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Zip Code 56587: Rising Home Values and High Ownership Rates in Rural Minnesota
CATEGORY
Property Value
DATA
Percent Owner Occupied
Housing Prices
Median Rent
Population
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Property Value
Percent Owner Occupied
Housing Prices
Median Rent
Population
Zip code 56587, located in Vergas, Minnesota, is a rural area covering 67.31 square miles. This region has maintained a consistently high rate of homeownership over the past decade, with average home prices showing a steady increase. The rental market, though small, has also experienced fluctuations in average rent prices.
The homeownership rate in zip code 56587 has remained remarkably stable, hovering around 93% from 2013 to 2019, before slightly decreasing to 92% in 2020 and maintaining that level through 2022. This high rate of homeownership coincides with a significant increase in average home prices. In 2012, the average home price was $197,190, and it rose consistently year over year, reaching $377,456 by 2022. This represents a substantial 91.4% increase over a decade, indicating a strong and growing housing market in the area.
Federal interest rates have played a role in the homeownership trends in this zip code. From 2012 to 2015, when interest rates were at historic lows (ranging from 0.09% to 0.14%), the homeownership rate remained stable at 93%. This period of low interest rates likely contributed to the steady increase in average home prices, as financing became more affordable for potential buyers. As interest rates began to rise from 2016 onwards, reaching 1.68% in 2022, the homeownership rate experienced a slight decline to 92%, suggesting a potential correlation between rising interest rates and a minor shift in homeownership patterns.
The rental market in zip code 56587, while small, has shown interesting trends. The percentage of renters remained constant at 7% from 2013 to 2019, before increasing slightly to 8% in 2020 and maintaining that level through 2022. Average rent prices have fluctuated over the years, with notable increases and decreases. In 2013, the average rent was $807, which rose to $952 in 2014. After some fluctuations, it reached $989 in 2019, the highest point in the available data. Since then, average rent has slightly decreased, settling at $948 in 2022. These changes in rent prices don't appear to have a strong correlation with the minimal changes in the renter population percentage.
Looking at the most recent data, the average home price in zip code 56587 continued its upward trajectory, reaching $392,677 in 2023 and further increasing to $402,808 in 2024. This represents a 6.7% increase from 2022 to 2024. Concurrently, federal interest rates have risen significantly, reaching 5.02% in 2023 and 5.33% in 2024. These higher interest rates may impact future homeownership rates and housing market dynamics in the area.
Applying predictive models to forecast 5-year trends, we can anticipate continued growth in average home prices, albeit potentially at a slower rate due to the higher interest rates. Average home prices could potentially reach around $450,000 to $475,000 by 2029. For rent prices, the trend suggests a moderate increase, potentially reaching an average of $1,050 to $1,100 per month by 2029, assuming stable economic conditions and consistent population trends.
In summary, zip code 56587 demonstrates a robust housing market with consistently high homeownership rates and steadily increasing average home prices. The rental market, though small, has shown resilience with slight growth in recent years. The interplay between federal interest rates, homeownership rates, and housing prices will likely continue to shape the local real estate landscape in the coming years.
