight of 10% to median household income. We assign a weight of 10% to median household income.
  • Affordability ratio: This is the ratio of the typical home value to the median household income in the area. A lower ratio is better because it means more households can afford a home, which indicates higher demand. We assign a weight of 15% to the affordability ratio.
  • Population growth: This is how much the area's population has grown over the past five years, according to U.S. Census estimates. Higher is better, as it indicates residents are moving into the area at a rapid clip. We assign a weight of 10% to population growth.
  • Unemployment rate: This is the unemployment rate in the area, according to U.S. Census data. We prefer a lower rate, as it indicates the availability of steady employment in the area, meaning residents will find it much easier to afford homes. We assign a weight of 15% to unemployment rate.
  • Property tax: This is the median real estate property tax paid in the area, according to U.S. Census estimates. We assign a weight of 10% to property tax.
  • Educational attainment: This is the percentage of residents in the area that have obtained a bachelor's degree or better, according to U.S. Census estimates. We prefer a higher rate because it indicates  local residents who have higher earning potential and thus should be able to afford homes. We assign a weight of 15% to educational attainment.

Disclaimer: The information contained in this article isn't intended as, and shall not be understood or constituted as, financial advice. The information in this article isn't a substitute for financial advice from an investment professional or real estate agent who is aware of the facts and circumstances of your financial situation or the specifics of any individual property.

Article Sources

[1] Zillow – "Zillow Home Value Index". Updated March 31, 2024.
[2] Zillow – "Zillow Home Value Index, difference over last five years". Updated March 31, 2024.
[7] U.S. Census – "U.S. Census Table S1501 - Educational Attainment 2018-2022". Updated 2018-2022.
[8] Zillow – "Zillow Home Value Index". Updated March 31, 2024.
[9] Zillow – "Zillow Home Value Index, difference over last five years". Updated March 31, 2024.
[14] U.S. Census – "U.S. Census Table S1501 - Educational Attainment 2018-2022". Updated 2018-2022.
[15] Zillow – "Zillow Home Value Index". Updated March 31, 2024.
[16] Zillow – "Zillow Home Value Index, difference over last five years". Updated March 31, 2024.
[21] U.S. Census – "U.S. Census Table S1501 - Educational Attainment 2018-2022". Updated 2018-2022.
[22] Zillow – "Zillow Home Value Index". Updated March 31, 2024.
[23] Zillow – "Zillow Home Value Index, difference over last five years". Updated March 31, 2024.
[28] U.S. Census – "U.S. Census Table S1501 - Educational Attainment 2018-2022". Updated 2018-2022.
[29] Zillow – "Zillow Home Value Index". Updated March 31, 2024.
[30] Zillow – "Zillow Home Value Index, difference over last five years". Updated March 31, 2024.
[35] U.S. Census – "U.S. Census Table S1501 - Educational Attainment 2018-2022". Updated 2018-2022.

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