If you’re looking to buy a home in Minneapolis, 2019 may be a good year. The Twin Cities’ economy is thriving, and analysts predict continued prosperity and positive trends. There is a boom of new construction in both urban and suburban areas. And massive renovation projects are reclaiming former industrial structures and turning them into the hottest new lofts, condos, and neighborhoods downtown.
TwinCity Lending knows the local economy and will help you get favorable financing for your dream home. We can help you figure out timing, payment terms, closing costs, and interest rates so you can close the transaction on that contemporary chic condo overlooking the Mississippi or the home with the fenced backyard for your kids and pets.
Several demographic and economic factors affect the housing market and help determine whether it’s a good time to buy a home. Unemployment, demand for homes, population changes, construction, taxes, and interest rates all affect your ability to purchase a home and what price you will have to pay.
Twin Cities Unemployment is Lower than the National Average
In early 2019, the national unemployment rate is 5.2 percent. Minneapolis and St. Paul are doing even better, with the local unemployment rates at 3.7 percent and about 4.1 percent respectively. Large employers in the area include corporations headquartered in Minnesota, such as 3M, Target, Best Buy, US Bancorp, General Mills, and United Health Care.
The low unemployment rate means jobs are plentiful and businesses typically are hiring. That is good news for potential home buyers because they have a lower risk of being laid off from a job. Workers also have greater mobility in a healthy economy with low unemployment. You can search for a different position — perhaps one with better salary and benefits — while continuing to work at your current one.
Minneapolis and St. Paul’s economies are strong because of public and private investment. Minneapolis has a robust manufacturing base that includes electronics, medical products, milling, food processing, and machinery manufacturing. The city’s economy also benefits from the presence of high-tech companies, several universities and technical schools, and 30 Fortune 100 companies. In addition to the private sector, the Twin Cities has many government institutions, from the ninth Federal Reserve to state-level government offices.
Furthermore, Minneapolis’ local government and Chamber of Commerce have invested heavily in the city’s infrastructure. Their economic development grants transformed vacant mills and constructed the Skywalk that makes it easier to navigate the downtown business area. A mixed economy such as the Twin Cities boasts, bodes well for tax revenues and further investment. With both private and public support, Minneapolis’ economy can better weather any downward dips that come its way.
Analysts forecast that job growth in the Twin Cities area will continue to outpace that of the nation. The Minneapolis job market grew 1.2 percent over the last year, and economists forecast 38.8 percent growth over the next ten years. These trends correlate with a stable housing market in which homes hold or increase their value.
At $32,232, Minneapolis residents have a higher average annual income per person than the US national average of $28,555. While the cost of living in Minneapolis is slightly higher than the national average (116 vs. 100), the higher wage gap more than offsets the difference.
The Twin Cities consistently ranks as one of the top places to live in the United States, especially for young professionals. Minneapolis ranks alongside Chicago, San Francisco, and Brooklyn, as a mecca for hipsters who value local economies, walkability, environmental sustainability, the arts, entertainment, a thriving food scene, and natural spaces.
As the area’s reputation increases, more people want to move here. This desirability drives the price of homes up, so buying now means that you will earn equity quickly as the value of your home rises. In 2018, homes in St. Paul increased in value an average of 9.3 percent, again besting the national average.
Favorable Interest Rates for Mortgages
Interest rates for 30-year and 15-year fixed rate mortgages remain low and affordable. Lower interest rates mean that you pay less for the home in the long run so that you can afford more house or a higher sale price and stay within your budget.
Mortgage rates have again fallen below the 5% mark in 2019. The average 30-year-fixed loan interest rate is around 4.5%, and a 15-year fixed rate mortgage average interest rate is approximately 4% as of February 2019. Analysts predict the housing market will remain robust, so there will be stable buyers and sellers. Lenders such as TwinCity Lending are here to secure home loans for those ready to buy.
Economy Predicted to Continue to Do Well in 2019
According to analysts, the national economy will remain strong in 2019. Most predict that unemployment will continue to drop, and positive economic indicators will cause inflation. When this happens, the Federal Reserve increases the federal funds rate between banks, which helps slow or stem the higher prices that come with inflation.
When the Fed raises rates, banks increase interest rates for borrowers and investors. For homebuyers, higher rates increase the cost of your purchase and your monthly mortgage payment. To stay within your budget or to qualify for your loan, you will need to borrow less by purchasing a lower-priced home or having more cash at closing.
Start Home Shopping Now
Many people move in the summer months, which is easier for families with children who need to switch schools. To move in the summer, sellers start listing their homes in February and March, expecting about 90 days minimum from listing to closing. Additionally, builders and contractors finish many projects as the weather warms.
That trend means now is a great time to start buying a home before rates rise. There will be more homes on the market in the next few weeks, and the Minneapolis and St. Paul economies are thriving and trending upward. As more people become interested in this area, your home’s value will increase. Buy now so you can build equity right away.
Contact us at TwinCity Lending, and one of our expert loan counselors will assist you every step of the way in the home buying process.