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It depends if you are a cash buyer or planning on financing. Interest rates probably will go up in the Spring but the 1st time buyers program (which is inflating homes $5K+) and creating a sense of urgency will probably end. No one knows for sure but that is the general concensus. All things being equal, it's best to buy the home at a lower price and take a higher interest rate.
If I had to hedge my bet (I have studied the topic countless hours) I am predicting the Twin Cities metro area to will go down. I predicted the same thing last July but didn't feel like selling and then renting (I plan on moving out of my current home). That cost me $30K or so...My formally $550K home is only worth $330K if I "had" to sell it. But the good news is I could pick up a steal myself so it all averages out.
Moody's chief economist Mark Zandi said MPLS area should be down 10% plus in 2010. The higher the price point the tougher the sell. As in >$300K is much tougher while under $200K is selling pretty well. People are looking for value.
The market is very local in nature. There are several markets within an area such as the Twin Cities. As a whole, I predict it will be going down not up. But things can change quickly (although no one is predicting it). In July of 2008, gas was $3.85 a gallon and SUV's were impossible to sell. Now small cars are tough to sell and people are triving big SUV's again. No one predicted gas in July of 2008 to be at $2.50 ever (ever) again. Everyone is guessing to some degree. It's a lot more obvious for places like LA. That market is in trouble!
OUCH!! We were upset when our house went down $30,000 in value .
I would agree that assuming you're not planning on flipping anything, an investment in one of the SW Minneapolis neighborhoods right now is going to be a worthwhile investment. Those neighborhoods seem to have always (or at least within my memory) been fairly slow and steady investments; no massive explosions in value, but no significant losses, either.
I disagree- not that SW Mpls is a good investment, I think over the long term its n'hoods will continue to hold a lot of value. And although in more recent years the SW area may have been slower/steadier investments (although I'm not sure about this either), I would think that over the past couple of decades, it's had the most explosive growth of any area in Minneapolis (if not a broader range)- the biggest disparities found in Mpls between city and neighborhood averages can be found there. I know a lot of SW residents that purchased when home values were relatively affordable in the 80s (and possibly early 90s?), whom also report that SW n'hoods were very middle class if not moderate and/or a little shabby in a number of areas. Their homes are all now worth multiple hundreds of thousands of dollars more than what they paid (I've told a couple of friends they should "cash out" and buy a house w/same square footage in another area of town for hundreds of thousands of dollars less).
If someone were to ask me which area I thought had the most potential for losing value, I would say SW at this point in time solely because of that big disparity between average prices there and just about all other urban n'hoods in the metro. In the early 2000s, a strib writer compared my own n'hood (before my time here) to being like a linden hills of the north for families looking for a similar feel but more affordability (they also made a comparison between the quickly rising values here as well as LH at that time). Our area's values fell hard and are still pretty bottomed out albeit showing some signs of recovery now in the under $200K market (above that it seems to still be pretty dim). It's a much different scenario for us as our ZIP code has had many foreclosures, unlike any SW Mpls ZIP code, but there still might be a little bit of a cautionary tale somewhere in there. Just a random opinion/thought, I'm definitely not an expert and not even all that familiar with SW so am not in a position to be dispensing any advice (although for the person who said they were surprised at how high home values in Mpls were- that's because you're looking in the most expensive area in Mpls).
Location: Cleveland bound with MPLS in the rear-view
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I see your point but one thing you should factor in is that Minneapolis (SW in particular) is an extremely RARE city in that it has these amazing urban lakes and pathways nearby, and it's one of the biggest draws of living in the city (at least for me). There just isn't anything like it in the U.S. If you live in the Twin Cities area and do not take advantage of these natural wonders you are missing out on a huge cultural aspect of what makes the Twin Cities special. That is why the SW market is so stable, and you could point to similar stability around Nakomis and Cedar Lake as well. In fact, that is another excellent location that is somewhat off the radar for many homebuyers. The housing stock is just a little bit older and more well built than many homes in SW. If you're looking at a map, take a gander at the area East of I-35W around Lake Nakomis and North of Hwy. 62. One major fallback though is the noise from the airports, as well as the schools in the area are slightly subpar to the SW schools. Still, I LOVE those starter homes!
Camden, I'm always a bit suspicious when people talk about their neighborhoods being "shabby" back in the day; maybe it's because among some people I know, anyway, they seem to get a kick out of depicting themselves as some sort of urban pioneer because they lived somewhere like the wilds of the Uptown, circa 1990 (not that I'd consider Uptown SW, but I've never head any of my friends or family talk about anything similar in the SW neighborhoods) Maybe it depends just what SW neighborhoods we're talking about here. When I hear "Southwest" I think neighborhoods like East Harriet, Fulton, Kenny, Armatage, Linden Hills, Lynnhurst, etc.; some of those places are expensive, but others remain solidly middle class. Most of the houses in neighborhoods like Armatage, which I consider to be pretty typical SW territory, are somewhere in the mid-200k range (many of them seem to be around the $230k-$240k mark right now). Yes, the values have gone up, but it's not like they were selling for $50k in the late 80s.
The possible exception might be in a few of the more border SW neighborhoods that might have been considered a bit more transitional. Kingfield, maybe? Other than that, I can't think of any neighborhoods in SW that have ever been considered the least bit shabby in recent decades. They've always been safe places with decent schools and a location near the creek and lakes. And with a few exceptions (Kings Highway and right by the lake, Linden Hills, etc.), most still remain solidly middle class. Granted, middle class where people probably are paying a higher percentage of their income to their mortgage than they would elsewhere, but middle class none the less.
Just curious to know what you use to calculate that figure, Zillow? Property Tax Total Assessed Value? Or is there another tool you use?
In 2006, we had a market done on our place because we were looking to sell. At that time, 4000 sq ft homes with a pool went for the low to mid 5's and I agreed with the numbers. In 2009, I have seen 4000 sq foot home in Andover go for under $400K (all day long). Yes, those are foreclosures.
My home isn't a 2004 or newer build. In Andover where the land is plenty the newer homes fetch more $$'s; mines a 93 so it won't sell for $400K. If I cherry pick the deals that sold in 2009, there are better homes that sold for the mid $300K range. I just talked with an agent and she said prices will be down in the Spring with a predicted slew of pending foreclosures.
I'm a realist. The national average went down north of 20%. I'm amazed at how many people think that only their neighbors homes drop like a rock. People are not buying 4000 sq foot homes as much. It takes more to feed them!
My County taxes went down about $100K. Before they were too low and now they are too high. You cannot trust those values to represent market.
My County taxes went down about $100K. Before they were too low and now they are too high. You cannot trust those values to represent market.
I agree. I personally wouldn't use that figure either. The Zillow figure also doesn't seem to be very accurate when compared to comparable sales. For the most part Zillow's values seem to be inflated from what I've seen. I really couldn't say what has happened to our home's value but I'd say it is probably in the ballpark of what we paid for it in May of 2008, especially with the rennovations we've done.
Last edited by Cruz Azul Guy; 02-09-2010 at 01:45 PM..
Townhouses seem to be the worst off right now in terms of resale due to the amount of them that are on the market. The Twin Cities United Way recently (end of last month) posted on their website a file called "State of the Economy". I recommend that people read it. They predicted that there are still more foreclosures to come, and that we will see a record amount over the next two years. What I like about their research is that it's based solely on the Twin Cities, not some national trends. Also, they get their information from professors at the U of M, and people who work directly in the foreclosure side of real estate. I trust the United Way's motivation to reasearch these issues and feel that they probably have a pretty good grasp on it being so involved in the community, but who can know for sure.
Camden, I'm always a bit suspicious when people talk about their neighborhoods being "shabby" back in the day; maybe it's because among some people I know, anyway, they seem to get a kick out of depicting themselves as some sort of urban pioneer because they lived somewhere like the wilds of the Uptown, circa 1990 (not that I'd consider Uptown SW, but I've never head any of my friends or family talk about anything similar in the SW neighborhoods) Maybe it depends just what SW neighborhoods we're talking about here. When I hear "Southwest" I think neighborhoods like East Harriet, Fulton, Kenny, Armatage, Linden Hills, Lynnhurst, etc.; some of those places are expensive, but others remain solidly middle class. Most of the houses in neighborhoods like Armatage, which I consider to be pretty typical SW territory, are somewhere in the mid-200k range (many of them seem to be around the $230k-$240k mark right now). Yes, the values have gone up, but it's not like they were selling for $50k in the late 80s.
The possible exception might be in a few of the more border SW neighborhoods that might have been considered a bit more transitional. Kingfield, maybe? Other than that, I can't think of any neighborhoods in SW that have ever been considered the least bit shabby in recent decades. They've always been safe places with decent schools and a location near the creek and lakes. And with a few exceptions (Kings Highway and right by the lake, Linden Hills, etc.), most still remain solidly middle class. Granted, middle class where people probably are paying a higher percentage of their income to their mortgage than they would elsewhere, but middle class none the less.
Uptown- I think I'm guilty of the very thing that I spend the most time fighting on here, i.e. blanket stereotyping, albeit in a different way. My (limited) experiences with SW (SW of Uptown) are very heavily skewed to the Linden Hills neighborhood, and the 8 or so families I am friends or work with that live there are hardly a great representative sample of even that n'hood. And one former resident family said that even Linden Hills was a little shabby on some intersections back in the 80s, and although I really questioned that, they now live in Powderhorn and own a business in North which caused me to trust this opinion more. Also, two of my friends that have both lived there 15 if not 20 or more yrs purchased their homes for less than $100K, and both homes are now valued between $400-500K (possibly a little more). Again, hardly a representative sample, and this type of inflation is probably is not all that far off from what you would find in a number of suburban areas in the metro. For LH in particular, however (from my experience visiting or going to various work/holiday parties, etc. there), I would say that the neighborhood skews heavily to upper middle class, but as it seems to be the most popular n'hood in the area, I shouldn't be using it to describe the broader area which I have zero knowledge of.
And I agree with West336 that the n'hoods in and around the lakes are definitely a Mpls treasure and very unique both in the metro and probably nation. Plus just about every economic and quality of life indicator known to man is extremely high in a large tract of SW, better than most area suburbs, which is great to see in an older urban area, and will ensure that it continues to corner the market on desirability in Mpls for years to come....
...well...that plus the high per capita of gourmet pastry shops in the area (as my LH friend likes to joke- sorry, couldn't resist).
Last edited by Camden Northsider; 02-09-2010 at 05:54 PM..
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My formally $550K home is only worth $330K if I "had" to sell it. But the good news is I could pick up a steal myself so it all averages out. 
.
- sorry, couldn't resist).
