What happened to Minnesota real estate in late 2012? 2012 in MN was a weird year, it started off with a bang and quickly fizzled only to have a slight bump in late summer and early fall. But yet over all our homes showed appreciation over the past 12 months since late 2011.
I place blame on a few things that made this year’s Minnesota real estate market volatile. Let’s start with the fact this is an election year and not just an election year but a presidential election year. Every 4 years we go through the same chaotic even and our market takes a hit because of the unknown. It sounds dumb and I agree, the election year places a huge toll on our market when the reality is it should not. I’m not sure if it’s just that people are overwhelmed with all that is going on but it happens every 4 years. But the plus side is the year following an election typically rebounds to some extent.
One thing that happened this year that really upset me was the Federal Reserve coming out and stating they will hold rates low until at least 2015! What? Why? I understand we are recovering from bad times but come on! Coming out and basically saying take your time to recover just crushed our momentum! The sense of urgency and desire to buy was just yanked out from under all of us and I can see the buyers reverting back into procrastination and the sellers paying the price. Why buy now, rates will be low for a few year? The reality is, rates may be low but what good does that do when home values are appreciating? Come to think of it isn’t that what happened in the early 2000’s? Low rates and appreciation created a bubble?
Let’s figure this out Washington and meet in the middle on this and stop swinging from one side to the other! So where does that leave Minnesota real estate in 2013? To be honest I think it will be better as things settle down but with low rates taking away some urgency I am hoping and relying on other factors such as job creation and recovery to give the entire market it needs to finally get back to normal. If people can work and rates stay low then that can provide relief in the marketplace if people do realize appreciation means the low rates won’t equal necessarily saving tons of dough. Short sales and foreclosures appear to have peaked about a year ago and while they still exist the overall weight of these homes is no longer causing the negative affects in the Minnesota real estate market.