Just a few years ago the choices for entry-level home buyers in the Twin Cities were so meager that many put off buying a house
until they could afford it. With the turn of the market in the last two years, the home-buying dreams of renters are more likely to come true. According to the Minneapolis Area Association of Realtors, this month more than 2,600 houses were on the market at less than $120,000 -- a 608 percent increase over the same period in 2005. The inventory for all price ranges increased 62 percent over 2005.
The return of the starter house is the upside of the down housing market. And home buyers
are taking notice. The only segment of the market which has shown any sign of growth are home sales in the sub-$120,000 price range. Though sales across the board fell 34 percent, sales of homes below $120,000 rose 79 percent during the past three years. Many of the bargains are foreclosures and condominium conversions in inner-cities, but there are also hundreds of single-family houses and townhouses in outlying suburbs within this price range.
Though prices had already begun declining in 2006, the subprime mortgage crisis, the tightening of credit markets, and record foreclosures and defaults has increased low-priced home listings. Still, the mortgage interest rate shocks aren't over. The biggest wave of adjustable-rate mortgage hikes will strike yet later this year, bringing with it the threat of more foreclosures.
Bargain seekers should be prepared to roll up their sleeves and do some work, however. The former occupants of homes bought in a short sale or foreclosure most likely didn’t take great pains at clearing out the home or cleaning it. If the home has been empty for several months, it may have been robbed of copper plumbing or wiring. Houses which have been standing empty for a long period of time most likely have water damage as well due to leaky roofs, windows, and seals.
There are bargains to be had though, as because of the flooded market, some very beautiful and decent housing is priced low as well. Some well maintained and well cared for homes are out there in the sub-$120,000 range just waiting to be found. Check out this listing in Camden, this home in Northeast, this house in Powderhorn, or this home in Longfellow. Looking for a home in St. Paul? How about this home in Dayton’s Bluff, this one in Hamline Midway, this gem in Payne-Phalen, or a home in the North End.