Twin Cities Homeowners Pay More in Escrow, but Rising Housing Costs Keep Shares Steady

In the Minneapolis–St. Paul housing market, rising homeownership costs are telling a more layered story than headline price increases alone. While escrow payments have climbed over the past five years, their share of the typical monthly housing bill has remained relatively stable — even as homeowners pay significantly more in total dollars each month.Escrow accounts, which typically cover property taxes and homeowners insurance, are a required part of most mortgage agreements. Lenders collect these funds monthly and hold them in escrow to ensure taxes and insurance premiums are paid on time. In many metro areas nationwide, escrow costs have risen sharply due to increasing property assessments and higher insurance premiums. However, in certain markets, including the Twin Cities, these increases have not translated into escrow taking up a larger portion of the total housing payment. “Escrow went up, but it didn’t grow faster than everything else,” explains economist Nadia Evangelou. “When mortgage payments for recent buyers are rising at the same time due to higher borrowing costs, escrow can stay about the same share of the total monthly bill — even though homeowners are paying more in actual dollars.” Minneapolis–St. Paul offers a clear example of this dynamic. With a current median listing price of $404,950, the metro has experienced steady home price appreciation alongside elevated mortgage rates in recent years. Over the past five years, monthly escrow payments increased by roughly $120. Despite that jump, escrow’s share of the typical monthly housing payment has remained relatively consistent, hovering between 22% and 23%.That percentage stability can be somewhat misleading at first glance. While escrow is not taking up a larger slice of the pie, the pie itself has grown considerably. Buyers today often face higher principal and interest payments because of both rising home prices and mortgage rates that climbed sharply from historic lows. As a result, even though escrow costs are higher, they are rising in tandem with overall housing expenses rather than outpacing them.Property taxes in Minnesota are closely tied to home values, and as values increase, so do tax assessments in many communities. The Twin Cities’ strong housing demand and limited inventory in recent years have pushed prices upward, which can translate into larger annual tax bills. At the same time, homeowners insurance premiums have increased due to inflation, higher construction costs, and broader risk factors affecting insurers nationwide.For homeowners, this means budgeting for gradual increases in escrow payments over time. For prospective buyers, especially those relocating to Minnesota, understanding the structure of monthly housing costs is critical. While the median listing price in the Twin Cities remains competitive compared to many coastal markets, buyers should factor in not only mortgage principal and interest but also taxes and insurance when calculating affordability.The relative stability of escrow’s share of total housing costs suggests that Minneapolis–St. Paul’s market is experiencing broad-based cost increases rather than disproportionate spikes in any single category. In contrast to some regions where property taxes or insurance have surged dramatically faster than home prices, the Twin Cities appear to reflect a more balanced pattern of growth. For families considering a move to Minnesota, this consistency can provide some predictability. Although overall housing expenses have risen, the proportional breakdown between mortgage payments and escrow has remained steady. That can make long-term financial planning more manageable, even in a higher-rate environment. As the housing market continues to adjust to changing economic conditions, the Minneapolis–St. Paul area remains a resilient and attractive option. Strong employment opportunities, stable property values, and a high quality of life continue to drive demand. While homeowners are undeniably paying more than they were five years ago, the steady share of escrow within the monthly payment underscores a market where rising costs are occurring in parallel — not in isolation.