The State of the Real Estate Market Today

This article is reprinted from The Pioneer Press by
Gita Sitaramiah

This drop in value may have something to do with Minnesota's weather in addition to the other factor she discusses. We had a winter of amazing amounts of snow, lower than normal temperatures and snowstorms almost every weekend. This weather kept buyers in the house hibernating. We'll see what spring brings.


"The value of Twin Cities homes fell more steeply than those in the rest of the country during the first quarter. That's according to a report Monday from online real estate database Zillow, which also predicts the housing market isn't likely to bottom out this year.
The Twin Cities median home value fell 15 percent in the first quarter from a year earlier to a median of $159,000, according to Zillow. Nationally, home values fell 8 percent to $169,900 versus the year-ago period.
Additionally, Zillow reports 46 percent of Twin Cities homes are worth less than what is owed on their mortgages.
The Zillow Home Value Index measures the value of all homes, not just those that sold in a particular period. With substantial home value declines, as well as increasing negative equity and foreclosures, Zillow now predicts the housing market will continue to drop into next year.
"We did expect substantial payback from the homebuyer tax credits, which buoyed the housing market last year, but lack of demand post-tax credit, as well as rising foreclosures and high negative equity rates, make it almost certain that we won't see a bottom in home values until 2012 or later," said Stan Humphries, Zillow's chief economist.
The Zillow data include public information, including recorded mortgages and other home loan data.
Home values in the United States fell faster in the first quarter than they have in any quarter since 2008, when the housing market experienced its worst performance, Zillow reported. Home values have fallen 30 percent since they peaked in June 2006.
The negative-equity -situation - owing more than the home is worth - in the Twin Cities got worse. In the first quarter, the rate was 42 percent. Nationally, the negative equity rate is 28 percent.
About 41 percent of all Twin Cities homes sold in March went for a loss, compared with 36 percent in December and 37 percent in March 2010. Nationally, 38 percent of all homes sold for a loss. That's a new high.
In the Twin Cities, 25 percent of first-quarter home sales were foreclosure sales, up 6.1 percentage points since the fourth quarter of 2010. Nationally, foreclosure represented 24 percent of all sales, compared with 17 percent a year earlier.