Buying a Home in Today's Minneapolis, Minnesota Real Estate Market

Buying real estate in today's market conditions has become for many, a decision filled with questions and concerns.

Is the Minnesota or Minneapolis, St Paul housing market going to fall further?
Should I wait for a better mortgage rate?
If I purchase my home now, will its price drop soon?
Are home prices falling equally in all Minneapolis, St Paul neighborhoods?

Should you wait for the real estate market to "hit the bottom"?

This is the million dollar question. Many buyers, many experts are saying that we have not yet hit the bottom here in the Minnesota real estate market. Of course, no one knows for sure. But our team has reason to believe if we are not at the bottom, we are indeed very close.

First of all, as a buyer, you need to ask yourself how long you plan on living in the property you are looking at purchasing. Will it be 1 year? Are you looking more long term? In general, if you are looking at two or less years before planning on moving and needing to sell, buying real estate most likely is not the right decision for you. With the closing costs you have in buying a home and securing a mortgage for that home, in addition to the costs you have when you sell the home, you most likely will be "money ahead" by not buying and renting instead.

With this being said, realize that the rental market has become strong for rental property owners. Because of the sheer number of people looking to rent (due to foreclosure, etc), property owners have seen increasing rents over the last few years. If you decide to rent versus buy a property, realize that rents are rising and that you may in fact have some competition when looking at securing a rental property that works best for you and your family.

Should you wait for interest rates to lower?

Historically, interest rates still remain at low levels. Again, no one knows for sure whether rates will rise or fall, but compared to times during the 1970s and 1980s when interest rates were sky high, today's average rate around 6% on a 30 year fixed mortgage is still very, very good.

Do home prices drop the at the same rate at each price level?

Home Buying in MN We have found that in general terms, home prices at various levels do not move up and down accordingly. In other words, just because you hear prices dropped 10% nationally, does not mean that every price range of property dropped by 10%. To be sure, the lower the price point of home you are looking to buy, the "safer" you will be long term that the property will not lose value. With basic economics of supply and demand, a lower priced home will always be more affordable and be in demand. Obviously, we all need a place to live, and when in doubt, the lower price point of $200,000 and under will continue to remain in demand long term.

As you look at a price range of $200,000-$400,000, properties are still in demand but there are not as many buyers as the $200k and under price range. As you get over $400,000, demand softens even more. Does this mean you will be unable to sell your $700,000 home? Of course not. Just be aware there are fewer buyers who can afford a higher price range. With fewer buyers, you as a seller are looking at less overall demand for your home and of course, longer market time.

Nichole Fredrickson of The Minnesota Real Estate Team, or "Nikki" as I called her, did a fantastic job in helping me purchase a home. Over a couple months, she patiently listened and found exactly what I was looking for, made suggestions with me and my family in mind, and quickly made the purchase of my house a reality when we found "the one." Nikki is a fantastic advocate for both sellers and buyers alike and I recommend her to anyone in need of a realtor that will go the extra mile with customer satisfaction as her #1 priority. Thanks Nichole!" - Jennifer Fischer, Minneapolis, MN

What type of property should you look at purchasing?

If you ask any seasoned real estate agent, the type of property that has always been in highest demand is the single family home. As you consider what type of property you are looking to buy, keep in mind what your "exit strategy" may be. If you own a townhome or a condo right now in Minnesota, your ability to sell that property is very, very tough. With brand new condos and townhomes able to be built for less than many of the properties 3-5 years old, buyers are often leaning towards the brand new construction.

Does this mean that a townhome or condo is a bad investment? Of course not. There is an old saying with real estate, "Time heals all wounds." If you give any property enough time, history has clearly shown that the price will rise. As we discussed however, the key is what price point you are looking to buy, and how long you plan on owning the property.

What Minneapolis St Paul neighborhood should I look for?

This is really a personal questions that you and your family need to answer. Do you like a particular school district? Do you want to be close to your family, friends, or a particular lake? Here in Minnesota, there are certain areas that always seem to be "in demand." In Minneapolis, the Lakes area has always had a strong interest by real estate buyers. Lake of the Isles is obviously too spendy for some home buyers, but Lake Calhoun and Lake Harriet and the neighborhoods around them offer some wonderful choices. Woodbury, Edina, SW Minneapolis, parts of Plymouth and Maple Grove, West Bloomington, Eden Prairie ... there really are so many wonderful neighborhoods in the Twin Cities that continue to be in very, very strong demand.