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Cost of living in Minneapolis

Minneapolis Cost of Living [2024] πŸ’° | What's the Average Cost of Living in Minneapolis?

If you're planning a move to the Twin Cities area, you may wonder how much it costs to live in Minneapolis. There is a common debate over whether or not Minneapolis is affordable. In 2018, the Economist Magazine ranked Minneapolis the 3rd most expensive city in the US, after New York City and Los Angeles. However, many have called into question the criteria for that survey as it does not take into account important factors such as housing.

The truth is, Minneapolis is not expensive for a city of its size. It's just about on par with what you can expect of any average city in the Midwest. Its reasonable housing prices and affordable consumer goods all contribute to a low cost of living for the quality of life it offers. To help you get a deeper understanding, here is a look at the Minneapolis cost of living.

Minneapolis Cost of Living Index

A great way to get a better understanding of the cost of living in Minneapolis and how it compares to the rest of the US is to examine the data from the Bureau of Labor Statistics. The federal government compiles information on the general cost of living and consumer spending habits in major metro areas. They compile that data into specific metrics that can be used to assess the overall affordability of an area.

Cost of Living Index

The cost of living index (COLI) is a metric that compares the prices of standard bills and consumer goods in an area to the rest of the US, which is represented by 100. The Minneapolis cost of living index is 102.9, which means it's 2.9% more expensive than the rest of the US. Housing and utilities are actually lower than the average, but groceries and transportation are higher.

Consumer Price Index

The consumer price index (CPI) charts the changes in the cost of average consumer goods. According to the CPI, the Minneapolis cost of living has decreased by 0.4% in the past two months. The decrease was mainly due to a decline in energy prices, as food and other miscellaneous items increased.

Consumer Expenditure Survey

The Consumer Expenditure Survey (CES) tracks the typical spending habits of average residents in a city. The CES indicates that households in the Minneapolis metro area spend an average of $82,883 per year. Housing is the largest expenditure at 33.3% of the area's household budget, or $27,591. Transportation is next at 12.1% or $10,018 in annual expenditures, followed by food at 11.4% or $5,908. Minneapolis residents also spend 15.2% of their household budget on personal insurance and pensions, which is significantly higher than the US average of 11.9%.

Consumer expenditures in Minneapolis

Family Budget Calculator

Finally, the Family Budget Calculator created by the Economic Policy Institute shows that the average family of four with two adults and two kids would need to earn $99,505 per year to afford standard Minneapolis living expenses like taxes, housing, food, child care, and health care.

Cost of Household Items, Utilities, Gas and Groceries in Minneapolis

Crunching the numbers is a good way to understand the Minneapolis cost of living in the abstract. But it also helps to look at real examples of Minneapolis living expenses, goods, and services. Here are a few examples to demonstrate the average cost of living in Minneapolis.

  • 1 pound ribeye steak: $13.31
  • 1/2 gallon whole milk: $2.52
  • 1 dozen Grade-A eggs: $1.85
  • 5 pound bag of potatoes: $3.23
  • 1 loaf of wheat bread: $2.32
  • 6-pack of Heineken beer: $9.02
  • 1st run movie ticket: $9.80
  • 1/4 pounder McDonald's cheeseburger: $4.07
  • Average cell phone bill: $61.39 per month
  • Average cost of gasoline: $2.66 per gallon
  • Average cost of utilities in Minneapolis: $198
  • Public transportation: $2 per hour for a Metro Transit bus pass ($2.50 during rush hour) or $4-$5 for a day pass.
  • Average car insurance premium: $140 per month

Minneapolis Real Estate Market

The Minneapolis housing market is strong and very competitive but still reasonably priced compared to the rest of the country. Compared to 2022, the Minneapolis real estate market saw a 5.3% increase in new listings, a 7.1% decrease in closed sales, and 2% increase in median sales price.

Redfin shows that the median listing price of Minneapolis homes for sale is $330,000. That means the median home price in Minneapolis is 21% lower than the national median. The Minneapolis average home price per square foot is $210. Most homes sell within 23 days of being listed, and 37.2% go for above asking price, a 3% increase since last year. The average home price in Minneapolis has gradually increased over the past 5-years, including a 2.3% change since 2022.

The price-to-rent ratio in Minneapolis is 16.5, indicating it's slightly cheaper to rent than buy. 1 to 15 indicates favorable conditions for homebuyers, while 16 to 20 means it's better for tenants.

 

Most affordable neighborhoods in Minneapolis

Neighborhood Median home price
Whittier $220,000
East Harriet $232,500
Loring Park $280,000
Columbia Heights $280,000
Waite Park $331,000

 

Most expensive neighborhoods in Minneapolis

Neighborhood Median home price
East Isles $1,102,500
Kenwood $850,000
Linden Hills $665,000
Downtown East $628,500
Lynnhurst $626,500

Minneapolis Rental Market - Average Rent in Minneapolis

Minneapolis has a lot to offer tenants as well as homeowners. About 52% of the Minneapolis housing market is tenant-occupied, while 48% is owner-occupied. According to RentCafe, the average apartment rent in Minneapolis is $1665 per month, which is 2.1% lower than the national average. Rent prices in Minneapolis start at $460 for a studio and go up to $14,000 for 3+ bedrooms. Studios make up about 13% of the rental market, while 55% are 1-bedrooms and 28% are two-bedrooms.

According to the Out of Reach Report by the National Low Income Housing Coalition, residents need to earn anywhere from $23.08 to $32.69 to afford the standard Minneapolis rent. A minimum wage worker would need to work 74 hours per week to afford the average rent in Minneapolis for a modest 1-bedroom home.

 

Affordable Minneapolis neighborhoods for renters

Neighborhood Average rent
Webber-Camden $952
Wenonah $972
Page $1,189
Brooklyn Center $1196
Windon $1,219

 

Expensive Minneapolis neighborhoods for renters

Neighborhood Average Rent
Como $2,022
Nicollet Island-East Bank: $2005
North Loop $1918
Cedar-Isles-Dean $1842
Beltrami $1829

Average Salary and Household Income in Minneapolis

Although breaking down the cost of housing and consumer goods is a good way to understand the Minneapolis cost of living, it also helps to find out how much the average resident earns. Minneapolis has a diverse economy supported by industries like advanced manufacturing, finance, agriculture, and retail. The Minneapolis Department of Employment estimates that the city was home to 318,500 jobs in 2015, which is expected to increase to 41,500 by 2040.

The median household income in Minneapolis is $74,473, which is 10% lower than the statewide median and 20% lower than the median in the entire Twin Cities metro area. However, the per capita income is $49,617, which is about the same as the rest of the metro area and 10% higher than the rest of the state.

Payscale shows that the average salary in Minneapolis is $79,000 per year. The average salaries for common Minneapolis jobs include:

  • Software Engineer: $82,730
  • Project Manager: $80,171
  • Operations Manager: $73,427
  • Mechanical Engineer: $78127
  • Software Developer: $77023

According to the Bureau of Labor Statistics, the professions with the highest average salary in Minneapolis are dermatologists ($474,900), radiologists ($472,890), surgeons ($366,910), and physicians ($348,140). However, the professions that have seen the biggest increase in average ages are computer programmers (28.2%), artists and related workers (25.6%), dermatologists (25.6%), designers (21.2%) and cooks (19.4%).

The average hourly rate paid by jobs in Minneapolis is $32,24. Here's how jobs in Minneapolis compare to the US average in terms of hourly wages:

Profession Average hourly wage in Minneapolis Average hourly wage in the US
  • Financial managers
$76.74 $79.83
  • Securities, commodities, and financial services sales agents
$48.78 $48.43
  • Human resources specialists
$37.59 $35.13
  • Machinists
$27.13 $24.72
  • Insurance claims and policy processing clerks
$24.27 $23.00
  • Cooks, restaurant
$17.93 $16.32

Income, Sales, and Property Taxes in Minneapolis

While it's helpful to know how much you can expect to make while living in Minneapolis, it's also important to find out how much of that income will go to local and state governments. Minneapolis is the county seat of Hennepin County.

Minnesota ranks eighth highest in the US for overall tax burden at an average rate of 9.41% or:

  • 6th highest in income taxes: 3.11% of personal income
  • 22nd in property taxes: 2.99% of personal income
  • 23rd in total sales and excise taxes: 3.41% of personal income

Here is a full breakdown of the income, property, and sales taxes you can expect to pay in Minnesota.

Income Tax

Minnesota has a graduated income tax rate that varies depending on how much money you make and whether you're filing alone or jointly as a married couple. The Minnesota income tax rates range from 5.35% to 9.85%. See the tables below to view the tax rates and brackets in Minnesota for the tax 2024.

Minnesota income tax rates

Sales Tax

The combined sales tax rate in Minneapolis is 8.025%, which includes city, state, and county tax. The state general sales tax rate is 6.5%. But in 2008, voters approved a state constitutional amendment that added an additional three-eight cent general sales tax (0.375%), which brought the total up to 6.875%. Hennepin County also assesses an additional 0.650%, and the city of Minneapolis's sales tax rate is 0.500%. That means you will pay a total of 8.025% in sales tax in Minneapolis.

Tax Rate
Minnesota State Tax 6.875%
Hennepin County Tax 0.650%
City of Minneapolis Tax 0.050%
Total 8.025%

Property Tax

Minneapolis property tax bills are a combination of local and state taxes. Minnesota state taxes fund school districts and the governments of various towns, cities, and counties. Hennepin County property taxes pay for local services such as the police, fire department, streets, libraries, etc.

Your Minneapolis property tax rate is based on the estimated market value (EMV) of your property, which is determined by the county assessor. The assessor also will classify your property for its primary use, such as an apartment, homestead, or cabin, as each is taxed at a separate rate.

So, the rate you pay in Minneapolis property taxes will vary depending on several factors. But the basic formula is:

  1. Taxable Market Value X Class Rate = Tax Capacity
  2. Tax Capacity X Local Tax Rates = Base Tax
  3. Base Tax - Credits + Referendum Levy and State General Tax = Property Tax Due

In 2018, the average effective tax rate in Hennepin County, Minnesota was 1.26%. Here is a full breakdown of the Hennepin property taxes and the rates for different cities and towns, schools, and special districts.

Ready to move to the city of Minneapolis? The Move Crews is the best Minneapolis moving company for a stress-free relocation. Call (612) 361-6787 for a free moving quote.

 

Gunnar
Gunnar is from Hastings, Minnesota. He has a bachelor's degree in Business and Spanish. In addition to his work in the moving industry, he runs a photography business that has given him the opportunity to travel all over the US. He is an idealistic visionary when it comes to the spirit of entrepreneurship and prides himself for his meticulous attention to detail in all aspects of his work.

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