A reduction in distressed home sales, especially foreclosures is sending Minnesota housing markets into a recovery sooner than most of the rest of the U.S. An increase in drastically discounted real estate sales, however, with banks in short sales, in which homeowners sell for less than what they owe on their mortgages are helping to propel Minnesota into a housing recovery.
Frustrated with the market, lower home prices and disappointed they were unable to sell, many homeowners removed their homes from the market earlier in the year. The dynamics of the housing market in the Twin Cities and the rest of the state are changing.
Home values are giving plenty of signs that they will rise in coming months for the year in Minneapolis and St. Paul, which have seen housing sales improve. The inventory of homes listed for sale is shrinking in the Twin Cities. Record low mortgage rates and home prices at new modern day lows are contributing to demand.
Home sales should see an additional boost in the region over the second half of the year as the weather improves for home buying conditions. More than half of all sales were foreclosures and short sales over the last year, but with the decline in foreclosures the Twin Cities are beginning to take on a new sort of market, but have not yet made the full transition into a sellers market.
Minneapolis, which had been forecast to see average home prices decline, should now see sales improve so much through the remainder of the year that it is now forecast to sustain 1.6% average housing appreciation by years end. St. Paul is projected to see home values improve an average of 1.9% in 2012.
The housing market has also heated up in Duluth, where home sales are at a brisk pace. Low mortgage rates and a tighter inventory of homes are also driving demand. Buyers actively searching for homes can’t take too long to make a decision on homes that are for sale in good condition. Better employment than many other regions of the country is helping the market recover. Home prices are forecast to appreciate 2.0% in Duluth by year end.
Sales were sluggish in most of Minnesota for more than three years before cities throughout the state found the bottom of their markets. The region has stronger employment than many other areas of the country, helping to drive the recovery in housing.
Slow home sales turned to a swifter pace by summertime in Rochester, which had sustained a major foreclosure hole in the market that has since vanished. Housing value losses should come to an end and be replaced by moderate appreciation through the end of the year in Rochester, with average home prices forecast to improve 1.3%.