After nearly three years in a downturn home prices rose faster than just about anywhere else in the country in the Twin Cities, but after the cancellation of the federal home buyers’ tax credit things cooled off quickly, and that’s the way things are projected to be the remainder of the year. That isn’t all bad news for the region though, which has some of the most affordable homes in the country.
Home prices, however, should make little progress in the rest of 2010 as Minnesota housing becomes accustom to a slower home selling market. Sales are off in St. Paul and Minneapolis, which make up the Twin Cities as buyers remain unsure of the economy.
However, stabilization in the market place may not be much further off in Minneapolis with a declining number of homes listed on the market. Bank owned foreclosures and short sales, in which the lender cooperates to sell a home for less than what is owed on the mortgage, became more commonplace in St. Paul triggering the increase in home sales.
Despite near record low mortgage rates the markets aren’t projected to see a full-fledged rebound during the remainder of the year. It’s time to find a bargain on a home for buyers in Minneapolis and St. Paul. The Twin Cities are forecast to experience a surge in foreclosures and short sales during the rest of the year, pressuring home prices forecast at average deflation of a better 2.0% for the year.
Until recently Minnesota has sustained the foreclosure crisis with less pain, but an increase in initial foreclosure notices will throw the state into jeopardy as more properties are foreclosed and bankers discount home prices on foreclosures to get them sold, giving home buyers all the reason to get off the fence and into the market.
Duluth housing prices were an invitation for bargain hunters and some lower priced bargains are still available for the savvy investor. The market didn’t see the double-digit appreciation experienced elsewhere in the nation, which protected it from drastic deflation resulting from the financial crisis.
Lower priced homes moved fairly quickly during the federal tax credit era, but have mostly dried up as a result. However, a rise in foreclosures should offer a bevy of homes at lower prices in the latter part of the year producing a spike in home sales. That doesn’t, however, mean prices will see inflation. The forecast for Duluth is a slight 1.2% in average deflation for 2010 hardly enough to be noticed.
Quieter Rochester is sustaining higher foreclosures and short sales as fall-out of the financial crisis hits. But new home builders are starting to pull building permits at an increasing pace, demonstrating the market may be in the direction of mending. After all it’s the long haul in real estate that counts.
The pressure on neighboring homes in Rochester from cheaper bank owned sales is projected to last through the remainder of the year as the market works through the economic downturn, forecast to average housing deflation of just 3.4%.