"Projections on the future of the housing market are like belly buttons"

Today's cover story spells out more doom and gloom for our local Real Estate market. While you simply can't deny that things have slowed, it always seems these articles come out just as the market changes. In the past it took a couple of years of high velocity sales before the media started to refer to it as a "Housing Boom" and eventually -in some circles- a "Housing Bubble."

This latest slowdown has been building for the past two years, it didn't just happen over night as the sudden prominent reporting of this issue - Front Page, Above the Fold, seems to indicate.
I think this is one reason, of many, why Buyer's are so confused about the current market conditions. Anecdotally I have seen a marked increase in the showing activity at all of my listings this week. Truth be told, in certain micro-markets where demand is high, you would never even know there was any kind of a slow down. Location is not just a cliche', it is the operating principle that everyone should base their purchases on!

Anyway here's a link to the Strib article:

Area home sales fall to lowest since '94

And here is the response issued by MAAR (Minneapolis Area Association of Realtors):

Market correction continues as buyers wait on the sidelines

Minneapolis, Minnesota (September 12, 2007) – Persistent instability in the mortgage market and a related malaise in consumer confidence continues to dampen home sales across the nation and the Twin Cities, according to the Minneapolis Area Association of REALTORS® (MAAR) based on data from the Regional Multiple Listing Service of Minnesota, Inc.

Amid a flurry of national news stories on uncertainties in secondary financing markets, newly signed purchase agreements (pending sales) for August were behind the same month last year by 18.1 percent, posting 3,834 unit sales. Similarly, closed sales are down 17.8 percent for the same time comparison.

“With buyers concerned by the news they hear on housing, it’s understandable that some are waiting on the sidelines,” said Deb Greene, president of MAAR. “Our concern is that while they wait they’re missing buying opportunities when the time is right.”

Builders and sellers have taken notice that buyers are in retreat. The number of new listings on the market in August was down 7.9 percent from August 2006, the seventh consecutive month of year-over-year declines in listings. Year-to-date, there has been 3.2 percent less placed on the market than this time in 2006.

Despite this decline in new listings, the drop in sales has been even more dramatic. As a result, homes are staying on the market longer and inventory is at record highs. At the start of the month there were 34,808 homes for sale in the Twin Cities region, an increase of 11.3 percent from this time last year. This amounts to 10.39 active listings for every expected buyer for the month of September.

“Sellers need to understand what they’re up against,” said Greene. “Homes must be priced aggressively and kept in excellent condition to sell quickly.”

With sales down and inventory up, home values showed a slight decline. The August median sales price of $230,000 is 2.1 percent down from August 2006. Home sellers received 94.7 percent of their original asking price in August, down from last year at this time when the figure was 96.6 percent. Downward pressure on home prices will continue as we enter the typical fall season slowdown.

Home values have declined as the market shifts further in the buyer’s favor, but at different
velocities depending on the property type.

“Projections on the future of the housing market are like belly buttons—everyone’s got one,” said Kevin Knudsen, president-elect of MAAR. “But the only thing we know for certain is that this rebound will take some time. In the meantime, opportunity is out there for buyers.”