A normal market has been the wishful thinking of the past five years. Most people understand that a normal market is 2-3% appreciation annually (not the inflated annual 10% we were seeing there for awhile.) Our Minnesota Association of REALTORS examined different areas of the market and here are some of the resulting highlights:
- APPRECIATION: Much of Minnesota is seeing appreciation this year. The median sales prices in most areas is up both month-to-month and year-to-year. A few areas with heavy concentrations of distressed sales are not seeing this, but in all, most areas are.
- INVENTORY: If you have kept up with our regular updates or if you subscribe to our Home Prices Report, you are probably well-aware that inventory this year is DOWN. (Sign up at www.WestSavageHomePrices.com.) Statewide, this trend continues. Pricing to the market has assisted in this endeavor as well. Most sellers understand that 2005 prices are not realistic and coming back anytime soon. Hence, most sellers are pricing their homes realistically. And they are selling.
- NEW CONSTRUCTION: New construction is important for the economy due to all the jobs it provides through the entire transaction. In many areas, including outstate, we are seeing growth relative to the late 1980's to mid-1990's. Furthermore, remodeling is becoming a trend for those who are remaining in their existing homes. All this boosts employment and the economy.
- INTEREST RATES: They continue to be at all-time lows. (The 15-year fixed hit 2.65% yesterday!) As rental rates rise with the strong rental market and low vacancy rates, purchasing a home is becoming more of an attractive option.
- DISTRESSED SALES: These are not going away anytime soon. That said, we have seen the levels drop off (locally.) While we are seeing far fewer delinquencies, Minnesota still has a significant number of homeowners who are in a negative equity position. Many of these people are still in their homes, making their payments. We can reasonably expect that some of these folks will hit bumps in life (job loss, medical issues, for example) which, when partnered with the negative equity, will inevitably lead to the continued liklihood of distressed sales being a part of our normal market.
If we can answer any questions for you on our local residential market, do not hesitate to give us a call. Chad & Sara - 952-212-3597
Comments