2015 Minnesota Housing Market Predictions

After the serious stagnation of last year, which we covered at large in our report on the 2014 Minnesota housing market, the market has now recovered quite nicely and will reportedly continue to grow into the foreseeable future as well. The housing market predictions for this state (as calculated based on Zillow data), indicate that there has been a 2.9% rise in this market and it will continue to rise by 0.9% in the next year as well. The basic indicator of a healthy real estate market, which is the median home value, sure looks promising for Minnesota now: in July 2015, it was at an estimated $181,700, whereas the median sale price was even higher, at $219,485. We will look into all the data in more detail below, but for now, it should suffice to say that the Minnesota housing market is really having a comeback and should be from now on much more attractive to prospective home owners and investors alike.

For now, let’s take a look at the overall economy of Minnesota and how it got hit by the recent recession, as well as its forefront of recovery and how all these dynamics are having an impact on the local housing market. Even though in its distant past, Minnesota’s economy was primarily known for just being a good and plentiful source of raw materials provided for other economies, the state has changed its focus moving it more onto finished goods and services. This led Minnesota to have one of the most diversified economies of today’s United States, and it is precisely this diversity that enabled it to have a quick recovery from the grapples of the post-2008 recession. In 2008, according to the Bureau for Economic Analysis, the state had a domestic gross product of $262 billion, and an income per capita of $42,772. Also, another major sign of a healthy economy (with which not a lot of other states can boast nowadays) is a very low level of unemployment: only a rate of 3.7 percent in January 2015, according to the BLS (Bureau for Labor Statistics). It’s no wonder, then, that the housing market predictions for Minnesota are looking good.

Minnesota Housing Market

Check out the gems the Minneapolis MN real estate market offers!

Influencing Factors for the Minnesota Housing Market

  • As mentioned above, the median home value is perhaps the most important indicator of the health of a real estate market, and the Minnesota housing market is no exception. Things are looking promising in this department, with a median home value of $181,700 according to Zillow statistics, and an even more encouraging median sale price for Minnesota homes, of $219,485. The median sale price per square foot is of $174. The market has seen a rise of 2.9% during the past year, and a further rise of 0.9% is expected to happen by mid-2016.
  • How about rents and the rental market in general, you may ask yourself? Well, things are looking good in this department as well: the median rent price is currently $1,379, which is very slightly higher than the average for the country as a whole (estimated at a median of $1,376). Per square foot, the median rent price is of $1.19 and after a slight bump in the first part of 2015, it is expected that the rent prices will continue their upwards trend. The Craigslist Minnesota rental announcements are usually the go-to for young people looking for a place to stay, but the activity of other hubs is also quite high (like Trulia, Zillow and so on).
  • Still, we would advise a cautious sort of enthusiasm. Even though all of these figures sure do look good, the Zillow experts don’t have a very good opinion of the overall Minnesota housing market health: it earned only a 2.2 out of 10 rating with them. Furthermore, it seems that this rating is expected by them to be decreasing even lower in the near future. The factors taken into account when looking into the health of a particular real estate market are things such as the percentage of homes with negative equity or delinquent mortgages.
  • Homes with negative equity (which contribute to the less than enthusiastic housing market predictions for Minnesota) are those which are evaluated higher than they will actually be able to sell. The percentage of negative equity homes in this state is currently evaluated by Zillow experts to be at 13.9% (at the end of July 2015), still a bit lower than the national average (15.4%), but not by a lot.
  • As for delinquent mortgages (which means those mortgages where people have failed to complete their most recent payments on time), these comprise about 2.8% out of the total of mortgages in Minnesota. The foreclosed homes are 3 per 10,000 in this state, while there are usually 4 per 10,000 nationwide. These figures are still lower than the national average (currently at 6.00% for delinquent mortgages), but since the Zillow analysis predict the market’s health isn’t likely to be improving anytime soon, it’s best to keep it under advisement.
  • Other experts are more optimistic about this market. Business Insider has named the Minnesota housing market among the hottest real estate fields in the nation for this year, and by the looks of the figures on home values and upward trends, they weren’t wrong to do so. According to the MPR, there are plenty of reasons for optimism towards this market (the fact that millennials want to move out and get their own place, the fact that employers are hiring again and unemployment is considerably low and so on), and only one reason for pessimism (the predicted rise of mortgage rates, announced and dreaded for a long time and now, seemingly, finally here).

Best Places to Live in Minnesota

Let’s now take a look into the main cities and areas inside the Minnesota housing market and see how the prices and values are doing over there. This way, whether you’re a prospective home owner or investor looking for accurate housing market predictions, you’ll know just what to expect from these places. First of all, let’s see how the Minneapolis MN real estate market is doing: according to the Zillow Minneapolis statistics, the median value of a home here is $202,500, after a 3.4% rise during the past year and further rise of 1.1% expected in the next year. The market temperature is rather cool, which means there aren’t a lot of transactions going on, but at least the prices are high (some areas of the state have higher values, but for a state’s capital, these numbers are high enough). The median rent price here is $1,495, and in the Minneapolis-St. Paul Metro area it’s $1,450. As for the Trulia Minneapolis report, these experts indicate that while the listing prices are on a downwards trend, it doesn’t matter since the actual sale prices are up and rising further. The current median sales price according to them is $229,900 (for the June 2015 – September 2015 time interval), up by 3.2% since the previous trimester.

The St Paul MN real estate market isn’t as valuable as the Minneapolis one, but at least its values are on the rise as well. The median home value here, according to Zillow, is $164,900, up by 2.9% during the past year and predicted to rise by a further 1.5% in the next year as well. The market temperature is cool (not a lot of buying and selling going on), and the median rent price is $1,300.

In the Rochester MN real estate market, things are looking even more modest. There’s no rise or fall of prices calculated for the past year or the upcoming one, and the median home value according to Zillow is at the same $135,900, and the median rent price is $1,250 (and $1,200 for Rochester Metro). At the same end of the spectrum (with lower prices and values) is the Duluth MN real estate market, with a median home value of $126,300, but better prospects for rising (it already rose by a staggering 9.3% in the past year and it’s scheduled to rise by a further 6.00% in the next year). The median rent price in Duluth is $1,139 and the median rent for the Duluth Metro area is $1,073.

Moving on to warmer markets, let’s take a look at the quick facts of the Bloomington MN real estate. The median home value here, according to Zillow data, is $215,400, up by 1.7% during the past year and predicted to rise by a further 1.0% in the next year, after experiencing a pretty significant low in 2012. The median sale price is a bit higher than the estimated home value, and it is currently at $218,476. The median rent price here is impressively high, at $1,595, so good news all around for people who are already owners on this market.

Last, but not least, let’s take a look at the St Cloud MN real estate market: according to Trulia statistics, both the average listing price (currently $170,935) and the median sales price (currently at $172,151) are on the rise. The listing price is only up by 1.2% in the past trimester (June-September 2015), but the sale price is up by a staggering 20.7%, so all potential investors should definitely look to this market closer, the housing market predictions for St. Cloud are definitely hot!

Neighboring Competitors for the Minnesota Housing Market: