OK, I’ve just read my umpteenth article about the scary real estate bubble bursting. According to what’s in the media, it’s about the worst thing to happen to the world since the movie “Ishtar” was released. Admittedly, there has been a change in the real estate market nation wide, including the Twin Cities. We no longer see houses selling in literally hours. There are rarely as many as 10-15 offers on the same house anymore. The days of bidding as much as $30,000 over the asking price are over.
According to the experts who calculate all the statistics, this is happening due to a few key factors. First of all, mortgage interest rates had inched up just enough that a sector of buyers could no longer afford the same house price they could afford when rates were lower. Secondly, housing prices had soared to such a zenith that they exceeded rises in income. The people earning median income need to be able to afford median home prices and that wasn’t happening. Important because in markets where there is 30% or more overvaluation of homes, a correction was due.
This correction is a blessing!!! The Twin Cities housing market needed to level off. It’s unfortunate for those caught in the crossfire, but, overall, substantial appreciation was still realized by home owners who have owned their homes for longer than a couple of years (provided they weren’t over extended in their mortgage amounts).
A few things to be thankful for, the economy is still chugging along at a respectable pace, employment is strong, consumers are still spending and driving the marketplace. All appropriate indicators of whether or not we are headed in to an over all economic down turn.
This REALTOR feels the rise in mortgage interest rates was no accident. It was a way to lasso the run away horse and get it back in the coral. Now that prices have calmed down a bit, interest rates are relaxing again to get buyers back to feeling comfortable to purchase a home. I’m more than WEARY of the media scaring home buyers to death. If there is a kernel of truth to the philosophy “buy low, sell high”, this is the buy low time! Once people realize mortgage interest rates are back down and the spring weather hits, the market will start to warm up again, but just up to normal temperature not HOT-HOT-HOT, like it was from 1998-2004.
Just be glad we’re not in Florida, Arizona or California. The bursting bubble has hit them hard and they are starting to sweat for all the wrong reasons!
Submitted by Susan Hofflander of Buyers Real Estate Group
Category: MN Housing Market