Housing continues to dominate conversations for many in 2025 with good reason; whether it’s the cost to buy, the interest rates homebuyers pay, local and national housing policy, or the increased costs associated with homeownership, everything feels more expensive. I like to look back every year and see what trends make up the past 12 months in our market, and attempt to predict what is likely to happen in the coming year. Since I deal primarily in the Twin Cities Metro as well as Western Wisconsin (PIerce, St. Croix and Polk Counties mainly) this installment will work to focus mainly on those areas and how they compare to national trends.

2025 Housing Trends in Minnesota and Wisconsin

Peripheral costs to ownership

One of the biggest issues facing both new homeowners as well as those who have owned homes for a while are those costs we pay as part of a mortgage payment that don’t actually include the mortgage itself. This is primarily in the form of two items; insurance and taxes. Across 2025, I asked this question to past clients and found that everyone who answered reported at least a 15% increase in homeowners’ insurance premiums. For some this was as much as 30%. For many homeowners, this increased cost also comes with extra attention in the form of insurance companies demanding that homeowners do certain repairs to maintain  coverage. According to state data the average home in Minnesota pays an average annual rate of right around $3000 per year. For the average home in Wisconsin, that is closer to $2100 annually.

The other area where homeowners are feeling the pinch – not a single county shared data with an increase of at least 5% and some municipalities are seeing property tax increases of 15% plus. In the Twin Cities Metro this likely means a property tax increase of approx $200 annually but not every household is the same and not everyone likes the look of those numbers. Early in 2025, we saw this play out more readily with buyers looking at median and below-median homes as they felt greater sensitivity to these costs and more that we will discuss further on.

Median Home Prices Rise Modestly

For the Twin Cities Region, the median home price rose 2.9% in 2025 compared to a year prior ($379,000 to $390,000 in 2025). Looking at Western Wisconsin [see page 7 of linked report] we see that the median priced home jumped 7.8% in value overall to $318,000. *A note – the Wisconsin data is through October of 2025 while other data is through the month of November. Nationally, the average increase on the median home is 1.7% up to $426,800. This number was held back some by flat or shrinking markets in the Western United States and the Southern US. As a whole, the Midwest shows that the median family home costs $331,100 on average and this price is up 4.2% We see from this that while our costs are higher than the rest of the midwest, our growth is slightly more modest in the past year.

Depending on where you look, you can find doom and gloom in the real estate sector or you can find people absolutely glowing about that. In general, the upper midwest has not seen price increases to the degree that other markets have nationally, and as a result we haven’t seen as dramatic of swings through any market in the past 5 years. There are winners and losers nationally, and this  is true even within our market as we will see in the next section.

Bifurcated Markets

One housing trend we saw in 2025 was a sharp line between buyer sentiment at lower price levels compared to buyer and sellers at higher prices. In June I noted that national stories talked about 40% of homes that were listed were being pulled off market. I looked at a snapshot of listings in our MLS (Northstar MLS)  for properties listed in May and June and found that approximately 15% of listings in that time were being pulled from the market. Of those, the vast majority were homes listed below the median price of $380,000. This points to those sellers (many of them having only owned since 2020 or later) having a thin margin of house profit they could work with – as a result if their home spent more time on market and needed a price reduction to be competitive, they likely weren’t able to make the numbers work. The buyers in the spring market (likely feeling the pinch of increased borrowing costs as well as insurance and taxes) adjusted their sights downward and away from the less expensive houses and either held off purchasing, or moved to other markets like those further out (exurban and even areas of Western WI).

At the same time, sellers with homes well above median price (generally $600,000 to $1M) were getting their asking price and buyers were finding multiple offer situations and cash-flush buyers to compete against in the higher price points. Shorter days on market and strong terms dominated the higher-end of the market for much of 2025. When rates were reduced in September, October and November, this spurred on buyers in multiple price points and appears to have diminished some of the effects of seasonality in the market. The main takeaway that I would share of this is, well kept and properly priced homes still sold well this year; I had a client list a well-maintained home in December and they ended up accepting an offer after high traffic and receiving multiple offers.

Condo and Townhome Sales

Another notable weak spot in our market is townhomes and condos. In my observation, much of this has to do with insurance and increased focus by lenders on the financial health of homeowner’s associations. For too long condos and townhomes have been plagued by deferred maintenance issues. Often this comes in the form of association boards that have resisted capital investments by their desire to not increase costs at all. The result is that many (Though certainly not all) associations have low cash reserves and that have failed to anticipate needed repair work to aging buildings. As a result, buyers have grown cautious about getting involved in underfunded associations and, in some cases, lenders have deemed an association to great of a risk to lend money on.

As a result, condo and townhome sales are making up a smaller portion of closed sales that last four years, and the median price for those type of homes is down 1% year-over-year for the Twin Cities Market. At time of publishing, a breakdown of Wisconsin townhome and condo sales was not readily available.

New Construction

Many communities on the edge of the metro (as well as in Western Wisconsin) are experiencing growth. As an example, Dakota County, MN  is estimated to be around 480,000 people in 2025. This represents an increase over the previous 5 years of approximately 100,000 people. Many communities are seeing an increase in building of new homes as a result. During the COVID years (2020-2022) we saw a lot of interest in new construction builds, and since housing takes a while to build these communities are still chugging along building units. This presented problems in 2025 for builders who had houses in progress but buyers less enthused about the market. in 2025, sales of new construction homes saw a decline of 7.2% in total sales compared to the previous years. The price of these homes increased 3.9% (much like previously-owned home sales) but builders often traded margin to get these sales. Some common terms I saw in the market were interest rates by lenders that were subsidized to be below 6%, or the inclusion of finished lower level spaces in the price (typically an add-on for new-home buyers).

Interest Rates

As alluded to above, interest rates played a big part in terms of buyer’s perceptions of affordability in 2025. Many have been hoping for a return to 3% mortgages as seen in previous years though this doesn’t seem likely to happen again any time soon. Buyers balked at rates around 7% that were plenty common later 2024 and into 2025, though these moderated slightly into the second half of 2025. The fed rate cuts in the fall (25 basis points each or .25%) across September – November eased the rates to the point that most lenders are reporting mortgage rates just below 6% at time of writing. This did spur some activity later in the year, though not dramatically so. Economists generally seem to favor little change in the 2026 rates so I would expect to see things stabilize further in 2026.

Memory plays a big part with regards to rates. My parents’ generation often points to extremely high mortgage rates in the high teens (13-18 %) during the early 80s, and anyone buying since the 2008 recession has only recently seen rates as high as 7%. Still, however, people need housing and often figure that the stability of ownership costs compared to rent increases often makes sense. My experiences with clients show me that while they don’t love the idea of these new rates, the market is adjusting and those who are in a financial position to buy aren’t stopped for too long.

The Statistics

This past year, my buyer clients looked at an average of 11 homes each before writing an offer. This does not include independent open houses, which many seem to check out early on in the process. The average buyer client in 2025 also wrote 2 offers before getting an accepted offer. This is down from previous years – generally my numbers have shown buyers looking at 15-17 houses on average. For homes I listed in 2025, the average days on market was 25. Here are some other statistics from our market:

• The peak buyer activity occurred in April and May with the biggest month of sales being in June (this reflects a typical 30 day closing period)
• Average showings before accepting an offer peaked at 16.
• The fastest market occurred during June with houses on market lasting an average of 39 days. Conversely, the slowest month was February 2025 when homes lasted an average of 69 days on market.
• Depending on when a house is sold, homeowners can generally anticipate accepting an offer of approx 97.4% to 100% of their asking price. Offers over-asking price are less common in 2025 than past years.
• The months supply of homes has gone up some in recent years – at its peak, there was 2.8 months of homes for sale (based on typical sales volume). While still historically low, this has been slowly improving since 2022.

My takeaways from the above are that we are seeing more parity between buyers and sellers in the current market. Homes CAN sell in multiples, but are doing so less often. Buyers are asking for (and getting) buyer inspection clauses as part of their offers). The importance of proper pricing is returning to the market and those who fail to take market conditions into account are paying the price in the form of longer days on market. Buyers are more educated – they have a very specific window of affordability and they aren’t willing to deviate from that due to their comfort level at a certain budget. As a result, they look at less homes and focus solely on those ones that are contenders.