Housing News, Opinion, Statistics and Homes for Sale
The Minneapolis Area Association of REALTORS released their latest market update this week which shows a Housing Affordability Index number of 157… the highest affordability in 5 years and 14% higher than a year ago!
Though interest rates did tick up some in the last month, median sales price took another dip which more than made up for the rate increase and lead us with a Median Sales Price below $200,000 for the first time since Spring 2005:
As the news about a slowing economy and fears of recession mount, the stock market has taken a huge hit, falling double-digit percentages in the last couple months, but housing is benefitting.
As money has been taken out of stocks, it has been flowing into bonds, which are historically a very safe investment. When demand for bonds rises, that reduces the interest rate paid on those bonds. As the bond market goes, the mortgage market follows.
We’ve seen substantial improvements in rates in just the last week, testing new multiyear lows and closing in on all-time lows! With falling sales prices and lower mortgage costs, housing affordability is climbing quite quickly and if the mortgage rates stay at these levels into February, we’re going to see the best affordability on homes in the Twin Cities since 2004.
The Minneapolis Area Association of REALTORS released their weekly market report today with new Housing Affordability Index numbers for December 2007. The HAI of 141 is the highest we’ve seen in the Twin Cities since February 2005… nearly 3 years ago. Falling mortgage rates, with many brokers quoting under 6% for a 30-year fixed), and lower sales prices has improved affordability by over 10% in just 3 months!
With mortgage rates and home prices down, the market is starting to look better for 1st time buyers and move-up buyers as well. The median sales price is down $10,000 to $220,000 from $230,000 in October 2005… a reduction of 4.3%. Some individual areas are doing significantly better, some are doing significantly worse. Even in the same community, there is a disparity between the pricing changes in single family homes, townhomes, and condos.
Where will 2008 end? My best guess is that prices will fall a little further and that interest rates will rise slightly, which means affordability may not go much higher than it is now. Only time will tell!
