Rochester, Minn.: Mayo Clinic keeps housing market healthy

— -- In recent years, Rochester, Minn., has been sheltered from the housing crisis.

Many other housing markets experienced a dramatic boom and bust, but Rochester has remained relatively stable because its largest employer is the Mayo Clinic. The teaching hospital has a revolving door of residents and fellows, who tend to be home buyers.

"Typically they come in knowing full well that they only are going to live here for three or four or five years," says Robin Gwaltney, a real estate agent. "But they buy a home instead of renting property, and they sell it when they are leaving."

That doesn't mean that Rochester's housing market has not been affected by the economic downturn at all, though. For example, another large employer is IBM, which had job cuts last year.

In the Rochester area, home prices were down 11% in February, compared with the same month in 2008. Meanwhile, home sales were up 6.4%.

Last month, home sales and home prices fell a bit, says Chad Carpenter, president of the Southeast Minnesota Association of Realtors. The move-up home market has been the most affected by economic worries.

"I think a lot of people have put the brakes on selling their starter home and are not moving up to a bigger, more expensive home," Gwaltney says. "They may decide that this home will last them for a while longer."

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Home foreclosure has not dragged down the housing market. "Compared to North Minneapolis, it's a drop in the bucket," says Chris Flood, program director of the Rochester Area Foundation, who tracks foreclosures.

Subprime loans have not been a major driver of foreclosures. "Foreclosure seems to have been (caused by) the same issues as they have been in the past," Flood says. "They have always been caused by divorce, injuries and major financial events."

No one can predict the future, but for now Rochester's housing market is holding steady, relative to other parts of the country.

"We are pretty insulated," Carpenter says. "We have a low unemployment rate, and our population base is still growing. We have a small-town feel, and I think that's the biggest draw."