Minneapolis, MN | RE Market | Recovery Begins: But Who Will Admit It?

Good news in Minneapolis Real Estate world... inventory levels are falling! We've all been talking about Buyers being able to "cheery pick" the best of the homes ("best" = cheep and nice), leaving all sellers in a bind trying desperately to be the best. Well that's beginning to change...

In all price ranges above $190,000 their are fewer homes on the market today than this time last year. MAAR's Housing Supply Outlook goes into detail. That's good news, but I'd expect Average Sale Price will continue to drop, in response to the flood of deals in the below $190 range, and buyers in this range still able to "cheery pick" the best of the bunch. So, will the good news come out? Will anyone know what this means? My friends will, but I bet the major news source won't cover this.

In order to see a recovery in real estate two things need to happen inventory must come down, which we are now seeing, and secondly demand must not fall off. So we're getting the first, inventory is decreasing, how's demand doing? Not as well.

Homes sales are down across the board. Over the past 3 years Buyers have been told three times not to buy. First it was because the RE market was "correcting" (early '06). Secondly, it was the "credit crunch" and "foreclosure crisis" ('07). Now all we're hearing about is the looming recession. Anxious buyers don't buy. In light of the high anxiety level, I am impressed with how many homes sales there are. In fact, Byers I talk to are all saying it's a good time to buy. And I seeing stories to that effect in th news too.

My prediction:

• Buyers will remain cautious but healthy. Sales volume will remain level lower than last year but will continue to hold where it is, not fall further.
• Sales Prices will continue to fall, on average, and in general, This is the result of more deals in lower price ranges.
• Sales Prices in the higher price ranges will remain lower than last year, but won't drop much further. The reduction in inventory at the higher price ranges will eventually result in increased competition among Buyers, pushing prices up, and lowering time on the market.