It’s been another turbulent year in the housing markets across the country, and the great state of Minnesota is no different. At first glance, the data provided by the Minneapolis Area Association of Realtors, (MAAR) for 2009 looks to be somewhat promising. However, there’s some significant factors at play that are scrambling the numbers like a like a bad carnival ride.
In 2006, Bank owned foreclosure and short sales made up less than 5% of the total home sales in the Twin Cities 
Metro area. For 2009, foreclosures accounted for more than 50% of sales metro wide.
Banks are not in the real estate or remodeling business. They are in the business of loaning money, and the sooner that they can get a distressed property off of their books, the happier they are. Potential buyers are passing up reasonably priced traditional home sales to pursue low priced foreclosed homes that banks are offering.
The majority of the time, foreclosed homes have been neglected and dismantled. It is not unusual to walk into a foreclosure where the pipes have frozen and burst causing thousands of dollars in damage, cabinets and doors removed or broken, appliances missing, carpet destroyed, and the yard unmaintained for a long period of time.
Even so, a home that will require some sweat equity and a nominal investment being offered at half the price of an identical home in pristine condition is more appealing to borrower’s pocket books than its’ turn-key doppelganger. Most foreclosures will see multiple offers within a matter of days because of the phenomenal asking price.
Year over year, the average days on market in the Twin Cities Metro area fell slightly from 8 ½ months in 2008, to 5.7 months in 2009. However, the majority of traditional sellers that I speak with have had their homes on market for much longer than this, in some cases as long as 2 years. This is because it’s not been uncommon for low priced foreclosures to be snatched off of the market in no more than a couple of weeks; not because MN is finally turning the corner on the housing slide.
Most traditional sellers that I speak to, ( when the owner of the home lists his or her property for sale,) are seeing very little interest in anyone buying their properties. Even after reduction after reduction, ( 46% of all sales in the Metro’s prices in 2009 were adjusted,) they are still sitting in the same spot they were the day they decided to list their house; no sale.
If you’re a seller that is losing optimism after several months on the market, (Don’t worry, you’re not alone) you most likely have access to a no closing cost refinance to reduce your monthly payment while you ride the storm out. With the Minnesota winter bringing the buying season to a crawl, the short time off market isn’t going to hurt your chances of missing that potential buyer you’ve been waiting for. Minnesota is now a no pre-payment penalty state, so if you’re one of the fortunate ones that is able to sell traditionally next spring or summer, it won’t cost you anything to do so.
Most area analysts predict 2010 will not be the year of the dramatic housing turnaround in the Twin Cities. With yet another wave of foreclosures on the horizon, the first time homebuyer tax credit extended into 2010, and mortgage interest rates remaining low, housing affordability in the Metro is the best it’s been in years. If you’re a potential buyer that is still sitting on the fence, you may want to reconsider your position.
All data provided by the Minneapolis Area Association of Realtors, (MARR).