Minnesota Housing Market Shows Home Sale Improvment

A 10% drop in home sales in the the Minneapolis/St. Paul housing market at the start of the year was actually good news. The region looked even worse at the end of 2006, according to the Minnesota Association of Realtors.

Home sales in 2007 are expected to be “pretty much on par with last year, maybe starting to recover at the end of the year, meaning (sales) will be up a little bit,” says Chris Galler, senior vice president of the association.

The Twin Cities area enjoyed double-digit price appreciation from 2000 to 2002, after which price increases slowed to the single digits. Last year, home prices rose about 4.5%, Galler said.

Homes priced below $250,000 are selling well; the market in the southwest suburbs is the healthiest in the area. But those who expect to sell need to keep their homes well-maintained in order to attract Minnesota mortgage applicants.

“People aren’t willing to spend that much money anymore for properties that need work,” Galler notes.Real estate agents are concerned, though, about the many homes in mortgage loans in default, as well as investor-owned homes that are sitting vacant and for sale. Not only are homes in foreclosure often in disrepair, which depresses property prices, they’re also typically sold below market prices.

“We are working with a group to try to track the problem,” Galler says.

Many of the homeowners in default appear to have low incomes and carry high-interest, bad credit home loans geared toward borrowers with shaky credit histories. It’s a problem many states are currently facing.

SOURCE: USA Today