Twin Cities housing market has no shortage of buyers

  • Article by: Jim Buchta , Star Tribune
  • Updated: February 12, 2013 - 11:06 PM

No winter doldrums this January as Twin Cities home sales rose 11 percent. It could be a harbinger of strong spring sales.

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FrankLFeb. 12, 1310:34 PM

One could hope we're seeing some strength, but as the article states, prices are still down 30%. A lot of houses are going to stay off the market until prices strengthen.

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RanickFeb. 12, 1311:15 PM

With 5% unemployment, historically low fixed mortgage rates, and low prices, why are people so shocked there are buyers out there? There has never been a better time to buy a house, hands down, than right now, and many young couples are realizing that. You'd have to be blind to not see the opportunity out there in the housing market right now.

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rshacklefordFeb. 13, 13 1:15 AM

"Ranick: You'd have to be blind to not see the opportunity out there in the housing market right now." ---- I don't think so. When all the baby boomers downsize, there will be a HUGE glut of homes on the market and then when they are gone (sorry to say), every kind of housing will be in enormous supply. Wait a bit longer and then still don't count on the home as a positive financial investment with good future returns like it always used to be.

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nicolaswillFeb. 13, 13 9:04 AM

Prices should NOT strengthen. There's are 100's of 1000's of homes that will be flooding the market in the next ten years with boomers selling and the massive shadow inventory that's being held. This is nothing more then an artificial prop up. Prices should also not strengthen as they are at a price that is finally come into line with their proper value. There's a reason why a low mortgage of 9-11% was considered fantastic 20 years ago. The prices were correct and the amount of the loan you took out was not 3-5X your salary base. Best way to see if your the house you're looking at is at the right value, it's value should be that of the late 90's, early 2000's. If you thumbs down this comment, your living in a fantasy world.

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FrankLFeb. 13, 1312:07 PM

nic, I agree with most of your comment, the only fly in the ointment is that for sectors of the market the prics of homes are below the replacement value. Builders I've talked to shake their heads when a person insists on a new home, because it is like buying a car. As soon as you get the keys, it depreciates downward. Some people just want a brand new home, including one of my coworkers.

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gleninthedenFeb. 13, 13 1:34 PM

A more accurate title would read that there is no shortage of buyers relative to sellers. And that is because there is an especially low number of houses on the market, not because there is a high number of buyers ready to buy. If the high ratio of buyers to sellers was occurring in a market where the number of sellers was at least consistent with some long term historical average then I would agree that the housing market was healthy and strong -- but it doesn't sound like that is the case. What instead may be happening is those potential buyers fortunate enough to have a living wage job they can count on are feeling a sense of urgency when shopping for homes in a market with such a tight supply. As a result, offers are more likely to be quickly made, driving up the sales numbers relative to the previous year when there was a higher supply that afforded potential buyers a more leisurely shopping experience. This phenomena also drives up the median price as the bifurcation of the economic classes continues. While the solidly middle and upper middle class compete for homes in the prime locations, more of those in the middle and the lower middle have dropped down economically, no longer able to afford the down payment on any home, thus lowing the house prices in some of the lower income communities in the Twin Cities. This can actually raise the median price if enough demand is created to raise the prices in enough upper income communities where potential sellers are more likely to both list and sell as opposed to potential sellers in less affluent neighborhoods where the incentive to list is less because the chances of selling at good price are low because potential buyers in those (blue collar type) communities are fewer and less well off.

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dlzabzFeb. 13, 13 4:23 PM

Q4 GDP -0.1%, government keeping interest rates artificially low, shadow inventory being managed by banks, higher taxes in 2013, higher gas prices in 2013, home prices now greater than 3x median income, DTI for buyers being loosened like 43%, most homes coming on the market are new builds. We're in a mini-bubble right now there will be a pullback at some point in the next couple years.

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