Minnesota’s high-income households (earning $500,000 or more annually) make up a very small slice of the population – roughly 0.8% of tax filers, or about 24,000 returns in 2023. These affluent buyers wield outsized influence on the housing market, particularly at the luxury end. In the 2018–2023 period, their home purchases surged to new heights, driving record sales of high-end properties.
The Twin Cities metro area, home to many of the state’s wealthiest residents, saw a boom in million-dollar home sales during the pandemic era, even as overall sales volume fluctuated. In 2020, the Twin Cities logged a record number of homes sold above $1 million – more than 20% higher than 2019. By early 2021, luxury sales accelerated further, up 75% year-over-year in January. This trend was fueled by a confluence of factors benefiting high earners: historically low interest rates (through 2021), rising stock market wealth, and strong home equity gains that enabled wealthy homeowners to “trade up” to even pricier properties.
Affluent buyers in Minnesota are typically purchasing expensive primary residences (often in exclusive metro-area enclaves) and, in many cases, additional homes such as lakefront vacation properties. Virtually all households in this income tier are homeowners, and many own multiple homes. Their purchases span both new construction and existing homes, from custom-built mansions in the suburbs to historic luxury condos in the city.
High-income buyers remained active even when overall market activity slowed; for instance, in 2022, total home sales in Minnesota fell to an eight-year low, yet prices hit record highs, and the luxury segment showed more resilience than entry-level markets. By 2024, sales of $1M+ homes in the Twin Cities reached four times the volume seen in 2005 – a dramatic long-term rise that underscores the growing presence of affluent purchasers.
Geographic Trends: Urban, Suburban, and Rural Markets
Twin Cities Metro (Urban & Suburban)
The vast majority of Minnesota’s $500k+ earners reside in the Twin Cities area, and their influence on the local real estate market has been profound. During 2018–2023, upper-bracket home sales in the Twin Cities hit all-time highs. Affluent buyers gravitated toward suburbs known for luxury properties – especially those with lakefronts or large lots.
By 2024, Minnesota had six cities where the typical home value exceeds $1 million, all of them in the Twin Cities metro. These include exclusive enclaves around Lake Minnetonka such as Orono, Minnetonka Beach, Greenwood, Woodland, and others, as well as Sunfish Lake in Dakota County. The addition of two new “million-dollar cities” in one year (Orono and Medicine Lake) reflects how home values in elite communities have climbed, partly due to wealthy buyers bidding up prices.
Urban centers have seen high-income demand as well. In downtown Minneapolis, a wave of luxury condominium development catered to affluent downsizers and professionals. The ranks of million-dollar condos tripled in the Twin Cities in the 2010s, and by 2018–2019 there was “robust” demand for upscale high-rise units.
New condo towers like the Eleven on the River and the Four Seasons Private Residences were introduced around 2020, adding hundreds of $1M+ units downtown. Sales agents reported that many of these condo buyers are wealthy boomers from the metro who “don’t want the big house anymore.” Downtown Minneapolis became the epicenter of luxury condo sales, though a number of seven-figure condos are also found in high-end suburbs like Edina and Wayzata. Notably, a large share of these urban luxury buyers pay cash – for example, more than half of the units in the Eleven on the River were pre-sold with cash buyers dominating the purchases.
Greater Minnesota (Rural & Resort Areas)
Outside the metro, high-income homebuying has centered on vacation and second-home markets. Minnesota is famed for its lakes, and affluent residents often acquire lakefront “cabin” properties in addition to their primary home. There are over 124,000 seasonal or recreational homes (cabins) across the state.
Since 2020, demand in these vacation home counties has jumped – part of a national trend where second-home purchases soared during the pandemic. In 2020, existing home sales in U.S. vacation home counties rose 24%, more than double the growth rate in non-vacation areas. Minnesota’s lake regions benefited from this surge. In fact, one Minnesota county was identified by the National Association of Realtors as among the nation’s “hottest” vacation-home markets in 2020.
Popular destinations like the Brainerd Lakes (Crow Wing County), the North Shore of Lake Superior (Cook County), and lake-dotted counties like Cass and Otter Tail saw increased interest from high-end buyers. With many offices going remote, some wealthy Twin Cities families moved their primary residence to what was once just the weekend cabin. Real estate agents reported buyers in their 40s and 50s “accelerating their plans” and relocating full-time to luxury lake homes since they could now work from anywhere.
One exception to the rural trend is Rochester, home of the Mayo Clinic, which boasts a concentration of high-income medical professionals. Rochester’s luxury market has expanded steadily: the most expensive home sales in Rochester climbed from about $1.5 million in 2019 to $2.4 million in 2024. Local Realtors describe Rochester’s upscale market in recent years as “stable, robust and exciting,” fueled by incoming physicians and investors tied to Mayo Clinic’s expansion.
What Types of Homes Are High-Income Minnesotans Buying?
Larger Homes and Luxury Amenities
With ample financial resources, high-income households in Minnesota have been purchasing some of the most expansive and well-appointed homes on the market. Many are upsizing to larger single-family houses with five or more bedrooms, home offices, and extensive leisure facilities.
For example, in the Lake Minnetonka area, it became common to see older 3,000–5,000 sq. ft. houses torn down and replaced with sprawling new residences 8,000+ sq. ft. in size. One teardown on Gray’s Bay turned a 5,000 sq. ft., $1.6 million lake house into an 8,700 sq. ft. home featuring six bedrooms, a game room, bar, and even a squash court.
Luxury features that were once rare are now almost expected in these high-end homes. In Rochester’s upscale market, Realtors note that features like dedicated wellness rooms or gyms, home offices, wine cellars, and entertainment spaces have become “almost essential” in luxury properties.
Key amenities and trends in Minnesota’s luxury homes (2018–2023) include:
Home Offices and Tech
Multiple home office spaces and built-in tech infrastructure to support remote work. Smart home technology and robust broadband are highly valued. Many wealthy buyers seek energy-efficient designs and smart-home systems that allow them to control lighting, climate, security, and entertainment at the touch of a button.
Wellness and Leisure Facilities
Gyms or yoga studios, spa-like bathrooms, saunas, and indoor sport courts (basketball, squash, etc.) have grown in popularity. An increasing number of luxury homes feature dedicated wellness spaces, reflecting a post-2020 emphasis on health at home.
Entertainment and Custom Spaces
Home theaters, tasting rooms or bars, game rooms, and expansive outdoor living areas (with kitchens, pools, and fire pits) are common. One $2.4M Rochester home sale in 2024 included a “resort-style” backyard with a pool and a high-end scullery kitchen for entertaining.
Lakeshore and Views
For second homes or primary residences on water, private shoreline and panoramic views command a premium. Properties on Minnesota’s coveted lakes (Minnetonka, White Bear Lake, Gull Lake, etc.) often include boathouses or extensive docks. Waterfront homes in the Twin Cities area appreciated faster than others – in the 2020–2024 period, private waterfront sales rose ~4% even as non-waterfront sales saw smaller gains.
Luxury Condos and Townhomes
Not all high-income buyers want a traditional mansion; many empty-nesters and professionals opt for luxury condos or townhomes with a maintenance-free lifestyle. Minnesota saw a burst of luxury condo development in this period, especially in Minneapolis.
New high-rise units marketed to millionaires boasted features like concierge services, rooftop pools, private terraces, and even shared “dog spas” for pet owners. The Mill District and North Loop neighborhoods of Minneapolis, for instance, have drawn affluent downsizers from suburban homes into multi-million-dollar penthouses.
By late 2019, developers were bringing roughly 180 new $1M+ condos to market in Minneapolis, responding to pent-up demand after a decade with little condo construction. Buyers of these units are typically older couples or individuals moving out of large houses, as well as some relocating executives. Baby boomers have been a driving force – reaching an age where they “don’t want the big house,” many boomers are selling their suburban estates and moving into high-end condos with walkable urban amenities.
Vacation Homes
High-income households in Minnesota are also buying vacation properties that range from rustic-chic cabins to lavish lake lodges. A generational turnover has been underway in cabin country – aging baby boomers who owned modest family cabins are selling, and a new class of buyers (often wealthy Gen Xers and younger boomers) is scooping them up.
Unlike the simple seasonal cabins of the past, many new owners either significantly renovate or rebuild these properties into modern vacation homes. As one observer noted, “lake properties have greatly increased in value, making them harder and harder for the average person to obtain,” and those who can afford a lake home today “can often afford nice ones.”
In practice, this means high-income buyers are transforming Minnesota’s vacation home landscape: old one-bedroom fishing shacks are replaced by 4-bedroom year-round lakehouses with gourmet kitchens and central air. Popular upscale lake destinations (e.g. Gull Lake, Lake Vermilion, Mille Lacs) now feature properties that blur the line between primary and secondary homes.
Upsizing, Downsizing, and Additional Properties
One striking trend among high-income Minnesotans is simultaneous upsizing and downsizing – depending on life stage – often accompanied by the purchase of additional homes. In the late 2010s and early 2020s, a robust stock market and rising home equity gave wealthy owners the confidence (and capital) to make changes in their housing.
Trading Up (Upsizing)
Many affluent homeowners chose to upsize their primary residence during this period. With more wealth at their disposal (and limited options for spending it during COVID lockdowns), the wealthy upgraded to larger or more prestigious homes.
“The pandemic has given people with a lot of money even more,” observed Redfin’s chief economist Daryl Fairweather in 2021, noting that well-off buyers unable to spend on travel or dining were pouring money into housing. Move-up buyers commonly went from an already expensive house to an even pricier one – for example, selling a $800k home to buy a $1.5 million home in a gated community.
Minneapolis–St. Paul saw numerous cases of this “trading up” dynamic. Wealthy residents of inner-ring suburbs (perhaps with a 4-bed house) moved to outer suburbs like Orono or North Oaks for a 6-bed estate with acreage. In North Oaks, the median sale price of homes jumped nearly 30% in 2020 (to ~$782k) as higher-end inventory was snapped up and competition intensified.
Overall, upper-bracket buyers showed very little hesitation in the pandemic market – one veteran luxury agent remarked in late 2020, “I’ve been in the business 30 years and I’ve never experienced anything like this… There doesn’t seem to be any hesitation or resistance in the [luxury] market right now.”
Rightsizing and Downsizing
On the flip side, older high-income Minnesotans have been downsizing from large single-family houses into smaller luxury dwellings. This trend was evident throughout 2018–2023, as baby boomers began retiring in greater numbers. Many empty-nesters no longer needed a 5,000 sq. ft. suburban home and opted to move into something like a condo or a “villa” townhome.
Crucially, downsizing for the wealthy doesn’t mean cheap – they often seek top-tier finishes and locations even in a smaller home. Thus, the Twin Cities saw a proliferation of million-dollar condos (tripling in number over roughly a decade) to meet boomer demand. Properties like one newly built 4,200 sq. ft. condo at De La Pointe in Minneapolis (listed around $2 million) attracted downsizers who wanted one-level living with luxury appointments.
Some even sell one large home to buy two properties: a chic condo for city living and a smaller vacation cottage, for instance. This indicates that downsizing doesn’t necessarily save money for high earners; it’s more about lifestyle and maintenance.
Second Homes and Early Retreats
A significant portion of Minnesota’s high-income households purchased additional properties during 2018–2023. These include second homes in-state (lake cabins, hunting properties) as well as out-of-state vacation homes. The pandemic motivated many to act sooner on second-home dreams.
Realtors observed clients saying, “If this is what I’m eventually going to do, let’s get on with it”, as they brought forward plans to acquire their “retreat” homes. In practical terms, that meant a 50-something executive who planned to buy a lakehouse at retirement went ahead and bought it in 2020, using it both for weekends and as a remote-work location.
Some high earners even made their second home into their primary home, moving to cabins full-time. For others, the second home remained a vacation getaway, but with much higher usage than pre-pandemic. This trend contributed to record sales in traditional vacation counties.
Financing Trends: Cash is King (for the Wealthy)
One hallmark of high-income homebuying in recent years has been the prevalence of all-cash purchases. Wealthy buyers, who often have substantial assets or proceeds from a previous home sale, are far more likely to pay cash than typical buyers. This trend became even more pronounced from 2018 to 2023.
Rising All-Cash Purchases
Nationally, the share of homebuyers paying all cash hit a record high in 2022–2023. According to the National Association of Realtors, 26% of all home buyers paid cash for their home in 2022, the highest on record. This was driven largely by repeat and high-income buyers – whereas 91% of first-time buyers needed financing, only 69% of repeat buyers took out a mortgage (meaning 31% paid fully in cash).
Minnesota reflects this national pattern. In the Twin Cities metro, about 17.5% of all home sales in late 2024 were cash purchases (no mortgage) – the highest share in over a decade. Moreover, for luxury properties over $1M, the cash purchase rate was roughly double that: an estimated 35% or more of $1M+ sales were cash deals. In other words, about one in three luxury homes in the Twin Cities is now bought outright with cash.
Why Cash?
High-income buyers can leverage cash for a few reasons. First, in competitive situations, cash offers are more attractive to sellers (faster closing, no financing contingency), so wealthy buyers often deploy cash to win bidding wars for coveted homes. Second, as interest rates rose sharply in 2022–2023, affluent buyers preferred to avoid borrowing at 6-7% interest. Many could tap stock portfolios or equity to buy in cash, planning to refinance later if needed. Third, some high earners simply did not need financing due to liquidity from bonuses, business sales, or inheritance.
By late 2022, as mortgage rates hit 20-year highs, the luxury market became even more skewed to cash. A Redfin analysis found that in early 2023, 46.8% of luxury homes (top 5% price tier nationwide) were bought entirely with cash, the highest share in at least a decade. This nearly half-cash statistic underscores how the wealthy circumvented the mortgage market.
Home Equity and Proceeds
Another financing aspect is that many high-end buyers are also sellers bringing significant equity from their previous home. Most sellers are also buyers at the move-up level, and they have the advantage of using proceeds as a large down payment.
For example, someone selling a $800k house with $500k equity can roll that into the next purchase, drastically reducing the loan needed. This dynamic was common in 2018–2023 given rapid appreciation – many affluent homeowners found that their houses had gained hundreds of thousands in value, equity which could be unlocked for the next purchase.
Thus even when not full cash, high-income buyers often financed much less of the home’s price than typical buyers. It was not unusual for a luxury buyer to put 50% or more down. This contributed to lower debt levels and, for the housing market, meant fewer high-end transactions were constrained by lending hurdles.
2018–2023 vs. 2008–2017: How Do the Trends Compare?
When comparing the recent five-year period to the decade prior, the differences are stark. The years 2008–2017 encompassed the housing bust, Great Recession, and a slow recovery – especially at the high end of the market – while 2018–2023 witnessed a robust expansion (and brief gyrations) in luxury housing driven by economic growth and a pandemic-era frenzy.
Market Conditions
The 2008–2012 period was a downturn. Minnesota was not hit as hard as some Sunbelt markets, but home prices fell and sales volume dropped significantly across all price tiers. High-income buyers largely sat on the sidelines or were very selective during the recession years. Financing for jumbo loans was tighter then, and many potential move-up buyers stayed put, so luxury sales were quite subdued.
In contrast, 2018–2023 began in a late-boom upswing and then saw an unprecedented pandemic housing rally. By 2020–2021, conditions for affluent buyers were extremely favorable (low rates, high asset values), resulting in record-breaking luxury sales. Even a sharp rate increase in 2022 only temporarily cooled the high-end market, which rebounded by 2023–24. The earlier decade never saw the volume or velocity of high-end transactions that the later years did.
Luxury Inventory and Development
Prior to 2018, new construction targeted at luxury buyers was limited. After the mid-2000s housing bubble burst, very few high-end condos or mansions were built for several years. For example, around 2010 the entire Twin Cities metro had only about 186 condos valued over $1 million.
Developers were cautious; some projects were put on hold or canceled. Starting in the mid-2010s and accelerating by the late 2010s, luxury development picked up. By 2018–2019, multiple new upscale condo projects launched, and suburban builders increased speculative building of high-end homes. Thus, 2018–2023 had far more new luxury inventory entering the market than 2008–2017, meeting growing demand.
Price Trajectory
The decade 2008–2017 saw prices at the top end recover slowly. Many luxury homes took years to regain their pre-2008 values. In the Twin Cities, the median sale price for all homes in 2017 was around $246k, and while high-end areas did better, growth was modest.
In 2018–2023, by contrast, luxury home prices accelerated rapidly. Minnesota’s median home price hit a new high each year, reaching $345k statewide by 2023 – and the gains at the upper end were higher in percentage terms. For instance, Edina (an affluent suburb) saw its median price jump 27% from 2019 to 2023. North Oaks’ median spiked ~30% in one year (2020). And many individual high-end properties sold for record amounts in the early 2020s.
Comparing peaks: the number of $1M+ sales in 2005 (peak of the housing boom) was only a quarter of what it was by 2024. That underscores how much the ceiling has lifted. The recent five years not only eclipsed the 2005 era peaks but created an entirely new plateau for luxury real estate in Minnesota.
Conclusion
Between 2018 and 2023, Minnesota’s high-income households reshaped the homebuying landscape. They drove record luxury sales in the Twin Cities, turned once-sleepy cabin communities into thriving real estate markets, and broadened the definition of a “dream home” with their appetite for larger, amenity-rich properties.
These buyers showed remarkable resilience to economic shifts – whether it was leveraging low interest rates to upgrade in 2020, or deploying cash to bypass high rates in 2023. In all geographic areas of Minnesota, from urban Minneapolis to the Northwoods, the imprint of wealthy buyers is visible: new construction mansions and condos have risen to meet their preferences, and prices at the high end have climbed steadily even when the broader market cooled.
Going forward, the influence of this affluent segment is likely to persist. Their preference for quality over quantity (fewer moves, but bigger investments) and ability to adapt (e.g. making a second home a primary residence) suggests they will continue to set trends.
One thing is clear – the last five years affirmed that in Minnesota real estate, the luxury market is no longer niche but a significant, thriving part of the industry, buoyed by high-income purchasers. And unlike the housing bust a decade ago, this time the wealthiest buyers have only solidified their foothold, making the upper tier of Minnesota’s housing market as competitive and vibrant as it has ever been.
References
- Star Tribune – Twin Cities area has new hot real estate segment: Million-dollar homes
- Star Tribune – Number of Minnesota home sales in 2022 at an eight-year low, but prices hit a new high
- Star Tribune – Ranks of million-dollar condos have tripled in Twin Cities amid ‘robust’ demand
- Star Tribune – Teardown trend gets supersized with demolition of Lake Minnetonka mansions
- Axios Twin Cities – Million-dollar homes are typical in these Minnesota cities
- Minnesota Realtors – 2024 Annual Housing Market Report
- MinnPost – The uncertain future of cabins in Minnesota
- National Association of Realtors – Highlights From the Profile of Home Buyers and Sellers
- National Association of Realtors – 2021 Vacation Home Counties Report
- CBS News – Rise in all-cash transactions turbocharge price gains for luxury homes
- Post Bulletin (Rochester) – 2024 in review: 5 most expensive homes sold in Rochester
