Today’s Minneapolis Real Estate Market: Buyers are in the Driver’s Seat

Filed in Minnesota Real Estate by on October 12, 2010 1 Comment

Cruise through virtually any neighborhood of Minneapolis homes, and you can’t help but notice the preponderance of “For Sale” signs swinging in the breeze.  If you are hoping to purchase Minneapolis real estate, you have a huge selection of homes with low prices.

Home buying activity in the Twin Cities has slowed down from the hangover caused by the surge of sales that resulted from the expiration of the first-time home buyers tax credit.  It seems like all prospective Minneapolis real estate buyers were incentivized by the credit and have already bought.  Maybe some folks who were not really ready to purchase jumped o the opportunity to claim this perk offered by Uncle Sam.

The reality is that today’s current mortgage interest rates are absurdly low, and offer far greater savings than the  As usual, the media is remiss in reporting this sort of thing.   Thanks to the media purveyors of doom and gloom, almost any Minneapolis real estate agent  you talk to can tell you about experiences with clients who were all set to buy a home at a great price, but got cold feet after reading the newspaper or watching the 10 o’clock news.  This is what we call a self-fulfilling prophecy.  I am not being Pollyanna about this because it is hard to deny that lender mediated listings dominate the large MLS inventory of Twin Cities homes.  The Minneapolis real estate market is awash with foreclosure and short sale listings. Still, I don’t think the media is doing much to inspire buyer confidence.

A Silver Lining in the Minneapolis Real Estate Market

Pending sales increased from July to August, and buyers are still purchasing because they want to capitalize on the low rates and huge selection. Numbers of new listings actually went down, which, of course is a positive trend for sellers.  Reports of falling prices are skewed downward because  relatively fewer upper bracket homes have been on the market.  Sellers are getting about 91% of asking price and move-up buyers realize that the savings from upgrading will found in the lower prices of more expensive homes.  It is a great time to leverage yourself into a better house.  Many sellers are realizing that they should not focus on the fact that they aren’t getting the price they want for their homes, but rather should consider the great prices and low interest rates afforded by the purchase of bigger Minneapolis homes.

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  1. Mr. Johnson,
    Thank you for this salient post!
    I am a Realtor in the Front Range of Colorado. (Denver to Colorado Springs and environs.) It is pretty amazing how similar the story is in this part of the country, with sales of existing homes garnering almost the same 91% of list price. Also many buyers were drawn out by tax incentives last win
    ter and spring. The real difference here is what is happening in new construction.
    Take Castle Rock, Colorado as an example. Castle Rock is an attractive town just south of Metro Denver. Castle Rock homes pricing that is for some, a better value than Denver, yet has sought after Douglas County schools, a high quality of life and proximity to Denver. However, resales are almost taking a back seat to construction of Castle Rock new homes. Builders here such as Richmond American, Meritage and Oakwood have become very aware of the current market, and have streamlined operations in order to respond with some pretty amazing pricing and discounts on their Castle Rock new homes. Communities such as The Meadows were previously selling comfortably in the high 300′s and easily into the 400′s. Today a buyer can purchase a very respectable brand new home, complete with a ten year warranty in Castle Rock starting in the mid 200′s. Some builders are even offering financing as much as 1/2 percent BELOW the already super low rates on their Castle Rock new homes. A new home, 30 year fixed rate loan by down of 1/4 to 1/2 %… simply fantastic value. Even with the slight bump up in rates this still seems to be happening. A person would almost have to want to rent with deals like that. And let’s not forget the energy efficiency offered by these builders. Castle Rock can get cold and windy. It is nice to know that companies like Meritage Homes have done their homework on eliminating drafts, sealing the houses up tight, and using the most efficient HVAC systems. Colorado home buyers are thinking more and more about that when comparing new homes to existing ones.

    The story is similar in other areas. These Colorado builders have responded so well to market conditions that they are giving some stiff competition to the resale market, and even in some cases, they can compete with the foreclosure market.

    It’s pretty amazing that new homes in Castle Rock are being offered like this.
    Realtors have huffed and puffed for years about how “now is a great time to buy a home. I’d add that if it ever was true, it very surely is the case right now.

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