In 1858, Minnesota became the 32nd state to be added to the United States. Known as Land of 10,000 Lakes, or officially L’Étoile du Nord (the translation from French is Star of the North), the state covers 86,939 square miles making it the 12th largest in the country. The 2nd northernmost state (after Alaska), part of the eastern border is Lake Superior and Canada is the northern border. So, how does this northern state rank in terms of the Minnesota real estate.
With a population of 5,489,594 makes it the 21st most populous state. Forecasts expect the population to pass 6 million by 2032 and reach 6.8 million by 2070. The unemployment rate is 4 percent. Employment rates have increased 1.4 percent over the last year and is expected to continue at that rate in the near future. The top employers in the state are University of Minnesota – Twin Cities, 3M Company, Target Stores Incorporated, and the next three are all affiliates of Park Nicolette Methodist Hospital.
The 2016 Housing Market in Minnesota is considered healthy, receiving a rating of 5.8 out of 10 from Zillow. Property values are currently $223,016 with a median list price of $183,000. Housing market predictions expect the market to increase at a rate of 4 percent and property values to move upward at a rate of 5.15 percent. The real estate market, according to Realtor.com, currently has over 25,000 properties for sale and nearly 2000 available rental units among the most popular cities in the state.
Influencing Factors for the 2016 Minnesota Real Estate Market
- The median home value of a house in the Minnesota real estate market, according to the Zillow Home Value index is $193,500. This is 7.1 percent increase over 2015, and the increase is predicted to continue at approximately 2.8 percent.
- The current foreclosure rate is 33 percent. As of August 2016, this rate is 14 percent higher than July 2016 and 34 percent lower than the same time in 2015.
- Minnesota’s median rental price is $1407 per month. This price is 3 percent higher than the preceding year, 2015.
- The APR for a mortgage in the Minnesota real estate market commonly falls within the range of 3.26 percent to 3.36 percent, currently 3.32 percent. The average rate is 3.33 percent which is on target with the national average of 3.31 percent.
Best Places to Live in Minnesota
Minneapolis is the largest city in Minnesota (46th in the country) as well as the most populous city in the state with a population of 410,939. The median age is 34 years and 48 percent of residents are single. Along with St. Paul, the two compose the Twin Cities, the second largest Midwest economic center after Chicago. The city’s economy is based primarily in commerce, finance, rail and trucking services, health care, and industry. Five Fortune 500 companies have their headquarters located in Minneapolis: Target, U.S. Bancorp, Xcel Energy, Ameriprise Financial, and Thrivent Financial.
The Minneapolis real estate market is warm and considered stable, with a rating of 4.6 out of 10 from Zillow. There are 6840 homes in some stage of foreclosure as of August 2016, 1 percent higher than July 2016 and 47 percent lower than the same time from the previous year (2015). According to Zillow Minneapolis, the current home value is $218,900. This reflects an increase of 7.3 percent and is projected to continue increasing at a rate of 2.9 percent. The median list price is $250,000 with a median closing price of $228,000. Fifty-nine percent of Minneapolis residents own their home. Trulia has listing for homes beginning at $50,000 for a two-bedroom house all the way up to a two-bedroom condo for just under $3 million and a seven-bedroom landmark home for $5 million. Craigslist Minneapolis has listings for two bedroom properties beginning around $70,000 up to five to six bedroom houses for approximately $1.5 million. While Realtor.com lists 5655 homes for sale, there are also 817 rental units available. Zillow’s rent index is $1537, a 2 percent increase over the 2015 index. The median rental price is $1500. A studio apartment may rent for as low as $665 per month while a two-bedroom rental, typically a house, rents for anywhere from $2000 to $4000.
St. Paul, the capital and other half of the Twin Cities, is located about twelve miles from Minneapolis. With a population of 300,851, it is the 2nd largest city in the state. Thirty-nine percent of the population is single and the median age is 33 years. St. Paul is host to the headquarters for companies such as Ecolab (a chemical and cleaning product company), Securian Financial Group Incorporated, and Gander Mountain. The current St. Paul real estate market is healthy, receiving a 6.2 out of 10 rating from Zillow. The home value at the present time is $177,700, a 7.9 percent increase over 2015 and an additional increase of 2.9 percent is expected over the next year. There are 1226 homes in some stage of foreclosure, 32 percent higher than the previous month and 4 percent lower than the previous year. Just over half of all residents, 59 percent, are homeowners. Of 4577 properties listed for sale, prices range from $30,000 to $50,000 for a two or three-bedroom home up to $2 million for larger four to seven bedroom homes. Another 398 properties are listed for rent. The rent index is $1388 (2 percent higher than 2015) with a median price of $1425. Rental units begin with studios and one bedroom apartments for $600 to $700 per month and reach a maximum $7000 for a seven-bedroom house or just under $7000 for a two-bedroom penthouse.
The third largest city in Minnesota is Rochester, with a population of 112,225. Southeast of Minneapolis – St. Paul, it is the home of the Mayo Clinic which employs over 35,000 residents. Millions of people visit the city each year as patients or visitors to the hospital. The Rochester real estate market lists 939 homes for sale and another 58 for rent. The vast majority of residents, 82 percent, own their homes. Thirty-four percent of residents are single and the median age is slightly higher than most of the other major cities in the state at 40 years. The median list price is $220,000 and median closing price is $188,000. While the average sale price is $199,886, the current home value is $215,000. This value is 10 percent higher than last year (2015) and is predicted to continue increasing at a rate of 5 percent. Sixty-three homes are in some stage of foreclosure, a sharp increase from the previous month (July 2015) and a moderate increase (38 percent) from August 2015. A two-bedroom home typically starts at around $60,000 and exceeds $1 million for five or six bedroom homes. The median rental price is $1350. Zillow’s rent index is $1381 which represents a 5 percent increase over 2015’s index. One bedroom apartments start at about $500 to $600 per month and two to four bedroom houses rent anywhere from just over $2000 to almost $4000 per month.
Moorhead, located on the North Dakota border, has a prominent agricultural industry and is home to American Crystal Sugar, Busch Agricultural Resources, and Pactiv. The population of 42,500 consists of 32 percent single residents with a median age of 32 years, 80 percent of residents own their homes. The Moorhead real estate market has an 8.3 out of 10 rating from Zillow, making it a very healthy market. Only 26 homes are listed in foreclosure, the same as last year but a 200 percent increase over July 2016. The current home value is $179,300, 6 percent higher than last year; the value is expected to continue increasing at a rate of 3.1 percent. The median list price is $215,000, and the median sale price is $213,000. A two-bedroom home starts at about $50,000 to $60,000 and a four-bedroom home can easily exceed $800,000. With 20 percent of the population renting, the median price for rent is $1337. Zillow’s rent index is $1333, a 6 percent increase over last year (2015). Rental prices for a one or two-bedroom apartment begins at $525 and goes up to a three or four-bedroom house for as much as $1695 per month.
Southwest of Minneapolis is Shakopee with a population of 37,076. The market is cool but still healthy with a 6.8 out of 10 rating. 73 homes are in foreclosure as of August 2016: 18 percent lower than July 2016 and 50 percent lower than 2015. The median list price is $244,000 and the median sale price is $213,000. Zillow’s current home value on the Shakopee MN real estate market is $237,800, 9 percent higher than last year and expected to increase and additional 3.2 percent over the upcoming year. In addition to the 296 properties for sale, 24 properties are available to rent. The rent index is $1578, 1 percent higher than 2015. The median rental price is $1395.