With the topsy-turvy MN housing market here in 2010, it’s tough to stay on top of all the numbers and market shifts that occur every week of the year. One day, the media says “housing market begins to recover” and the next day it’s “real estate still reeling”. So if you’re a potential home buyer and you’re thinking about buying a house, what factors in the housing market should you look at to see if it’s a good time to buy?
The first factor is the current mortgage interest rates. You have probably heard enough about interest rates over the radio and TV, but in case you aren’t aware, mortgage interest rates are at historical lows right now. Most of my client buying their first home are getting interest rates below 5.5% – a lot of them in 4′s. Needless to say, that’s easy money, and it’s a great incentive to lock in a fixed rate at such a low percentage point.
Another factor to look at is home prices. I don’t have to tell you that home prices have decreased in Minneapolis and St Paul over the past 4 years quite a bit. We all know prices are low and even though the economy has declined recently, housing affordability is at an all-time high. As long as you have the means to get the loan and make your payments, you’ll be able to afford much more house than you could have 5 years ago.
A factor you should be aware of (and not many people think about this one) is how many active listings are for sale in the market. Real Estate is very local, so if you’re looking in Plymouth versus Woodbury, there will be a big difference. But by and large in the Twin Cities area there are still plenty of homes for sale, making it a buyer’s market. The simple supply-demand ratio tells us that if supply is increased, there will usually be less demand. What that means for you as a buyer is that as the supply rises in the market there will be more houses to choose from and less competition with other potential home buyers.
Currently in the Twin Cities are there are just over 27,000 homes for sale. A Balanced Market is typically about 22,000 for our area, which means it is a Buyer’s Market since there are more listings for buyers to choose from. This ultimately means the buyer has more power in the transaction and can usually get a better price for the home.
Life after the Home Buyer Tax Credit has begun, and because of that vanishing incentive, a lot of people have decided to wait on buying a home until it makes more sense for them in their personal lives and situations. So if you’re at a point right now where you are ready to dive in, you’re going to face much less competition and have a ton of houses to choose from. This all adds up to a great buying experience for you!
