Up to this point I’ve talked about several areas around the Twin Cities that have weathered the recent down turn in the housing market pretty well. I thought it was time to look at some areas that have not done so well since the peak of 2006. The Near North Area of Minneapolis has been the hardest hit, 77% since 2006. Near North, along with the other areas in this chart, have a reputation for being economically unhealthy. The median sale price being below the Twin Cities Median of $155,000 isn’t the only reason some of these areas suffer economically. Part of it is the make up of the community, proximity to high crime areas and low demand for housing in those areas.
I’ve also noticed communities with low economic health also have more competition with distressed properties. Although, I will argue the number of distressed homes is not the only reason for prices being pushed down so much. It has more to do with the overall inventory of homes for sale and not enough home buyers to buy these homes – way too much supply and not enough demand. In a post I wrote last week I briefly talked about competition in the Twin Cities Housing Market.
In this next chart is the competition the Near North Area of Minneapolis is experiencing. 25% of the homes for sale are distressed. If we look at this from an inventory perspective that means one out of four homes are distressed with the majority of them being Short Sales. There are currently 1,608 homes for sale in the Near North Area of Minneapolis, 402 are distressed.
In this next chart we see the Near North Area is currently in a Balanced Market, much like the rest of the Twin Cities Area and is teetering near a Seller’s Market since last year. Balanced Markets have a tendency to not last very and now that I’ve looked at one of the hardest hit areas in the Twin Cities Area it’s even more obvious to me we could see a turn around in the foreseeable future.
Until job growth improves a housing recovering is going to be a slow one and until companies know what their expenses will be from new government policies and regulations job growth will also be slow. Which would lead me to believe that government is a very BIG reason why the housing market hasn’t recovered more quickly.
About Eric Hempler
