2018 Minnesota Real Estate Market Predictions

Minnesota housing market
Minnesota was the 32nd state admitted to the Union, and it was formed from the eastern portion of the Minnesota Territory back in 1858. It is known for its lakes, its cold weather, and its down-home Midwestern “Minnesota Nice.”

The Land of Ten Thousand Lakes has a lot of things going for it. Minnesota is the 22nd most populous state in the country, and it is often cited as one of the healthiest states in America. Residents enjoy a longer life expectancy, get more exercise, and have better health insurance than many parts of the country.

No wonder the people living there have a characteristic niceness.  Sure, they may have to endure low temperatures during the winter, but they also enjoy low unemployment and a low number of work-related fatalities. Plus, all the cold and snow turn the state into a winter wonderland. Just don’t ask how long winter is sticking around for.

Predictions for the Minnesota Housing Market in 2018

But the question on everyone’s mind, much more so than the length of winter, is the state of the Minnesota housing market in 2018. Is it as robust and healthy as its citizens? Or are the cold temperatures about to make the market sick?

Closed sales are down 6% from last year, with pending sales down 4%. The good news is that both prices and percent of list price improved from last year. Homes in Minnesota also continue to appreciate in value, but at a rate slightly lower than the national average. Data collected on home appreciation values over a five-year period from 2012 to 2017 show that homes appreciated by 37.4% across the country, and by 31% in Minnesota.

According to Zillow, the median home value in Minnesota is $225,210, which means that the value has increased by 8.2% over the past year, and Zillow predicts that value will rise 4.9% within the next year.

Zillow gives the Minnesota housing market a rating of “very healthy,” and sites that homes spend an average of 91 days on Zillow, and less than 1% of Minnesotan homes are listed as delinquent on their mortgages.

Influencing Factors in the 2018 Minnesota Real Estate Market

Zillow also sites that foreclosures will be a factor in the 2018 Minnesota housing market. Though delinquent mortgages in Minnesota are below the national average, 1.7 homes per 10,000 are foreclosed, and 8% of Minnesotans are underwater on their mortgages.

Inventory remains the biggest factor for the Minnesota housing market. From December of 2016 to December of 2017, inventory was down 27.5% making it the lowest for the Minnesota housing market since 2004.

It’s a seller’s market for sure in the land of lakes. With fewer new listings on the market, supply remains low as demand remains high, helping to raise home prices.

This shortage of inventory also means that retirees and first-time buyers are often competing for the same short supply of townhomes. That means that not only will the supply of homes be important to watch in 2018, but also the available price ranges.

Mortgage rates across the country will also play a prominent role in the 2018 housing market. Experts expect rates to reach 5% by the end of the year, which will affect what buyers can afford. This may lead to a decrease in the median sale price, but experts are not worried since it still falls way below the 8% mortgage rates of the recent recession.

Best Places to Live in Minnesota

Nearly 60% of Minnesotans reside in the Twin Cities metropolitan area. This is comprised of Minneapolis, the most populous city in Minnesota, the capital city of St. Paul, and the surrounding suburbs.

Both St. Paul and Minneapolis are highly livable cities with affordable median sale prices that continue to rise steadily. Residents can enjoy several art museums, fine dining, a burst of new and innovative brewpubs, and plenty of biking trails and outdoor activities.

Forbes Magazine also recently voted Minneapolis as the number one healthiest city in America due in part to the city’s commitment to exercise, and their embracing of bike trails.

The Twin Cities Metropolitan area is the 13th largest metro area in the country. In addition, there are 17 cities in Minnesota with populations above 50,000 people. The Southern suburbs of the Twin Cities, like Lakeville, benefit from high-performing schools, a stable and steadily increasing housing market with a median listing price of $430,000, and a close proximity to the big cities.

It’s Still a Seller’s Market in Minnesota

The Minnesota housing market for 2018 is poised to continue steady growth in median sale prices, but it will have to battle declining inventory and foreclosures that occur above the national level. Sellers can rejoice in the abundance of demand and the sweetness of short supply, and they can expect their home to be on the market, or on Zillow, for roughly three months.