Escalating Expenses, Mortgages, Challenge Minnesota Homeowners

With its many lakes, mountains, and forests, Minnesota has long been a popular place to live for those who love the great outdoors. It’s also home to the Mall of America, Prince’s famed Paisley Park recording studios, and the Mayo Clinic.

Minneapolis and the Twin Cities have an active college student community, world-class restaurants, and a thriving arts and culture scene that make it a prime pick for homeowners looking for a city feel. Though the downtown core experienced a dip in sales along with the rest of the country in the early days of the COVID-19 pandemic, it bounced back in October, with pending sales in Minneapolis up 47% year over year. Yet, to a lesser degree, the area is seeing the same phenomena as major metropolitan areas like New York and San Francisco when it comes to antsy homeowners looking to purchase a new property in a quieter area after springtime lockdowns.

Getting Out…And Staying Put

The largely rural North-Central region of the state, which is approximately two to three hours from Minneapolis, reported a 63% increase in closings over last year. In Arrowhead, on the shore of Lake Superior, there was a 32% rise. 

“Realtors in Greater Minnesota tell us that they have consumers buying second homes in rural areas, especially cabins, with funds they would have used on trips — especially foreign travel — pre-COVID,” Chris Galler, CEO of the Minnesota Association of Realtors, told the Star Tribune. “The change in leisure travel plans and the change in employee commuting patterns has led folks to seek out properties away from more populated areas.”

Demand in suburban Duluth has led to record highs when it comes to home prices. In October, the median cost was $210,000, a $5,000 increase from just a month earlier and 13% more than the same time in 2019.

At the same time, Michael Doyle, a real estate agent in Maple Grove, has observed that many homeowners are staying in their homes longer than ever before.

“It used to be people moved every seven years. We’re just not seeing that anymore,” he explained to CCX Media. The reasons are many, but in conjunction with less construction and increased lumber prices, the lack of housing stock has posed a significant challenge to those looking for new homes.

“We’re seeing hyperactivity right now,” said Galler, noting a 36% decrease in housing inventory. “We’re seeing a lot of first time home buyers who are very frustrated that they’re unable to find homes. We’re seeing sellers who would like to sell their homes but are having difficulty finding a home to move into.” As recently as October, however, the situation seems to be improving, with a surge in homebuilding permits.

The Cost of Living in Minnesota Continues to Grow

Even though the median home price in the state was up 9.3% from $259,000 to $283,075 between August 2019 and August 2020, one thing is clear: no matter where you go in Minnesota, real estate is more affordable than many other parts of the country. This doesn’t mean that it’s all smooth sailing; in 2019, monthly living expenses in Minneapolis came in at $2,105 and St. Paul at $1,934. On top of mortgage payments, these costs can quickly add up and make it difficult to make ends meet day to day, let alone save for the future.

If you currently own a home in Minnesota, you have an advantage when it comes to making the most of your property’s value and achieving your financial goals without having to sell your home or take out a loan. Find out if you might be able to tap into your equity and get cash to pay off debt or finally make those renovations you’ve been putting off with a home equity investment.

The more you know about your home equity, the better decisions you can make about what to do with it. Do you know how much equity you have in your home? The Home Equity Dashboard makes it easy to find out.