Move over, Twin Cities, small towns were Minnesota’s 2025 hottest housing markets

February 21, 2026 - 02:18

Forget the urban rush; Minnesota's 2025 housing momentum has firmly shifted to its smaller communities. Outstate areas dominated the latest annual Hot Housing Index, with lake-home seekers, remote workers, and value-driven buyers fueling the surge.

The index, which analyzes key metrics like home sales, price appreciation, and market speed, revealed a clear trend: buyers are increasingly prioritizing space, affordability, and lifestyle over proximity to major metropolitan job centers. This demand has created intensely competitive markets in numerous picturesque towns and rural counties, particularly those offering recreational amenities.

Real estate professionals report inventory moving at a breathtaking pace in these hotspots, often with multiple offers above asking price. The data suggests a permanent recalibration for many, as flexible work arrangements allow households to plant roots far from traditional economic hubs. This migration is driving significant price growth in communities that once saw modest annual appreciation, fundamentally altering their economic and demographic landscapes.

While the Twin Cities market remains stable, the explosive growth elsewhere highlights a profound change in what Minnesotans seek in a home. The dream now frequently includes a quieter main street, room to breathe, and access to the state's natural beauty, making small towns the undeniable stars of the current housing scene.