With an increase of 23% in pending (sold, but not yet closed) sales at this point of 2009, versus 2008, the Minneapolis real estate market has indeed been heating up. However as always, there is a further reality behind the statistics. Our current increase in sales is being driven by the price-point of $300,000 and lower. The farther above that price you get, the exponentially slower the sales get. In any normal market this is the case, but now it is much more so than usual.
The micro-market at $300K and lower is hot right now and we are currently burning through our stock in the Minneapolis real estate market. Many agents are noticing (and commenting, as I am) that the good home inventory is very rare now. We have a large amount of mediocre and lower stock. We are also seeing the return of very frequent multiple offers at the $300K and lower micro-market. It will be interesting to see how this plays out.
One thing to expect though: By the end of this year, Fannie, Freddie and Indy should be releasing a whole new, second wave of short sales and foreclosure properties, with another deluge to the Minneapolis area real estate market. The question is: Will the low interest rates continue, and the will the fed extend the $8,000 first-time home-buyer tax credit, in order to create the massive drive to purchase this second wave? While I do not like the fed manipulating interest rates in the first place, currently, the toothpaste is out of the tube, and for the time being, I certainly hope the low interest rates and the tax credit are both extended to meet the upcoming increase in supply.