Twin Cities See Steep Decline In Home Prices

By Lindsey Seavert, WCCO-TV

ST. PAUL, Minn. (WCCO/AP) — More signs of a sluggish housing market in the Twin Cities, with new figures showing the Twin Cities saw the biggest drop in home prices among 20 major cities across the country in February.

The Standard & Poor’s/Case-Shiller Home Price Index shows home prices in Minneapolis-St. Paul fell 3.1 percent in February compared with January. The seasonally-adjusted numbers for February show a smaller drop-off of 1.3 percent.

“It means that Minneapolis is in tough shape right now, as far as home prices go,” said Christopher Galler, CEO of the Minnesota Association of Realtors. “But it wasn’t anything we weren’t expecting. Last year, we were against the federal home buyer tax credit and the repeat buyer tax credit, so we understood there was going to be difficulties.”

Galler says foreclosures, especially among the first time homebuyer marketplace, continue to push market prices down.

“There is no seller to move up, what that does is skew the marketplace, because there are more home sales on the bottom of the market than at the top,” said Galler.

Lastly, Galler believes weather was a factor for the stagnant February marketplace activity.

“The weather out here was miserable, and people don’t like to go out and look at houses when it is cold and snowy,” said Galler.

Sue Moline, of West Bloomington, can relate as a buyer and seller. She just put her home back on the market again, and also has started house hunting again. She’s had her home for sale on and off for the past two years.

“You can’t buy a new property until you sold what you have got, but on the upside it’s a good time to buy, even if you sell lower than you would a few years ago, you’re still gonna get a lot more house for your money,” said Moline.

Moline’s realtor, David Olson, of Counselor Realty says the Standard and Poor’s survey reflects what he saw as a realtor this winter.

“Reports can be helpful, but I can tell when things are going down because of a lack of calls and lack of interest, and I see things picking up,” said Olson, who said activity does usually pick up in the spring.

The 20-city index shows home prices declined in 19 metro areas from January to February. Detroit was the only city in the index that posted a gain in February.

David Blitzer, chairman of the Index Committee at S&P Indexes, tells Minnesota Public Radio News he doesn’t make too much of the Twin Cities’ poor performance in February.

Blitzer says the Twin Cities market is suffering from the same conditions as other cities. He says tight credit and foreclosures continue to hurt the housing market nationwide.

“Overall, it’s a one month figure and a one month figure can be an anomaly overall. But we are not shaken by that,” said Galler.

Here in the Twin Cities, Galler says buyers with good credit hold the advantage.

“With the interest rates where they are right now, and the incomes people have right now, we are underpriced in the twin cities marketplace,” said Galler.

Still, as consumer confidence slowly returns, he warns buyers and sellers, this trend will likely continue.

“We have a good summer yet to go before we see a good bottom. Consumers are getting more confident but it’s difficult to determine where the exact bottom is,” said Galler.

(TM and © Copyright 2011 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2011 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)

  • Hmm

    If I had waited to buy my house now instead of when the government gave me a cool $8000 for free I think I would have made out better. Oh well. The $8000 was nice.

  • Kevin

    Here is what kills me. The value of my house went down $20,000 in the last 2 years, and my real estate taxes went up almost $1000 in the last two years!

    • Joe

      Down $181K on assessed value since 2008.
      Property taxes have dropped by only $401
      I get the fact they need the money to maintain things, even at just a status quo.
      That said – I have no issue in paying the $8611 in taxes IF at least the roads remain driveable, the parks remain in repair and clean…things like that. If these things start to drop and my taxes stay this high I may join the hoardes out there who have said screw it and walked away from the mortgage and property.
      As they say — don’t push me to far. I can and will start fresh somewhere else

      • getridofem

        You can see the values drop and drop but you will keep paying the same or near the same in tax’s as they need that much for their give-away programs they have in the county–untill they are done away with you will never pay less tax–no matter how much value you loose on your properties.

    • tuna-free dolphin

      Sorry Kevin, we’d lower your taxes based on the lost value of your home but but we need that money for a light rail systen you’ll never use. Oh, and to help Obama get reelected. Actually that money is already spent.

      • Mike

        tuna-free, Hey genius your property taxes go to local government to educate your children and such. Cry baby……

        • Bob

          Hey Fool, don’t even get me started on the overpriced, bloated and underworked education system in this state.

        • tuna-free dolphin

          Don’t even get me started on the sucking vortex of tax dollars into the under-performing, and ever- expanding budget of public education. Not to mention the costs of overpaid union teachers which my property taxes fund then get funneled into Liberal campaign coffers who always promise to throw yet more money into the giant maw. If you can’t connect those dots maybe we should call you Special Ed.

  • Dave

    Kevin – I have the same issue… What we REALLY need to be scared of is in 5 – 7 years when our glut of excess housing inventory dries up and the values do start to rise. Do you really think that the municipalities and state will reduce real estate taxes just because the value has finally been appreciating? Oh – I don’t think so!

  • getridofem

    Most of teh homes 2 years back and beyond were well over priced and inflated, they are just now getting to where they should be. I would expect them to drop another 5-10% and then be right were they should be. When in the real estate busines I saw them go up and up and up and said to all I knew and had dealings with it had to stop that they were way overvalued and priced and the bottom was going to fall out of the market–guess what–

  • Want to buy

    Buy a house now…sell it when it’s worth double what you bought it for in the future. Is it that easy?

  • John

    Bought after the bubble in 2008. Lost 70,000 since then. All my other neighbors, will be in their homes for good. Some have seen over a 200,000 loss. How can there not be someone in jail for this? Trillions of dollars in losses and no one did anything wrong? Yeah…..right…… The only way to sell now is to short it. You will be out of the market for 6 months. You can get another loan after that, that’s if you even want another home loan.

  • foge1

    The reason why there is no bottom is that you had realtors Ramsey pushing up values.

  • Earthman 2020

    The price of homes continues to drop and yet the cost to rent continues to rise. What I don’t understand is why banks don’t start renting out the huge inventory of foreclosed homes they have on their hands. After a home is foreclosed it generally sits there for over a year – and during that time the bank is getting absolutely nothing. And then when the bank finally sells the home they have to pay a Realtor and other closing costs associated in selling a house that most likely is fetching far less than what was originally owed to them. If banks starting renting out homes they would get immediate cash flow, and then they could implement a program that would eventually allow their renters to purchase the property, like a rent to own program, hence elimating much of the cost that goes into selling a home. And IF all the banks starting doing this then rent prices would go down simply because of the huge inventory of rentals that would suddenly be on the market. But banks don’t need to make such drastic changes to their business plans because our government thought it would be easier if we (the taxpayers) bailed them out. So now we are left with everyone going ahead with business as usual and hoping for different results. It’s insanity by definition.

    • swerver

      Tha sad fact is home values will never rise to what they were, if your upside down you will remain there , I wish 1 person would admit they bought a house on an arm, knowing they couldnt afford it, but took the money and hoped the arm payment wouldnt increase, because in reality it was you people who created this mess, if its to good to be true it probabl;y is, i was offered a 360k home for 1300 on a arm, luckily i waited and last year i paid 129K for a home that once was assessed at 230K. $900 a month conventional mortgage

    • Human Bean

      Here’s the thing, those banks are getting something while that house sits empty. The Bank takes out an INSURANCE policy for the full loan value on your house. Then when they foreclose on you they get THE FULL LOAN AMOUNT and whatever they squeeze outta you for the rest of your life.

      • Earthman 2020

        I find that hard to believe. All in all it’s just a sick game fueled by greed.

      • Mark

        Indeed, if you think anyone other than the common American is losing in this game, you are mistaken. Banks had insurance and insurance and banks all got bailouts and the opportunity to sell all their bad debt on the books. Where did all that money come from? You and me, in both taxes and deflation by massive “printing” of US dollars in electronic form. They made enormous sums of money on the way up, then cashed in on the way down. Sort of like if you could take out bank robbery insurance. You rob the bank, spend the money, then when you get caught the insurance pays to keep you out of jail and gives you a huge settlement. Welcome to the upper 1%.

        • chimp

          im not losing a just bought a foreclosed home for 125k, im winning $900 a month as opposed to $1133 for rent, lofe is good

        • captainobvious

          So if banks had insurance on all real estate loans why have over 500 closed in last 2 years. Mark no offense but u seem to know nothing about any subject ever

  • Hannah

    Hi. I was told that a bill had been signed (The health care bill?) that if you sell your house after 2012, you will have to pay a 5% sales tax on it to the feds! Does anyone here know if that is true or not true? I don’t know what a sales tax on real estate has to do with a health care bill, but all the same, I wouldn’t put it past the politicians to “sneak” it in somewhere!

    • Vince

      Hannah, There was a section of the Obamacare bill that created some new taxes. One of those new taxes was for home sales like you stated. It is not as big of a deal as people think though. It is only for ‘gains’ of over 500,000. In other words, if you bought a home for 200K and sell it for 800K, you pay tax on the gain over 500K (for married couples). In this case, you would pay tax on 100K in ‘gains’. You would not be paying tax on the entire sales price nor the entire gain.

  • Hannah

    Hello again. I just talked to my husband and he said the sales tax on a sell of a house will go into affect in 2013 and therafter! It is in the Obamacare bill and is 3.84%! Hopefully it’s not true!

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