The Housing Bubble

The Pioneer Press reports on the housing bubble in the Twin Cities. “If you think you see a for-sale sign on every block, look again. On some blocks, there are two. There now are more homes on the market in the Twin Cities than ever before, as far as local real estate experts can tell.”

“As of Monday, the total number listed for sale in the 13-county Twin Cities area totaled 24,744, breaking the previous record of 24,692 set late last October, according to the Minneapolis Area Association of Realtors.”

“The record inventories are fueling competition among real estate agents and stirring anxiety in the market. Asking prices are being cut and stories abound about people juggling two mortgages while waiting for the old house to sell. Real estate agents who used to juggle multiple offers are scrambling to attract buyers, who now have the luxury to pick and choose.”

“One real estate agent who works in St. Paul’s Mac-Groveland neighborhood said he’s seen agents teaming up with pizza deliveries to pass out for-sale fliers with the pepperoni. Don’t laugh, he said: ‘It reaches a lot of people.’”

“Meanwhile, Edina Realty has taken an unusual step to address the slower market: It’s marking down interest rates. The company is offering a free one-year warranty on a house, and a 1 percentage point discount for one year on the mortgage interest rate to customers. That means saving a homeowner about $2,300 on a $300,000 loan with 20 percent down payment. The deal started March 12 and runs to March 26. ‘It’s a new reality in real estate sales,’ said (realtor) Barb Jandric.”

“Record inventories have fueled concern that supply could start weighing down home prices to the point where they slide backward in value, instead of creeping up or leveling off. That sets some homeowners on edge. Although real estate agents are not standing still, they caution against alarm. ‘Shift happens,’ Mark Allen said.”

“Jandric said she doesn’t expect home values to slide, but said certain areas and certain types of housing might see prices drop. Entry-level town houses in second-ring suburbs such as Apple Valley are an example of areas with risk, she said. ‘There are going to be pockets where it’s going to be a bit of a dip,’ Jandric said.”

“Some sellers don’t seem worried. Michelle Mitchell said she didn’t hesitate listing her house in the sought-after Mac-Groveland area. After only one week on the market, she and her husband have already turned down an offer, she said. Mitchell acknowledged, however, that she’s feeling some pressure. They’re selling because they found their dream home in the Crocus Hill neighborhood. They’ve signed a purchase agreement. They can handle two mortgages if they have to, she said, but she doesn’t think it will come to that.”

“Not everyone in the neighborhood is as confident. Just a few blocks away, Mary Lemmons is trying to sell her house for the second time. She works in a title office, closing home sales, so she’s trying to sell her house herself, without an agent. But last summer Lemmons’ home sat on the market for five months, even though she’d put on a new roof and siding on it. She didn’t realize last year that the boom in the market might be drawing to a close. She listed now to get a jump on the spring rush. ‘There’re a lot more sellers than there are buyers right now.’”