While we are seeing some positive signs in the Twin Cities real estate market, a lot of the activity is at the lower end of the price range which is being driven by the $8,000 First Time Homebuyers credit and investors. These groups are snapping up properties that are <$200,000 but many other homes priced above that, especially ones that are not in lender mediation, are struggling to get offers.
The Minneapolis Area Association of Realtors puts out a ton of great research each week & month and the following graphic really caught my eye (Twin Cities Real Estate – Monthly Indicators). The average sales price for homes is down over 26% in the past 2 years. That means if you bought your home in the mid-2000’s, like so many people did, you home is not only worth less than you purchased it for – it may be worth A LOT less than you bought it for.
With so many people getting low down payment loans that means there are thousands of Twin Cities homeowners with a home worth less than they owe on it. Not only is that issue driving a lot of the foreclosures, it’s become extremely painful for people that ARE making payments but want to sell. Coming to the closing with tens of thousands of dollars is not fun but it’s what reality is in this market.
The main blessing is that for those purchasing a replacement home, they are going to get that same level of discount on whatever they purchase which helps make it something of a wash.
