A few articles have popped up recently that are all interrelated and I thought that I would make a post that brings them all together. I also wanted to bring them to your attention if you are someone considering buying or selling a home
this year, especially now as the busy real estate season starts winding up.
It’s easy to go in chronological order to start, so the first article I’ll discuss is this one from early March that says that foreclosures drove U.S. home sales up 7% in 2008 after a 40% plunge the prior year. Deeply discounted real estate prices and the super-low interest rates being offered seems to have spurred some serious activity in this sector of the market. Nationwide, foreclosed houses sold at auctions or by financial institutions surged 177% for the year, and represented as much as a third of all activity in 2008.
– St. Paul
metro area hasn’t escaped this trend, for in the month of February, lender-mediated transactions in the Twin Cities represented more than 60% of all pending sales. The median purchase price of a “distressed” home in the Twin Cities was $125,000, while in traditional home sales, the price was $205,875. The low prices that distressed properties sell for is drawing down the price of traditional homes as sellers attempt to compete with banks. Nationwide (and statewide) foreclosure moratoriums are being proposed, but as far as I know, none have been enacted or followed-through with yet. There are some banks and lenders that are enacting their own moratoriums though. Some of them have caught on that lenders don’t make good Realtors! That’s what I’m for! :)
In some better news, existing home sales rose nationwide in February as home buyers take advantage of lowering sale prices and interest rates. According to Freddie Mac’s most recent weekly survey, record-low interest rates currently stand at 4.98% for a 30-year fixed rate conforming loan. Additionally, first time home buyers are being lured into the action by the $8,000 first-time buyer tax credit that was put into place part-way through February.
Finally, new homes sales unexpectedly rose 4.7% in February, but as buyers make their way through a huge backlog of unsold homes, prices are continuing to fall. It’s still down from last year and the year before, but analysts had expected new home sales to continue to fall. It could have something to do with the adjustments that some home builders have been making to their marketing practices. Besides deeply discounting their existing homes, some custom builders are finding niches to appeal to, like constructing green homes, emphasizing smaller floor-plans, or even branching out into other areas of the home sale business. One Twin Cities home builder has even become what's known as a "woman-centric" builder, aiming its home design and marketing at women.
If anything, this little round-up should show you just how different the current real estate market can appear, depending on which angle you’re looking at it. Though the market is typically down right now, there are different things that may or may not affect your home’s sale. And if you’re a buyer, with the low interest rates and tax incentives, now is the time to start looking for a house. In February, the median sales prices of homes in Minneapolis and St. Paul were an affordable $112,500 and $93,000 respectively. If you’ve been holding off on buying a home, it’s time to reconsider and take a look at what is out there.