Posted: 1:19 pm Wed, May 11, 2011


By Burl Gilyard

A home at 3835 Fremont Ave. N., once in foreclosure, in north Minneapolis is back on the market. The city and nonprofit partners have teamed up to renovate foreclosed homes with federal money. (Staff photo: Bill Klotz)

Minneapolis offers $1,500 enticement to buy foreclosures

As the latest housing statistics paint a tough picture of the local housing market, the city of Minneapolis is offering a new incentive for homebuyers as the city tries to dig out of the continuing foreclosure crisis.

This weekend, the city is promoting a tour of formerly foreclosed homes in north and south Minneapolis that have been rehabbed with federal money and are now up for sale again.

On Wednesday, the city unveiled a new incentive of $1,500 for buyers who purchase homes featured on the tour. That’s in addition to several other homebuying incentive programs already offered by the city.

Tom Streitz, director of Housing Policy and Development for the city of Minneapolis, said the city began working on a program three years ago with nonprofit partners to buy homes directly from banks to rehabilitate them.

“[In] the areas where we buy and rehab homes, prices are going up from a market where it had bottomed out in 2008,” Streitz said.

The city of Minneapolis has received $32.9 million in federal foreclosure recovery money to date. So far, 17 homes that were rehabbed with Neighborhood Stabilization Program (NSP) money have been sold, and another 75 are expected to hit the market this year.

The city is hosting a home tour from 11 a.m. to 3 p.m. Saturday of homes (www.livemsp.org) that have been rehabbed through the program. The tour includes 24 houses in north Minneapolis and 17 houses in south Minneapolis with listed prices ranging from $65,000 to $220,000.

On Wednesday morning, the city was showcasing a home at 3835 Fremont Ave. N. that dates to 1922. The house is listed for sale for $135,000.

“This is all about how do you bring people back,” Streitz said of drawing residents back to city neighborhoods.

But in the larger picture, the local housing market remains in tough shape.

The latest numbers released Wednesday can be summed up in a four-letter word: down. Closed sales, pending sales, new listings and the median sales price are all down compared with the same period a year ago.

The median sales price for homes in the 13-county metro area was $145,000 for April, down 14.6 percent from a year ago, according to the Minneapolis Area Association of Realtors (MAAR). But it represented a slight uptick compared with the $140,000 median sales prices reported for March.

Local home prices have been declining for nearly five years. According to MAAR’s historical statistics, the local median sales price peaked in June 2006 at $237,500 and has generally declined ever since, despite some occasional upswings.
Housing statistics are still suffering from comparisons with early last year, when the federal tax credit incentive program was still in play. Federal tax credits for homebuyers briefly put some juice back into the housing market, but the current numbers suggest that stimulus was short-lived. The tax credit incentive program ended last year.

“Once the dust is all settled here, the stimulus had a dramatic short-term impact,” said Aaron Dickinson, a residential agent with Edina Realty who tracks the local housing market and statistics on his blog, www.twincitiesrealestateblog.com. “It was a one-time kind of a thing.”

Distressed deals still account for a large chunk of the housing market. According to MAAR, foreclosures and short sales represented 46.1 percent of all pending sales in April. But there were signs that the trend could be slowing: Distressed properties accounted for 30.5 percent of all new listings, the lowest level since April 2010.

“It’s more of the same,” Dickinson said.

MAAR reported 4,289 pending sales across the metro area in April, down 25.8 percent from a year ago. There were 3,363 closed sales, down 14.4 percent from last year at the same time.

According to MAAR data, the average home is on the market for 152 days before it sells. That is almost identical to the length of time for homes on the market two years ago.

Sellers should take note: Homes are currently selling for 10 percent less than they might hope. MAAR reports that sellers are receiving an average of 90.1 percent of their original asking price, another sign of the softness of the market.

All told, fewer homes are on the market today than a year ago. MAAR reported a local inventory of 24,380 homes for sale at the end of April, a decline of 16.1 percent from the number available a year ago.

By the Numbers

$145,000
Median sales price, April 2011

$169,800
Median sales price, April 2010

14.6%
Decline in median home price

Source: Minneapolis Area Association of Realtors

Related links

http://www.mplsrealtor.com/

http://www.twincitiesrealestateblog.com/

http://www.livemsp.org/

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