Market Update

Last week's market report compiled by the Minneapolis Area Association of Realtors shows that new listings are relatively flat compared to last year, but newly signed purchase agreements continue to decline, now over 20% behind this same time last year.

When you look at this year's activity in the chart below, you see that the trend is for increasing listings but relatively flat sales...resulting in the buyer's market you have heard so much about.


One factor contributing to the decrease in buyer activity is a tightening in lending standards. In recent years "subprime" mortgages opened up homeownership to people who traditionaly couldn't buy because of weak credit or little money for a down payment. The volume of "subprime" mortgages is expected to drop by about 30% this year, according to the Mortgage Bankers Association in Washington, DC. This means a smaller pool of qualified buyers.

The after effects of those lending practices are also causing a sharp increase in short sales and foreclosures due to a combination of declining values, no appreciation, 100% financing and unaffordable monthly payments due to increasing adjustable rate mortgages. This means an increase in the number of homes for sale, especially bank owned properties.

Many people seem to think that bank owned properties are the best way to get a good deal. My experience has shown that while that may sometimes be the case, you'll more often get a better value buying an owner-occupied property. Not only will you usually get a home in better condition, you may also get a better price. While owners may be willing to negotiate to get a sale, banks are often in no hurry to sell...they know what price they want for a property and are often willing to wait until they get it. They are also often slow to respond to an offer, with response time sometimes stretching into weeks.

In spite of public perception that the housing market is anything but certain right now, this is a good time for buyers if you're ready to buy. Homes in the Twin Cities are more affordable than in recent years, interest rates continue to be historically low inspite of the recent increases and there continues to be a big selection of homes from which to choose.

Market conditions aside, buying a home is about finding a comfortable, safe place to live...something that is always a wise investment when you're financially ready to buy.