The water heater downstairs
In this region the water heater lives downstairs, sharing a wall or a utility closet with the finished space around it. When a tank finally rusts through (and every tank eventually does), the water does not go to a garage floor the way it would in a warmer state. It goes to the carpet.
How tanks actually fail
The dramatic burst is rare. The usual failure is a slow one: the tank corrodes through at the bottom seam and releases water steadily, often overnight, at a rate that a nearby floor drain can hide for hours. Whether the puddle stays a utility-room event or becomes a family-room event depends on geometry: how far the finished flooring runs, whether the drain is clear, and whether anything on the floor wicks the water sideways faster than the drain takes it down.
The laundry sits in the same corner and fails the opposite way: supply hoses let go suddenly, under pressure, usually while nobody is home. Two different failures, one shared destination.
The cold-climate wrinkle
Minnesota tanks work harder than most. The incoming water runs near freezing for a third of the year, which means bigger temperature swings, more expansion cycling, and a shorter honest service life than the same tank would give in a mild state. The age question is worth asking a year earlier here. And the drain pan under a basement tank is only as useful as the drain it feeds: a pan that empties onto the slab is a shallow dish in front of a wave.