The media has been full of stories recently about both the Twin Cities and national housing markets. Almost all of them have painted a bleak picture of what’s happening in real estate as sales are down significantly and the inventory of homes available continues higher.
For example, the Minneapolis Association of Realtors published their weekly Market Activity Report yesterday which shows sales in the Twin Cities are down 42% for the past 3 months as compared to last year. Active listings are now up to 27,784 – an 8% increase over last year.
Today the Star Tribune posted a story about how the incredibly low interest rates haven’t stopped national home sales from falling to their lowest levels in 15 years. Sales in the US were down 27% in July.
While it’s always a good idea to know what the current state of the market is like the question I hear most often is “what is going to happen to home prices in the future?” The graph at the top of this article is from a blog called Keeping Current Matters and uses data from MacroMarkets which surveys 100 economists and housing experts for 5 year projections in real estate. Based on this data they conclude that –
If you are selling, the price you can expect to receive for your house will be lower over the next two years than it is today.
If you buy today, you could see a cumulative appreciation of almost 10% in five years.
Are they right? I don’t know but hopefully by combining the data from 100 experts we get a better picture of what to expect. The one thing I do know is that there will be a bottom to the market and trying to predict the exact best time to buy or sell is an inexact science.
