The Minnesota real estate market may fall further than previously thought as foreclosures and unemployment worsen. Homeowners who took out adjustable rate mortgages are finding it nearly impossible to refinance due to the drop in value of their home, which will add on to the foreclosure sales that already account for more than half of homes sold in Minnesota. See the following article from Housing Predictor for more.
The illusion was all too evident in Minnesota. Home prices seemed like they were finally bottoming out as sales rose, but prices are still falling in an economy that is battling high unemployment and a rising tide of foreclosures. More than half of all homes sold are of foreclosed properties or bank-assisted cut rate deals.
Auctions hadn’t been used much to sell property in Minnesota until the real estate crash, but now a slew of auction companies are selling property in person and over the Internet in Minnesota and housing prices are suffering.
In Minneapolis and St. Paul, neighboring cities known as the Twin Cities, pending sales are improving, but the federal first time tax buyers credit is attracting bargain hungry buyers, who are hunting for discount deals throwing the market into the financial doldrums. Many first timers are putting in low-ball offers even on already discounted bank owned properties.
As distressing as sales are, foreclosures in Minneapolis are being marketed at some of the lowest prices in the country. Minneapolis and St. Paul housing is forecast to deflate an average of 10.2% in 2009.
Outside of the Twin Cities in Bloomington, new homes sitting on the market after being finished by new home builders have supplied a boom for first time buyers looking for deals as builders offered incentives to purchase their homes. But with low interest rates and a smaller inventory builders aren’t offering as many incentives anymore.
Local Markets at a Glance
As the economy slows further with growing unemployment, home values are sliding. Despite the rise in home sales in Bloomington, housing is forecast to experience average deflation of 10.6% through the year’s end.
In north-eastern Minnesota home buyers are hoping the bottom of the market is at least near as sales move slightly in the positive direction from a year ago in Duluth. But the market is also attracting mainly first time and low end buyers taking advantage of the tax incentive.
Lower inventory should act to stabilize the market in Duluth, which has some of the lowest priced housing in the state over time. But with a low volume of sales it’ll be a while before Duluth reaches a healthy balance, and is forecast to see deflation of just 5.8% in 2009.
Sales in Rochester are far below what they were even a year ago, adding to a dismal outlook for the market, which is dealing with an excess inventory of resale homes listed for sale. New home builders are at a loss to start new projects except a few high-end builders that are praying for a recovery in the market soon.
However, adjustable rate mortgage resets are making it impossible for many homeowners to refinance their homes since values have dropped so much. Foreclosures are rising as a result and should impact the market and most of Minnesota for at least another two years, barring major government intervention. Rochester is forecast to see home value average deflation of 9.1% in 2009.
This article has been republished from Housing Predictor. You can also view this article at Housing Predictor, a real estate analysis and forecasting site.