Minnesota’s Housing Market Since 2010

By MNR News posted 01-24-2023 08:22

When it comes to assessing real estate trends, two things are key: locality and longevity. In other words, when measuring the market to drive decisions, it’s best to focus on a specific locale and look at data spanning back more than just a year or two. This is especially crucial now, given the extraordinary activity we’ve seen since mid-2020. As the market undergoes a correction—and moves back to a healthier, more balanced environment—expanding one’s view to look at wider historical trends can help inform consumer decisions. 

Perhaps you have clients who are wondering: Is now a good time to buy? Should I wait to see if interest rates come down further? While each client has unique needs, helping them understand the historical trends in Minnesota’s housing market provides important context to consider.

There’s a reason people talk about homeownership as a cornerstone for building wealth. Take, for example, the data below on median home prices since 2010. Someone who bought a home that year will have seen, on average, their equity more than double in just over a decade. It doesn’t take an economics degree to assess the wisdom of such an investment. 

It’s also noteworthy to look at interest rates over the last decade. While the 2% and 3% rates of 2020–2021 created uniquely favorable purchasing power, a 5% to 7% rate is more in line with the U.S. historical average. And as NAR Chief Economist Lawrence Yun recently told Minnesota Realtors®, don’t expect to see interest rates that low again for at least the next 30–40 years.  

Of course, it’s going to hurt your clients to consider what they could have saved by locking in at a 3% 30-year fixed mortgage rate versus, say, a 6% rate. The jump in monthly payment isn’t something to brush over. At the same time, however, if home prices continue to climb—as history all but guarantees they will—then waiting is a losing game too. 

In summary, homeownership is one of the most secure investments one can make over the long term. Providing clients with simple data can help them make wise decisions for themselves and their families. Rather than being tossed to and fro by sensational headlines in the day-to-day housing market, it’s best to let the historic numbers speak for themselves.