GLOOM & DOOM in the Twin Cities Housing Market . . . . or is it?

GLOOM & DOOM in the Twin Cities Housing Market . . . . or is it?
May 15th, 2009

Did the title of this article catch your attention? Well, gloom and doom sells. However, if you have listened to the news lately, you may have heard some positive snippets regarding the Twin Cities housing market. What you haven’t been hearing is that this trend actually started in July of 2008! Based on information from the REGIONAL MULTIPLE LISTING SERVICE OF MINNESOTA, INC for the period from January 2003 through April 2009, we have actually seen an increase in pending sales for every month from July 2008 through April 2009 compared to the corresponding month one year prior (May statistics not yet available). The last time we had seen this was the month of January 2006 – which saw more pending sales than January of 2005. So, after a long 2.5 years , (yes this market started back in 2006) we have lots of reasons to be positive about the housing market in the Twin Cities.

One interesting point to note is this increase in pending sales took place during the height of the credit crunch. Yes, mortgages are no longer easy to come by. A buyer does now need to have a down payment, a job, and a good credit score. For folks not in the real estate business or in the real estate market, the news reports made it sound as if no one could obtain a mortgage. This simply was not true if you had the required items listed above. Though the new requirement can be frustrating for those who could handle a mortgage, but fall outside of the current underwriting guidelines – such as a lot of self-employed people, the new lending practices make good sound sense and along with the abandonment of the ARM mortgage, will hopefully lead to lower rates of default in the upcoming years

Another positive factor in the housing market is that the inventory is lower. This is due to two reasons – homes being purchased and fewer new listings. Again, according to the REGIONAL MULTIPLE LISTING SERVICE OF MINNESOTA, INC for the period from January 2003 through April 2009, new listings are down for the first four months of 2009 - reaching numbers that were similar to what we saw in early 2005. Some of the factors contributing to this include: mortgage companies making some effort to keep home-owners out of foreclosure (they need to look like they are doing this in order to benefit from the bailout money), sellers deciding it is not the time to try to sell now, and a lowered rate of new construction.

As a real estate professional, I try to ignore the gloom and doom of the everyday news and look at the facts and the statistics. After 10 months of positive numbers in the Twin Cities, the news is finally catching on that we have some improvements. Once they state that we have hit the bottom of the market, it will be well behind us. In fact, I think in a lot of neighborhoods, the lowest priced homes hit the bottom sometime back in November of 2008.

This article publiched in the summer addition of Q!