Why Are Houses So Expensive in Minnesota?
Despite the COVID-19 pandemic, the Minnesota housing market is booming. The problem for homebuyers? It’s a seller’s market. There’s a high demand for Minnesota homes, but a short supply leads to bidding wars, and homes are selling for much more than the asking price. This can be discouraging for homebuyers as they wonder why houses are so expensive in Minnesota.
Factors Contributing to High Home Prices
In addition to the competitive, high-demand issues we mentioned above, there are other factors that are adding to surging home prices.
Strong Job Market
Minnesota is home to 16 Fortune 500 companies. We also have lower unemployment rates than other states. These details are good things for the state’s economy and reputation, however, it lends itself to the high demand for housing.
Low Interest Rates
Interest rates in Minnesota have been at a historical low which has made buying residential real estate very attractive. Homebuyers want to snatch up these properties while rates are low. Recently, however, the Federal Reserve has hinted at rising interest rates, which has only fueled the demand for homes.
High Homebuilding Costs
The pandemic had a huge impact on the availability of both materials and labor. A shortage in homebuilding materials means increased costs. Since workplace safety has been an ongoing issue as well, labor costs have also increased.
Average Cost of Minnesota Houses
We’ve been discussing the factors that are making houses in Minnesota so expensive, but what are the actual prices we’ve been seeing? According to the Pioneer Press, the average sales price of Minnesota homes has shot up to $360,000 in just the last year. That’s a 13% increase from the year before.
Many Minnesotans cannot afford to pay $360,000 for a home. Despite that figure being the average price, they may be wondering if house prices will go down in Minnesota. We’re remaining optimistic, since life is slowly returning to a sense of normalcy. This means lower costs for materials and labor.. These positive changes lead us to believe that house prices can begin to lower.
Want to Learn More About Why Houses Are So Expensive in Minnesota?
Get all of your questions answered by Ted Bougie and the expert loan officers at Best Advantage Mortgage. We’ll make sure you’re equipped with the information you need about Minnesota home prices, and we’ll get you the best possible loan for your situation. Contact us today to get started.