Key economic indicators show that Minneapolis-St. Paul has a strong, diverse economy that is steadily growing. So instead of listening to “the experts” spread bad news about the Twin Cities real estate market, let’s look at what the data trends are actually telling us – that this real estate market is ripe with opportunity.
Our businesses are growing, and they span a wide variety of industries – from healthcare to financial services. Our population is on the rise. Unemployment rates are steady, and mortgage rates are still near 30-year lows. We rank in the top 10 among major metro areas in per capita income, workforce participation and housing affordability. We have more Fortune 500 companies per capita than any other city in the United States.
All of this is sweetened for the savvy homebuyer because it’s a buyer’s market and there is an abundant selection of homes around the metro area right now. As a potential buyer, the numbers for the Minneapolis-St. Paul economy add up in your favor and you have a unique opportunity to take advantage of the conditions in the real estate market to find your dream home.
Population and home values on the rise
Good jobs, renowned companies and better than average pay make it no wonder that the Minneapolis-St. Paul area is growing. The Metropolitan Council estimates that 2.82 million people lived in the Minneapolis-St. Paul area as of April 2006. Population has grown 6.8 percent since 2000, and six of the 13 counties in the metro area are among the 100 fastest growing counties nationwide. Prolonged growth – the Minneapolis-St. Paul area is on track to add nearly one million more people between 2000 and 2030 – means home values will continue to increase as more people vie for limited available land, keeping the real estate market active.
Home ownership rates in Minnesota are already some of the highest in the country. Between 1990 and 2006, the home ownership rate increased 11.9 percent in Minnesota. In 2006, the Twin Cities had the 10th highest ownership rate among the 75 largest metropolitan statistical areas. Home values in this real estate market generally appreciate between three and four percent each year, putting us on par with a 20-year trend.
The ample supply of homes in Minneapolis-St. Paul paired with still-low interest rates are making home buying more affordable than ever. Fixed rate mortgages peaked last July (at 6.67 percent) and have fallen back to a shade above 6 percent. For comparative purposes, only the period between fall 2002 and fall 2005 saw mortgage rates less than this amount. So, historically, mortgage rates are near 30-year lows.
More about the Minneapolis-St. Paul economy and real estate market in the next post.
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