Housing Softening: MPLS Leads the Way in Price Cuts. (Minneapolis: sales, real estate)

[MN-Born-n-Raised]

After the housing tax credit expired, home sales have dropped 30% nationally in June.

According to Time, a byproduct was that Minneapolis registered a 40% listing price reduction. That's the highest percentage out of all the major areas. See U.S. Housing Market Sees Price Cuts, Rising Inventory - TIME


MPLS housing inventory has increased as consumer confidence has dropped. On average, the list prices across the country dropped by 10%.

[moving123456]

Good news for people like me that have been waiting for the market to correct itself further.

I have lost count of how many people told me that it was dumb to wait any longer and that prices were not getting any lower over the last couple years. Most of the people sharing that wisdom already bought during the bubble peak and are far upside down on their mortgages.

[west336]

It's never a dumb time not to purchase a house if you can't afford to purchase one. I still think prices will be relatively flat (+/- 5%) over the next 5 years and, investment-wise, you could probably find a better place to put your money. However, actually having principal in an asset the size of a home is something I'd love to start working towards, even if prices are somewhat stable.

[Cruz Azul Guy]

Does the softening of the market after the tax refund ended really surprise anyone? Real estate experts were talking about that happening way back when the plan was extended. For anyone who is planning on living in the same place for the next 5+ years this is still an attractive time to buy, and not just for the rock bottom prices. Interest rates right now are insanely low.

In hindsight it probably wouldn't have been a bad idea for me to wait on buying a home (I bought in May of 2008). However, paying into equity is still way better than flushing money on rent so I still feel good about my decision. I feel way more liberated as a homeowner too, which is a huge improvement over the feeling that my landlord is screwing me over every other day.

[west336]

One difference with paying rent is that, SF for SF, you pay less in rent because the LL retains the principal and doesn't get reflected in the price of the lease. However, profit margins are made in the gap between flat rent and rent + principal, so in the LR you lose with an apartment, but only if you can otherwise afford to purchase a home, which is more difficult on the coasts. With the impending changes that are going to be made to future home loans, I am starting to reconsider purchasing a home until I have something closer to 20% down.

What's ridiculous about the tax refund "bubble" is that even though everyone knew about the relapse, prices weren't adjusted for it when it happened. I don't get that.

[MN-Born-n-Raised]

Originally Posted by moving123456

Good news for people like me that have been waiting for the market to correct itself further.

I have lost count of how many people told me that it was dumb to wait any longer and that prices were not getting any lower over the last couple years. Most of the people sharing that wisdom already bought during the bubble peak and are far upside down on their mortgages.

I thought for sure prices had more to go in April of 09 (the perceived bottom). But there was a lot of pending demand that was built up so in March of 2010, I was starting to think it might have bottomed out last year (houses were sellnig well and prices were rising). Now the way it looks, it might go down some more. At the same token, we MAY dodge this 2nd ressession that people are talking about. The next three months will be interesting. If we re-slide into a double dip, I'll bet the values will fall some more. But it might go back to April 2009 pricing or possibly less. No one knows...

But each area of the market is different. Lake Minnetonka homes will be different than Stillwater which will be different than Champlin. I will say vacation properties are not selling unless they are the best lots or super cheap (foreclosures). I don't care if we are talking about Brainard or Ely. I talked with the assessor who covers the White Fish chain and he said that only 10 out of over 130 homes sold (I'm going from memory). Reality has not set in for a lot of listings up there. In 2010, there are a lot less people with that kind of money. I predict when all is said and done the lake properties to take the biggest bath in MN. >35%???

[Cruz Azul Guy]

Originally Posted by west336

I am starting to reconsider purchasing a home until I have something closer to 20% down.

Agreed, don't buy without putting 20% down...not worth it.

[west336]

There are also a lot of pending/impending foreclosures on the horizon, esp. as unemployment continues to lag. Not to mention a pending/impending commercial foreclosure crisis. So if you're truly searching for the bottom, IMO wait 6 months to a year.

[ET_MTB]

Originally Posted by west336

It's never a dumb time not to purchase a house if you can't afford to purchase one. I still think prices will be relatively flat (+/- 5%) over the next 5 years and, investment-wise, you could probably find a better place to put your money. However, actually having principal in an asset the size of a home is something I'd love to start working towards, even if prices are somewhat stable.

I guess buying at peak prices was a good time to buy.

Locking up your money in a falling asset it the worst thing you can do from the perspective of investing. Buy a home as a place to live if you can handle losing money and you have job security where you live for the next 10 years.

Housing Crash Continues

[IAmNotFat]

I think we're in for a double dip reccession with house prices falling just as much as they did the first time around. Real Estate prices are still way too inflated and the market will evenetually correct them no matter what the government tries to do to prop them up.