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Twin Cities See Steep Decline In Home Prices

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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.)

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