After a sharp drop in the late 1980s, inflation-adjusted housing sales prices in Minnesota were on their way back up by the mid-1990s, a new study from Minnesota Planning shows. The statewide median sales price of existing houses in 1995-1996 was $87,500, up from $85,000 in 1989-1990 but below the 1984-1985 figure of $93,500 (in 1995-1996 dollars).
The recent gains were driven by strong growth in housing prices in rural areas and small cities. The median inflation-adjusted sales price in the 80 counties outside the Minneapolis-St. Paul region rose 12 percent, compared to a 1 percent increase in the Twin Cities area.
"This report doesn’t tell us everything about Minnesota’s housing situation, but it does give us a picture of one important part of it," said Minnesota Planning Director Ann Schluter. She noted that the study is designed to look at long-term trends, rather than the hot housing market of the past year or two. And because it covers only sales of existing residential units, it does not reflect the market for new construction or rental housing. The report is based on data collected by the Department of Revenue.
Despite the recent gains in housing prices outside the Twin Cities, prices in the seven-county area remain considerably higher on average. In the 1995-1996 period, the median sales price ranged statewide from a high of $131,320 in Carver County to a low of $18,000 in Kittson County.
Over the 11 years covered in the report, many rural counties, especially those in western Minnesota or along the southern border, experienced substantial erosion in median prices. Declines of 30 percent or more occurred in Faribault, Lac Qui Parle, Lincoln, Martin, Red Lake, Redwood and Watonwan counties.
Hennepin and Ramsey counties also experienced falling sales prices, reflecting declines in Minneapolis and St. Paul and in some of the inner-ring suburbs.