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Today, we'll discuss the current state of the Twin Cities real estate market. It is important to have historical context when talking about current real estate trends so that you can understand exactly what is happening in the market.
For instance, we consider it to be a balanced market when we have somewhere between 21,000 and 23,000 listings on the market. Right now, we have 17,000 listings. We all remember the market crash. At the peak of the market, we had 35,000 listings. As you can see, we are significantly down from the peak, and we're below the balanced market rate. Right now, with our low inventory, sellers do have the upper hand.
Now, let's look at pricing. January 2012 was the bottom of the market with a median sales price of $140,000....
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As we emerge from the seemingly never ending polar vortex, the real estate market is beginning to show signs of life. The most recent market stats continue to favor home sellers with lower inventory and higher median sale prices. Here is a breakdown of the year over year stats for a few key categories:
- New Listings: DOWN 16.9% over last year.
- Homes for Sale (inventory): DOWN 9.1% over last year.
- Median Sale Price: UP 12.4% over last year.
To give a little more context to this information, there are just under 12,000 homes for sale in the Twin Cities right now and last year at this time there were just over 13,000 home listings and those following the real estate industry were noting at that time that the overall listing inventory was exceptionally low...and now it is even lower. The lack of available homes is causing median and average sale prices to increase. If you would like more information about the market stats in your area, please visit our Twin Cities Market Statistics page for additional information that is updated daily.
If you’ve been paying attention to the news coming out of Washington lately, you may have heard that Congress plans to shut down Fannie Mae and Freddie Mac. The plans would phase out the government-controlled mortgage guarantee giants over the course of five years.
The push to dismantle Fannie and Freddie is a result of the housing crisis the country has experienced. Freddie and Fannie teetered under a crush of massive losses on risky mortgages before being bailed out to the tune of $187 billion, about 2/3 of which has already been paid back to the government.
The House Republican bill would practically entirely privatize the mortgage market, andd limit the Federal Housing Administration to insuring loans only for first time home buyers and lower-income borrowers. The Senate's bipartisan plan includes a new agency that has a continued, but more limited, government role in insuring a wider range of mortgage securities. The idea behind both of these plans is to shift more mortgage financing risk from to the private sector to prevent taxpayers paying for future bailouts.
But there's a price homebuyers would likely pay for having private investors shoulder more risk to protect taxpayers.
"It will mean higher mortgage rates," said Mark Zandi, chief economist at Moody's Analytics. "The question is how much higher."
Typical borrowers could pay about $75 per month in extra interest payments, about half a percentage point, on an average mortgage under the Senate proposal, Zandi estimated, and about $135 more under the House plan. That's on a conforming...
As consumer confidence and incomes rise, home building activity in the Twin Cities metro area continues to rebound. According to the Builders Association of the Twin Cities (BATC), housing construction so far this year is up 23 percent from the same period in 2012, putting builders on a track for their best year since 2007.
During June alone, 496 permits were issued to build 912 units. Minneapolis led the top five cities permitting 380 units. Brooklyn Park and Woodbury were in the second position with 31 units, followed by Ramsey with 29. Construction of new homes in Blaine MN, Chanhassen MN and Lakeville MN tied for fifth place with 23 units permitted each.
So far this year, builders were issued 2,379 permits to build 4,204 units, a dramatic change from this time four years ago when there were only 1,633 units.
In the south metro, Lakeville continues as the busiest homebuilding market in Dakota County and one of the metro area’s most active. The city has recorded 172 permits since the beginning of the year through the end of June, up from 107 for the same period a year ago.
In the north metro, Blaine is closing in on Coon Rapids for the title of largest city in Anoka County. It was the ...
The Twin Cities real estate market is heating up and sellers are winning the season so far. Inventory is getting a bit tight, resulting in higher sale prices and even multiple bids.
The jackpot is a little unecpted and too soon for some home sellers, though. There are stories of home sellers putting houses on the market and having offers withint days. When they accept so soon, a whole new flood of concerns is coming forward: What to do between houses - after one has sold, but before the new home has been bought?
This concern may be causing some sellers to hold back. Home sellers don't just want to unload a house and be homeless for a while, they want to have a prospective house that they want to buy in mind before putting their house on the market.
But that's not the only option. Our own Matt Barker was interviewed by the Pioneer Press on this very subject:
"Unless they're willing to take the risk of owning two properties at once, we're preparing the majority of sellers for
short-term rentals," and encouraging them to be patient for the right
house to come along, [Re/Max Results Realtor Matt] Barker said.
Once sellers are ready with their game plan, whether they have a new home in mind or are going to rent, and they are finally prepared to put their home on the market, there are some things they can do to encourage ...
Local and national housing statistics indicate that the real estate markets in the Twin Cities and surrounding areas are still struggling. Here are brief summaries of three recently released Twin Cities real estate reports:
- The Case-Shiller Home Price Index, which follows repeat sales of properties, indicated that during September, prices in the Minneapolis - St. Paul metro area were down 7.4% compared with 2010 and down just 0.9% from August.
- A report from the Builders Association of the Twin Cities showed that Twin Cities home builders requested about the same number of permits in November of this year as they did in 2010. However, the number of units they planned to build decreased from 685 to 442. Construction activity for the year overall is down compared with last year, but improved form 2009.
- A third quarter report from Corelogic said that 17.5% of all residential properties in the Twin Cities metro with a mortgage were worth less than the amount owed on the mortgage, compared with 17.4% during the second quarter. That percentage is better than the national figure of of 22.5% of homes. It could be a lot worse. In Nevada, 58% of all mortgaged properties were upside-down.
- Finally, decreasing home prices have attracted some buyers into the Twin Cities real estate market, but kept sellers out. According to October sales figures from the ...
Pending home sales initiated in June within the Twin Cities area were among the highest in nearly five years. Buyers may be taking advantage of low prices and near-record low mortgage interest rates before they start to climb.
The Minneapolis Area Association of Realtors reports that though there are some good signs occurring in the local Twin Cities residential real estate market, there's still a ways to go. Though pending sales rose in June, closed sales fell 11.4% compared with a year ago. The median sale prices fell 9.3% from a year ago to $165,000. That is still better than March's low of $140,000.
It's unclear whether the latest uptick in buying activity is a blip or a sign of a sustained recovery, given an economy still struggling to gain traction and the extent of the foreclosure crisis still unknown. Stable employment, strong rent prices and relatively low foreclosure rates suggest that the market has seen the worst, said Herb Tousley, director of the Shenehon Center for Real Estate at the University of Minnesota.
"I believe there is reason for optimism," he said.
The biggest barrier to a recovery is foreclosures. At its worst, nearly 60% of all residential real estate sales in the Twin Cities metro were distressed sales, but it has fallen to 38% last month - the lowest level since June 2010! Additionally, fewer foreclosures are entering the market, with the 29% of new listings in the Twin Cities during June that were either foreclosures or short sales being one of the lowest monthly totals in three years.
Still, the foreclosure problem isn't going to go away soon, giving buyers some time to get their down payments together before Twin Cities real estate prices begin a faster climb.
The homeownership rate within the United States declined to the lowest rate in 13 years during the fourth quarter of 2010, according to data released by the U.S. Census Bureau. At 66.5%, the home ownership rate was 0.4% below the third quarter and down 0.7% compared to the previous year.
Across all measurements, statistics for homeownership rates are down. The largest decline happened in the West, where the number of owners fell 1.3% from the previous year. The homeowner housing vacancy rate rose to 2.7% as foreclosures continue to afflict real estate markets, up from 2.5% the third quarter. The South and Midwest tied with 2.8% of homeowner housing stock left vacant. Statistics for the South represented a 1.0% decline from the year before, while the Midwest’s number was unchanged. The West and Northeast showed vacancy rates of 2.7% and 2.0% respectively.
As homeownership rates sank, rental activity has gone up. Rental vacancies reached the lowest reading since the beginning of 2003, at 9.4% in the fourth quarter, down 1.3% on from a year ago. The South has the largest percentage of rental vacancies at 11.5%, but also saw the biggest year-over-year drop with 2.2%. The West and Midwest also saw modest declines in rental vacancies, while the Northeast saw a small increase of 0.3% from the year before.
The mistakes made by financial institutions, the high unemployment rate and a glut of foreclosures are the three main culprits behind home ownership rate reductions and increases in rental activity.
Source: Homeownership Reaches 13-year Low as Vacancies Rise
Forbes has recently compiled a list of America's 10 Most Affordable Cities. Ranked at No. 7 overall was the Minneapolis - Saint Paul Twin Cities Metro Area.
Forbes started its list with the 50 largest U.S. Metropolitan Statistical Areas. Then they went to work finding a mix of data that included current median asking price of homes on the market, median salaries of workers with bachelor's degrees or higher, cost of living and unemployment statistics. The result is a list of the top 15 urban affordability hot spots.
Minneapolis ranked 28 for asking price, 17 for salar, 19 for cost-of-living, and 5 for unemployment. Here's what Forbes had to say about Minneapolis:
At $249,000, the current median asking price for homes in Minneapolis-St. Paul remains higher than those of its neighbors on our list. The Twin Cities make up for it in quality of life, touting low unemployment rates and a healthy cost of living vs. salary.
"Minneapolis-St. Paul has very strong institutions of medical research and higher education, a highly educated population and a desirable amenity base," says Stuart Gabriel, director of the Ziman Center for real estate at the University of California Los Angeles.
"Minneapolis has weathered the downturn better than most places and its prospects continue to look relatively bright," says Gabriel, who has researched the quality of life as it relates to real estate economics.
The cities that beat Minneapolis were:
- Omaha, Nebraska
- Buffalo, New York
- Detroit, Michigan
- Indianapolis, Indiana
- Cincinnati, Ohio
- Pittsburgh, Pennsylvania
Overall, the Midwest dominated Forbes' bargain city list.