Investing in Stillwater MN Real Estate: 2026 Market Guide

If you are looking at the Twin Cities metro map and trying to decide where to park your capital, Stillwater often stands out—and not just because it’s pretty. 

Sitting right on the St. Croix River, this town is a unique hybrid. It is one of Minnesota’s biggest tourist engines, but it is also a high-income, stable commuter suburb for people working in St. Paul and the eastern metro.

For investors, this creates an interesting dynamic. You aren't buying into a standard cookie-cutter suburb, but you also aren't buying into a volatile urban center. The entry price is higher here than in some neighboring towns, but the trade-off is often higher-quality tenants and appreciation that tracks well above inflation.

Let’s look at the numbers, the neighborhoods, and the regulations you need to know before writing an offer.

When we talk about buying in Stillwater, we need to set realistic expectations regarding price. This is a desirable area with limited inventory, and the competition reflects that.

Median Sales Prices generally hover in the $430,000 to $440,000 range for typical single-family homes. However, that number can be misleading if you are looking for specific amenities. If you are eyeing properties with river views or historic provenance near the Lift Bridge, you are easily looking at $600,000+.

Inventory remains tight. Homes under the $500,000 mark are in short supply, meaning sellers still hold the leverage in that price bracket. If you see a well-maintained home list on a Thursday, it is common to see it pending by Monday. The "days on market" usually sits between 19 and 30 days for priced-right inventory.

You will also find a distinct split in property types:

If you are running a buy-and-hold strategy, the numbers in Stillwater can look quite different depending on the asset class. There is a significant divergence between apartment rents and single-family home rents.

Demand for single-family rentals is incredibly strong here. Many tenants are households transitioning to the area who want to be within the Stillwater Area Public Schools (ISD 834) boundaries but aren't ready to buy yet. Because the inventory of rental houses is low, landlords can command a premium.

Here is how the numbers generally shake out:

While overall vacancy rates in older apartment buildings can hover around 11%, vacancy for updated single-family homes is much lower. When a clean, updated home hits the rental market, it usually leases quickly to young professionals or remote workers seeking more space than the inner-ring suburbs can offer.

This is the most critical section for anyone thinking about Airbnb or VRBO. Stillwater is a tourist town, so short-term rentals (STRs) seem like a no-brainer. However, the city has implemented very strict regulations to protect housing stock.

The License Cap: The city limits the number of STR licenses to 50 units in the residential neighborhoods outside the Central Business District. As of 2025, availability is scarce. It is common for there to be zero to two licenses available at any given time, meaning you might be stuck on a waiting list.

The Transferability Trap: This is where many investors get burned: STR licenses are generally non-transferable. If you buy a house that is currently a successful Airbnb, that license does not transfer to you at closing. You must apply for a new license as the new owner. If the cap is full, you cannot operate, regardless of the property's history.

Taxes and Operations: If you do secure a license, you are required to remit a lodging tax (approx. 3%) on top of standard sales taxes. While you don't always need to be owner-occupied (depending on the specific license type), the operational scrutiny is high.

If the STR regulations sound like a headache, the long-term rental market is a breath of fresh air. Compared to the regulatory environment in the Twin Cities core, Stillwater is very approachable for landlords.

Unlike Minneapolis licensing requirements that involve tiered fees and complex inspections, Stillwater currently does not require a rental license for leases lasting 31 days or more. There is no annual inspection fee and no administrative hoop to jump through just to put a tenant in place.

This lowers your barrier to entry and reduces your annual operating costs. You still need to comply with state safety laws and fair housing standards, of course, but the lack of city-specific red tape makes property management in Washington County much simpler for the average investor.

Stillwater isn't a monolith; where you buy dictates your tenant profile and your maintenance budget.

Downtown and North Hill: This is the postcard version of Stillwater. These areas are walkable to Main Street and the river.

Croixwood and West Stillwater: Located further west from the river, these neighborhoods feature homes built in the 1970s through the 1990s.

Liberty on the Lake: This is a newer development area with modern amenities.

When running your pro forma, you need to account for Washington County's holding costs.

Property Taxes Stillwater property taxes are generally higher than rural Minnesota but comparable to other high-demand suburbs like Woodbury. You can expect an effective tax rate of roughly 1.05% to 1.12%. For a median home, the annual tax bill often lands around $4,200+, though this varies heavily based on the specific assessment.

Insurance Premiums: If you buy in the historic districts (North Hill or South Hill), get an insurance quote during your inspection period. Carriers may charge higher premiums for homes with knob-and-tube wiring, slate roofs, or older foundations. Newer homes in the western part of town will generally have standard insurance rates.

Is Stillwater the right move compared to other metro hot spots?

Vs. Woodbury: Woodbury offers newer stock and corporate rentals. It is easier to find a 2005-built townhome there. However, Stillwater offers "character" that Woodbury lacks. Tenants who choose Stillwater usually do so because they want the river lifestyle, which can lead to longer tenancy durations.

Vs. St. Paul: St. Paul has seen increased regulation regarding rent stabilization and tenant protections. Stillwater offers a freer market for landlords with no rent control ordinances and no LTR licensing, making it a safer bet for those who want full control over their asset.

Vs. Minneapolis: Minneapolis offers lower entry prices in some neighborhoods, but crime rates and appreciation volatility can be issues. Stillwater is a higher entry price point, but it offers a stable, slow-and-steady appreciation curve with fewer systemic risks.

Yes, but they are strictly regulated. There is a cap of 50 licenses for properties located outside the Central Business District. Because licenses are limited and non-transferable upon sale, you should never assume you can operate an Airbnb without verifying current license availability with the city first.

It depends on the lease length. For short-term rentals (under 30 days), yes, you need a specific license. For long-term rentals (31+ days), you currently do not need a rental license or inspection to operate, which is a major advantage compared to Minneapolis rental regulations.

Rents vary significantly by property type. Average apartments rent for roughly $1,675, while single-family homes in good condition command $2,550 or more. The scarcity of rental houses allows landlords to push rents higher than in neighboring suburbs with more inventory.

Stillwater is an excellent location for stability and appreciation, though cash flow can be tight due to high entry prices ($430k+). It is best suited for buy-and-hold investors looking for high-quality tenants and long-term equity growth, rather than investors looking for cheap flips or high-yield cash flow immediately.