In a competitive market, it’s a price war and a beauty pageant. Banks and foreclosures have the luxury of competing on price. Traditional resale homes must compete on condition and amenities. The Minneapolis Area Association of Realtors has conducted a comprehensive study using our local MLS statistics. They separated the foreclosure type property from traditional resale homes. The findings tell the tale of two markets. Where foreclosure properties average sales prices are considerably down, traditional resale properties in most areas are down single digits. As you are blasted with information from the internet, television and newspaper, remember that all real estate is local, from metro area to city/community down to your neighborhood.

 

September/October Market Observations:

 

1.                   As our local market continues to heal, one of the first indicators is a slow down in new listings hitting the market. Historically, the gap between supply and demand narrows in the last quarter. Less competition and continued buyer activity translates into a good window for serious sellers.

 

2.                   September experienced a huge spike in sales compared to last year. This is most likely due to down payment assistance programs expiring at the end of the month. Regardless, we anticipate a ripple affect from increased first-time buyer activity.

 

3.                   The bottom quartile price ranges continue to sell as banks are slashing prices on foreclosure property.  In the peak of the market, the top quartile, new construction activity was driving the numbers upward. Still, nearly 30,000 homes have been sold in 2008. Just off last year’s numbers.

 

4.                   If you’ve filled up your gas tank recently you can relate to prices being a moving target. For many inexperienced agents, understanding the current market conditions are puzzling and difficult to extract from statistics. Where some properties are receiving multiple offers and others sit on the market for months with our experience and volume of being in the trenches everyday allows us to keep our finger on the pulse of a dynamic market. 

 

5.                   Government intervention and stimulus measures will hopefully force lenders to loosen up their purse strings and lend to qualified borrowers. Large banks are still gun shy with the Wall Street roller coaster. Still, we are anticipating interest rates for your run of the mill, 30 year mortgages will remain at or near 6 percent into early 2009.

 

6.                   The Supply Demand Ratio and Housing Affordability Index clearly point to a buyers market. In the last decade, there hasn’t been a more affordable selection of homes combined with lower interest rates and incentives for first-time buyers.