The number of homes for sale in the metro sits at historically low level despite the recovering housing market recovering. The bids are in, but the stock is low.
“Thousands of people are still trapped in their homes because of negative equity,” explained Chip Halbach, executive director of the Minnesota Housing Project.
This April, more than 13,200 homes were listed for sale in the Twin Cities metro. The number seems stable enough — until you glance at last year’s supply. Then, more than 18,500 homes were for sale.
That marks a 29 percent difference, according to the Residential Real Estate Price Report Index, a monthly analysis of the 13-county metro area produced by the University of St. Thomas. The numbers paint a picture of the current housing environment: One where those with positive equity have it easy and buyers face fierce competition.
“The market is switched, and you’re hearing multiple offers on homes and people bidding back up over the asking price,” explained Herb Tousley, with the University of St. Thomas. “The reason there’s so few homes on the market, we feel, is that these people that have negative equity. They’re really locked out of the market. They can’t sell right now, so people that would like to sell are unable to.”
Nationally, the average for “underwater” homes is 25.4 percent. In the Twin Cities Metro, the average of homes that sit on upside-down mortgages is anywhere from 29-44 percent, according to the aforementioned report index. Understandably, few homeowners are interested in a short sale.
“It’s a tough thing for people to leave their home and write a check as well,” Halbach said. “You’re not going to have a down payment for somewhere else to live in.”
Halbach told FOX 9 News the Twin Cities is still experiencing a housing crisis that does not discriminate.
“You have people that … would save money over the long term if they could get from renting to ownership, and aren’t able to make that move,” he said. “With the Baby Boomers not having saved well for retirement and not having saved well in the market collapse — either end of the age scale, it’s going to be a tough situation.”
Meanwhile, Tousley remains optimistic and points to a difference by this year’s third quarter.
“As the market improves, median are prices going up and a lot of them will come into positive equity,” assured Tousley.
Halbach believes major investment in communities that need it the most is required before we see a true revival of the local housing market.
To learn about Minnesota’s housing counseling system, visit http://www.hocmn.org/buyingahome/housing-counseling/ to find resources to help homeowners avoid losing their home.