We’ll be the first to admit that it’s been a long road back from the bubble bursting. But as time goes on, the housing market continues to stabilize locally and across the country. Here are some of the positive indicators we’re seeing in Minnesota and western Wisconsin:
1. Homeowners are coming out from underwater
Rising prices over the last two years have helped many homeowners rise out from negative equity - which is when the value of the mortgage exceeds the likely value of the home. CoreLogic reports that only 9.9 percent of local homeowners are underwater on their homes, which is significantly less than the 12.7 percent rate nationally.
2. Fewer non-traditional homes are for sale
Owners who have come out of negative equity are now in a position to sell their homes “traditionally,” instead of being foreclosed upon or participating in a short sale. This spring, the Twin Cities metro saw a 48 percent decline in non-traditional home sales when compared to 2013.
3. Inventory is low but rising
While foreclosure and short sale numbers continue to dwindle, there has been a rise in traditional homes for sale. In fact, these listings rose 19 percent in June 2014 over the previous year (Northstar MLS). This news couldn’t come at a better time for buyers, who have been faced with an extremely competitive market the last few years.
Still, it’s important to note that we are by no means in the middle of a buyer’s market. The monthly supply of homes is still at 4.1 months, which puts us in clear “seller’s market” territory. Here’s a handy guide to understanding how we determine who has the advantage in the housing market.
4. Mortgage rates remain historically low
Experts have been predicting a rise in rates for awhile but in early August, mortgage loan rates were at a 14-year low. If you are a buyer who thought you missed your chance to get a good deal on a home, it’s not too late.
5. Luxury and second home sales are on the rise
When the recession hit, we saw a steep (and understandable) decline in discretionary spending. Now, we are seeing a rise in luxury home purchases and lakeshore home sales. Both are signs that financial freedom and flexibility have returned to this upper segment of homeowners and buyers.
6. Millennials are finally ready to buy
Despite being called “Generation Rent,” more than 90 percent of Millennials say they eventually hope to own a home. Rising rental prices are pushing many members of Gen Y to purchase a home now. If you’re a first time buyer, check out this guide to buying in today’s unique market.