Today’s real estate landscape is buzzing with developments that could impact both current and prospective homeowners. From the latest on Minnesota’s first-time home buyer programs offering significant grants and loans, to the record-high U.S. home prices amidst falling sales, and even historical insights into how past events like IBM’s expansion influenced housing in Rochester, there’s a wealth of information to explore. Whether you’re looking to buy your first home, understand market trends, or delve into historical real estate dynamics, today’s coverage provides crucial insights. Dive deeper into these stories to stay informed and ahead in the ever-evolving world of real estate.
Minnesota First-Time Home Buyer: 2024 Programs & Grants
As a first-time home buyer in Minnesota, you have access to some great resources. The North Star state can provide home buyer education courses, counseling, and special mortgage programs. Best of all, Minnesota can deliver down payment assistance to qualifying borrowers. This can help cover your down payment and closing costs to put you in a home sooner than you thought possible.
Aside from the standard loan types above, eligible Minnesota buyers may qualify for a home loan through the state. The Minnesota Housing Finance Agency, or Minnesota Housing, offers special mortgages and cash to cover some or all of your down payment and closing costs. Here’s what you can expect.
The Start Up program offers first-time home buyer loans with 3% down, affordable interest rates, and income limits up to $134,800 (in 2023). Down payment and closing cost assistance is also available. More on that in the next section.
If you’re a repeat buyer or a Minnesota first-time home buyer who exceeds household income limits, the Step Up program may be ideal for you. Perks are similar to the Start Up program, and refinancing and purchase price limits apply.
Minnesota Housing’s website also says it “offers several HFA conventional mortgage products that must be layered with one of our Mortgage Loan Programs, offering the reduction or elimination of mortgage insurance (MI) costs with options available up to 97% LTV.”
That’s a lot of jargon. Broken down, it simply means:
As a Minnesota first-time home buyer, expect to need a credit score of 620 or better to qualify for this program. You’ll also need to complete a home buyer education course to be eligible.
Helpfully, Minnesota Housing provides a list of approved courses (see the resource section below), including an online option, on its website. Just click the “+” symbol next to “Homebuyer education and resources.”
There are multiple home buyer grants and loans in every state. In Minnesota, you should find helpful programs at the city, county, and state levels. You can ask your real estate agent or loan officer to point you in the right direction.
Statewide, Minnesota Housing provides down payment and closing cost loans that can help with your upfront home buying expenses.
It has three main down payment assistance options, all of which can be used for closing costs as well:
You need to use a lender approved by Minnesota Housing to be eligible for any of these. And the one you choose will tell you which, if any, you can get. Always get quotes from multiple lenders before you commit.
The median home price in Minnesota was $361,400 in June 2024. That increased 2.5% from the year before, according to Redfin.
Although home price inflation shows signs of slowing in Minnesota, saving for a down payment can still be a challenge for first-time buyers. If you find yourself in this situation, keep reading to find out if you qualify for one of many home buyer assistance programs available.
Down payment amounts are based on the state’s most recently available average home sale price. “Minimum” down payment assumes 3% down on a conventional mortgage with a minimum credit score of 620.
If you’re eligible for a VA loan (backed by the Department of Veterans Affairs) or a USDA loan (backed by the US Department of Agriculture), you may not need any down payment at all.
If you’re a Minnesota first-time home buyer with a 20% down payment, you can get a conventional loan with a low interest rate. And you never have to pay for private mortgage insurance (PMI).
Of course, few first-time buyers have saved enough for 20% down. But the good news is that you don’t need that much. Not by a long shot. Borrowers can often get into a new home with as little as 3% or even 0% down using one of these low-down-payment mortgage programs:
Note that government loan programs (including FHA, VA, and USDA home loans) require you to buy a primary residence. That means you can’t use these loans for a vacation home or investment property.
In addition, most programs let you use gifted money or down payment assistance (DPA) to cover your down payment and closing costs. Depending on your mortgage loan, you could potentially get into a new house with minimal cash out of pocket.
If you’re unsure which program to choose for your first mortgage, your lender can help you find the right match based on your finances and home buying goals.
Home purchase prices in Minnesota’s three biggest cities could be more expensive than in other parts of the state. However, each major city has at least one down payment assistance program.
They’re all likely to have similar eligibility requirements, including that you’ve completed a homeowner education course; use an approved lender; and meet local income limits. Check with your provider for other loan terms and conditions.
The median list price in Minneapolis was $360,000 in June 2024. That rose 3.6% year-over-year, according to Realtor.com.
If you want to buy a home at that median price, your down payment options might fall between:
The city of Minneapolis runs the Homeownership Opportunity Minneapolis (HOM) which provides a zero-interest, no payment 30-year loan with $10,000 in assistance for homebuyers between 61-80% AMI and $20,000 in assistance for homebuyers below 60% AMI. The assistance will have to be repaid when you move, sell, refinance, or finish paying down your main mortgage.
Eligible Minneapolis first-time home buyers must be below income limits, which vary by household size, and complete financial wellness counseling from an approved agency.
The median home price in St. Paul was $299,000 in June 2024, according to Redfin. That rose 1.7% year-over-year.
If you want to buy a home at that median price, your down payment options might fall between:
The city of St. Paul offers up to $40,000 to those who are eligible, with amounts varying depending on your need. This DPA takes the form of an interest-free loan that falls due only when you move, sell (unless there are no “net proceeds”), refinance, or finish paying down your main mortgage. Check out the resource section below and download the full program guidelines (PDF) for all the details.
The median list price in Rochester was $427,300 in June 2024. That rose 11% year-over-year, according to Realtor.com.
If you want to buy a home at that median price, your down payment options might fall between:
First Homes is a nonprofit subsidiary of the Rochester Area Foundation. It can provide down payment assistance either using the Minnesota Housing Start Up program (above) or through its own First Homes Gap Loan.
For the latter, it offers up to $12,000 to qualifying buyers, but that depends on available funding. This appears to take the form of an interest-free deferred loan. And you don’t have to repay that until you move out, sell, refinance, or finish paying down your main mortgage. Check with one of First Home’s participating lenders to see whether you’re eligible and if funds are available.
All the organizations we’ve listed above should provide advice freely to any Minnesota first-time home buyer or one purchasing in their local area.
In addition to our selection, the U.S. Department of Housing and Urban Development (HUD) provides a few lists for statewide, regional, and local resources.
Statewide first-time home buyer resources in Minnesota
Minnesota home buyer resources by county
City-level home buyer resources in Minnesota
You can see today’s live mortgage rates in Minnesota here.
When you’re ready to start the home buying process, experiment with a mortgage calculator to see how down payment and interest rates will affect your mortgage payment. Then, get personalized rate quotes from at least three to five mortgage lenders.
Don’t just look at advertised rates online. Apply for preapproval and compare the interest rates and fees you’re offered. Because that’s the only way to know you’re getting the best deal possible on your new home loan.
1Source: Redfin Minnesota Housing Market report
2Source: Experian.com study of 2021 and 2020 data
3Based on a review of the state’s available DPA grants at the time this was written
U.S. home prices hit a record high as sales fell. Here’s how housing experts explain the trends • Minnesota Reformer
U.S. median home prices hit a record high for the second month in a row as sales continued to fall, according to a report released this week, as potential buyers continue to lie in wait for lower mortgage rates.
Existing home sales fell 5.4% in June and median home sales reached its highest level on record since prices were first tracked by the National Association of Realtors in 1999. The median price rose the most in the northeast region at 9.7%. In June, existing home sales plummeted 8% in the Midwest, the greatest fall among the regions, according to the report released on Tuesday.
New home sales, released on Wednesday by the U.S. Census Bureau, fell 0.6% in June and is 7.4% lower than new home sales a year ago. The median sales price of a new home was $417,300, lower than the existing home sales median price of $426,900. Housing experts say that this closeness in price is unusual, since new homes have usually sold for much more in the past 10 years and may be reflective of changing demands for smaller and more affordable homes.
Despite that change, these two measures have shown that home prices still remain out of reach for many and that in response, sales have been slow. What is driving these prices and when will they abate? Housing economists say there are many factors at play, including Fed policy and an aging population.
High demand for homes and lower inventory levels have contributed to higher home prices in recent years. These expensive home prices and high mortgage rates have resulted in this housing market shift.
Matthew Walsh, economist at Moody’s Analytics, said low housing affordability and the “persistently high” mortgage rate is contributing to cooling housing activity. Unless housing becomes more affordable soon, he said he expects to continue to see lower existing home sales. The 30-year fixed mortgage rate was 6.78% as of July 25, according to Freddie Mac.
“Buyers are very responsive to mortgage rates and with the information being so readily available and the anticipation that mortgage rates are going to come down, I think that’s keeping people on the sidelines,” said Selma Hepp, chief economist at CoreLogic.
But she said homebuyers face a double-edged sword. When mortgage rates do come down, there will be a lot of pent-up demand that will also put pressure on home prices. A rise in cash buyers could also be pushing prices higher, Hepp said. All cash buyers were 28% of home transactions in June.
“A lot of these cash buyers are actually baby boomers who maybe cashed out on their existing home. We do know that home equity is at an all-time high and if you’re moving from a very expensive home price area to a lower-priced area, you obviously will have a lot of cash,” she added.
One bright spot for homebuyers is that total housing inventory has been rising. Inventory increased 3.1% from May and was up 23.4% from a year ago according to the June existing home sales report. Walsh said some households may be deciding they can’t wait to make a life change and are moving out of homes for larger or smaller options.
“It’s a lot of households that can no longer postpone plans to sell, whether that’s because their household is expanding because they’re having children or it’s shrinking and they need to sell their larger home in the Northeast and move to a smaller home to retire in the South,” Walsh said. “They can no longer put up with the homes that they’re in and sacrifice their low mortgage rate for a higher rate.”
Still, Hepp said the inventory is far lower than pre-pandemic levels and where demand has picked up — in Boston, New York, and Chicago, for example — there’s not a proportionate increase in the supply of housing.
Some homebuyers may be watching the Fed’s plans to cut interest rates, which affect mortgage rates, for some financial relief. A majority of economists say they believe the Fed will cut rates in September and December, according to a recent Reuters poll. Cutting rates may help bring some buyers back into the market and pump up inventory, but the effect will likely not be strong enough to bring home sales back to where they were before the pandemic, Walsh added.
The Biden administration announced a flurry of proposals this month to make housing more affordable, some of which would impact homebuyers as well as the repurposing of public lands in Nevada to bring at least 15,000 affordable rental and homeownership units to the area. In February, the White House also announced the opening of grant applications for assistance to homeowners to replace dilapidated homes.
Donald Trump, the Republican nominee for president, said at a July rally in Iowa that he would address problems in the housing market through cutting interest rates, according to Newsweek. Although presidents nominate the chair of the Fed for a four-year term, they do not have power over whether the Fed cuts rates.
States have been pursuing their own policies to improve housing inventory and affordability, including Utah and Oregon, which passed legislation to use funds for loans to developers who plan to build more affordable homes. A Maryland bill signed into law by Democratic Gov. Wes Moore in May would push property owners to make plans for vacant properties by letting cities raise taxes on those properties.
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Casey Quinlan is an economy reporter for States Newsroom, based in Washington D.C. For the past decade, they have reported on national politics and state politics, LGBTQ rights, abortion access, labor issues, education, Supreme Court news and more for publications including The American Independent, ThinkProgress, New Republic, Rewire News, SCOTUSblog, In These Times and Vox.
IBM announcement sparks housing boom in Rochester – Post Bulletin | Rochester Minnesota news, weather, sports
A shortage of housing is nothing new in Rochester. Quonset huts had to be erected to house returning veterans and their families after World War II. In that case, the local situation was part of a nationwide shortfall of housing following the war.
But a decade later, Rochester faced another anticipated dire need for housing, and city officials tried their best to get ahead of it.
In 1956, with IBM having announced that it would open a plant in Rochester, city officials made some quick calculations and determined that what the city had on hand in housing stock was woefully inadequate to meet the needs of IBM employees moving here.
At a meeting with local builders and real estate developers on Oct. 23, 1956, it was announced by Rochester officials that “construction of 600 homes will be needed in 1957 and the same number in 1958,” reported the Post-Bulletin.
At the same time, the newspaper said, “city government faces the need of asking the people for a large bond issue to finance street and utilities programs.” Already, there was pressure on the city budget to extend municipal water and sewer lines to newly annexed areas, where new housing developments would presumably be built.
Obviously, meeting this need for housing was going to be a major challenge.
Nobody was complaining, though, about the coup of getting a major worldwide corporation like IBM to settle in Rochester.
“IBM tells us they will be hiring 1,000 people in 1957 and 1,000 more in 1958,” Joseph Cotter, president of the Chamber of Commerce, told the meeting. Up to 80% of those workers would be hired from Rochester; the rest would be transferred in, he said.
Using the IBM salary scale of that time, Cotter estimated 85% of newly constructed homes should be priced at $12,000 to $15,000. Only 5% could be priced at over $25,000.
“These homes must be available when they are needed, or we will lose far too many of our prospective residents to communities within a radius of 50 miles,” Mayor Claude H. McQuillan said.
Among the challenges: The city could only annex lands that were contiguous to the city limits, and there was no ability or desire by Rochester to provide city utility services to areas outside the city.
McQuillan had just returned from a trip to IBM plants in upstate New York. “We now have the advantage of knowing in advance what will happen if we don’t act promptly to control the growth of our city,” McQuillan said. “What has been done to attract industry into our city is only the beginning of what must be done to fully capitalize on the opportunity for growth and prosperity which faces us right now.”
By the end of the year, plans for new housing developments had already been released.
On Dec. 3, 1956, it was announced that “several hundred” homes would be built on a 270-acre site west of the Rochester Country Club. The developers intended to seek annexation into the city, and pledged that despite the shortage of housing, “our houses will be priced as low as though the market were truly competitive.”
And thus was born Country Club Manor, another attempt in another time and place to ease yet another Rochester housing shortage.
Thomas Weber is a former Post Bulletin reporter who enjoys writing about local history.