Now may be a great time to buy, but…
In the last month, I’ve been contacted by several first time homebuyers who are planning to move to Minneapolis from out of state. All have been excited about the $8000 tax credit, which is available to anyone who purchases a home before November 30th. All understood that interest rates are still at historical lows (4.875% as of 10/6/09) and all realized that there is currently a vast amount of inventory to choose from. Despite all of these incentives to buy a home, most had also expressed concern over the state of the Minneapolis real estate market. More specifically they wondered if the market would go lower?
One such buyer was kind enough to cite an article that backed up his concern in his email to me. The article was titled Five Housing Markets That Have Further to Fall by Sarah Morgan of SmartMoney.com… CLICK HERE
The above article listed Minneapolis as one of the top five cities where home values are still falling, and the underlying theme was that buyers should hold off on purchasing in these cities in the hopes of getting a better deal.
After reading the article, it was easy to see why so many of these out of state homebuyers felt that the Minneapolis real estate market was in free fall. The reality of today’s real estate market however, is much different.
After doing a little digging, I found that SmartMoney.com is based in Manhattan, and their focus seems to be stocks/investments etc. Because of where they are and what they do, I don’t expect them to know too much about the Minneapolis real estate market and its intricacies.
When reading reports like this, it’s important to remember that when most people (especially the media) talk about the real estate market, they tend to speak in generalities. For example, “Minneapolis” usually means the Minneapolis/St. Paul Metro area. Because of this, their facts are based on a very broad spectrum of data.
This is very misleading to buyers and sellers because that’s simply not how real estate markets work. In Minneapolis, prices and stability change from neighborhood to neighborhood. A condo seller in Downtown Minneapolis doesn’t care what homes in Burnsville are going for, she or he needs to know what buyers are willing to pay for a condo like theirs in Downtown right now.
The facts
While it’s true that some areas have been ravaged by the current state of the economy and may still be in “free fall”, other parts of town have been much more stable. To illustrate this, I’ve posted the average sale prices over the last seven months in three different areas of Minneapolis below. I gathered this data personally from the RMLS and while deemed reliable, it cannot be guaranteed (required disclaimer). That said, the RMLS is where the majority of home sales are recorded and it is the most reliable source for sale prices available.
Because at the Downtown Resource Group we specialize exclusively in condos and lofts, I’ve included Uptown and Downtown as well as North Minneapolis, where sale prices have been hit very hard, to show just how much one declining neighborhood can affect the overall numbers in a city.
Downtown: Average sale prices by month…
1. March – $398,201
2. April – $359,321 – down
3. May – $318,127 – down
4. June – $325,082 – up
5. July - $343,824 – up
6. August – $263,275 – down
7. September – $290,409 – up
Uptown: Average sale prices by month…
1. March – $246,864
2. April – $344,757 – up
3. May – $367,137 – up
4. June – $355,737 – down
5. July – $301,479 – down
6. August – $296,560 – down
7. September – $430,606 – up
North Minneapolis: Average sale prices by month….
1. March – $47,268
2. April – $33,320 – down
3. May – $44,739 – up
4. June – $53,031 – up
5. July – $54,565 – up
6. August – $61,656 – up
7. September – $67,703 – up
As you can see, while North Minneapolis brings the overall city (and Metro) numbers down dramatically, even that neighborhood has seen an increase in average sale prices since April.
Also, I’d like to note that Uptown and Downtown seem to have a sporadic average sale prices because of the types of homes that can be found in those areas. In Uptown for example, you can buy a $150,000 condo that’s two blocks from a $2,000,0000 home. Because of this, average sale prices tend to fluctuate more than in other neighborhoods and that’s to be expected in Uptown and Downtown.
So when is the best time to buy?
When will buyers get the best deal, best value and best interest rate? While each person’s situation and needs are different, if someone is thinking about making a purchase, has a stable income and 3.5% to put down on their purchase, there’s a good chance the answer is right now.
Inventory is up and first time home buyers can take advantage of the $8000 tax credit. Also, some condo projects like Skyscape are now matching the tax credit, giving buyers a total of $16,000 in savings, not to mention the immense savings they will receive over time with current low interest rates.
This is also good news for sellers as well because more buyers buying = more sellers selling. This in turn drives sales though every price range in the market. Recently I was involved in a transaction that started with a $240,000 first time purchase and ended with a $500,000+ transaction four homes down the line. This transaction allowed 3 groups of sellers to sell their homes and buy another one, and it all started with a first time homebuyer.
Work with a specialist
Now that we’ve determined that there are currently many great reasons to buy a home, how does a buyer ensure that they take full advantage of today’s market? Buyers should first determine where they’d like to live. To do this, they should ask themselves what area and type of home best fits with their lifestyle? Once they have that figured out, they should contact a real estate professional that specializes in the area and type of home that they are looking for. There’s a lot that goes into buying a home and working with a specialist will enhance the entire home buying process. It will also dramatically increase their ability to find the best value that meets their needs.
At DRG we pride ourselves on being the only broker in Minneapolis that specializes in condos and lofts. If a buyer is looking for a home in Plymouth, we’re not the right choice, but for any buyer interested in a condo, loft or town home in Urban Minneapolis, we’re committed to providing level of service that will exceeds expectations.
Thanks for reading, and happy home hunting!
Dylan Garrison | Urban Realtor
612.865.3226
