Housing values in Brown County are up

But county still lags far behind state average

By KREMENA TODOROVA

Journal Staff Writer

NEW ULM -- Housing sales prices in Brown County picked up in the late 1990s but still lag far behind the state average, according to a new working paper by Minnesota Planning, the state agency monitoring population and economic trends.

Prices in this county rose 21.7 percent between 1996 and 1999, compared to a state average of 28.6 percent.

This was far higher than the inflation rate for the period, 6.6 percent.

Over the longer term (between 1985 and 1999) housing sales prices in Brown County rose 46.8 percent, compared to a state average of 75.8 percent.

The numbers are based on existing, rather than more expensive new housing, the report notes.

The median sales price of a home in Brown County in 1999, at $73,000, remained far lower than the median price for the state, $112,500.

A median price means that half of the houses sold above and half sold below it, and is often considered a better indicator of housing values than the average price.

While growing "dramatically" in the late 1990s throughout the state, housing prices continued to differ dramatically among regions and communities, notes the report's author, Martha McMurry.

The highest values are generally in the Minneapolis-St. Paul area and in southeastern Minnesota and the lowest in the rural western parts of the state.

For example, suburban Carver County had the highest median sales price, $158,000; the lowest median price, $31,000 was found in Kittson County in the northwest. In all, 15 counties in the southwest, west and northwest posted median prices under $40,000.

Amenity counties in the northern and north central parts of the state have experienced the most dramatic growth since the 1980s, the report also says. For example, the median price soared 169 percent in Cook County, to $105,000 between 1985 and 1999. It was probably driven by demand for retirement homes in areas with lakes, forests and other scenic attractions.

Second-ring suburban counties also experienced gains substantially above the state average, as continued metro expansion increased demand beyond the seven core metro counties.

The lowest long-term gains in median sales price occurred in western Minnesota and along the Iowa border.

From 1985 to 1999 the median sales price actually declined 7.7 percent in Yellow Medicine County, and rose only 10.4 percent and 13.4 percent, respectively, in Lac qui Parle County and Murray County.

The low gains in these regions represent a substantial decline in housing values in inflation-adjusted dollars, says the report. These counties have experienced little or no population growth, so few people are buying homes. In addition, housing values are depressed because many of the structures are older and smaller.

But in most recent years, from 1996 to 1999, the pattern of change was "erratic," says the report. Rural western counties were among those posting both the greatest and the smallest percent gains in median sales price.

Kittson County saw a 72 percent gain, Lincoln County 66 percent and Faribault County 50 percent from 1996 to 1999.

At the other extreme, median prices fell 13 percent and 10.2 percent, respectively, in Yellow Medicine and Mahnomen counties, and grew only 4 percent in Marshall County.

These mixed results may stem from the relatively low initial sales prices, says McMurry. With a low starting value, a relatively small dollar change can result in a large percentage change.

Housing prices appear to have converged "a bit" in the late 1990s, says McMurry. Median prices in lower value cities and counties have tended to grow a bit more than prices in higher-value cities and counties. A strong economy and low mortgage interest rates may have improved the lower-end market.