Twin Cities Housing Market Stabilizing?
Seller activity is slowing down, home builders are waiting for clients before building, and home buyers seem to be waking up a little. The fact that home seller activity is slowing down is a sign of stability in the overstocked Twin Cities area. The number of new listings in April was down 11.5 percent from a year ago, and down 9.5 percent for the first four months, according to a press release from the Minneapolis Area Association of Realtors. It's not quite the recovery sellers have been seeking but it's a sign that the number of homes on the market may be hitting a plateau.
Much of the decline can be attributed to the sharp fall off in the number of new houses, town houses, and condominiums being built in the Minneapolis metro-area. Builders have been exercising extreme caution as they watch they local housing market. The Builders Association of the Twin Cities Keystone Report shows that the number of new units planned so far this year is down 61.7 percent from the same period of 2007. Though April has been historically a time when new home construction picks up, this year home builders were issued only 180 permits to build 293 units. Last year in April, there were 486 permits issued to build 895 units. In 2006, there were 671 permits and 1,177 new units. As you can see, construction has dropped off quite significantly. Many builders are waiting until they have buyers lined up before breaking ground as they wait for the market to become less saturated.
The market’s recovery depends partly on mortgage interest rates, which have decreased lately to just under 6 percent for a 30-year fixed-rate mortgage. It also depends partly on access to credit. Though qualifying for a mortgage in the wake of the subprime mortgage meltdown has become more difficult, it is still possible.
Between home values coming down, a new Minneapolis loan program which basically offers free money towards homes in some neighborhoods, and the FHA’s doubling of the limit for loans it backs, there are lots of factors going for many people seeking to buy their first, or next, home.