Home sales are up and prices are down in Minnesota, where some of the most affordable housing markets in the country are at 2000 year home prices.
There's nothing chilly about the Minnesota housing market these days. The federal government's tax incentive has gotten buyers off the fence and into new homes. Lower prices have also helped prod the market along with mortgage rates hovering around 5%.
Battered by the economic recession, Twin Cities home prices have been declining for more than three years, but have been buffered by the rise in sales as of late. Minneapolis and St. Paul, the neighboring cities known as the Twin Cities, are making strides at a recovery of sorts that is projected to last well into 2010.
The upward mobility of move-up home buyers is likely to aid Minneapolis in its recovery from the housing downturn, and St. Paul should follow suit. There's nothing tricky about the recovery in the Twin Cities other than a second wave of foreclosures expected that will send home values on a bumpy ride for a while.
When the winter snows thaw in the Twin Cities home buyers looking for bargain rate deals will be out in abundance riding with real estate agents to find their new homes and other deals. Minneapolis and St. Paul are forecast to see average housing values deflate just 3.2% in 2010, hardly a move that should keep anyone from buying a home.
| City |
Forecast |
| Minneapolis |
− 3.2% |
| St. Paul |
− 3.2% |
| Duluth |
1.8% |
| Rochester |
− 4.1% |
Foreclosures have had a more limited impact on markets in Minnesota than other harder hit areas. But bankers will slash prices on foreclosures to get them off the books, giving home buyers all the reason to get off the fence with their down payment money.
In Duluth on Lake Superior, lower home prices are already attractive to many buyers, who qualify for a mortgage in these credit crunch days. The lower price ranges are moving at a fairly steady pace and just may remain that way even through the winter months. Duluth home prices are protected to at least some degree since the market never experienced a huge inflationary spiral. Home prices should adjust accordingly through 2010 and gain a small but still positive 1.8% for the year on average.
In Rochester, where home sales were only off slightly during the worst part of the downturn else where, new home builders are thinking about new starts more actively and wondering how long it will be that they'll have to wait out the market. The cold chill of Minnesota's housing market is starting to warm.
But the market in smaller Rochester will also be impacted by growing foreclosures and as a result will witness a decline in average values of 4.1% in housing deflation in 2010. The recession has had an impact in Rochester that will take a while to work through before the market turns up for the better.
