A doozy of a reason to get your home on the market sooner rather than later
As a real estate agent who lives and works in Minneapolis, I like to play sociologist--look at what is happening around me and think about how it will impact our local real estate market. This morning I found a potential doozy. The Minneapolis Star Tribune published an article about the protected status of Liberians in Minnesota expiring this October. Thousands of Liberians have been in Minnesota under a temporary protected status since 1991 when that status was granted due to a Liberian civil war. There are teenagers that were brought here when they were infants, grew up here, and now face the possibility of being sent "home" to a country they don't know anything about. I'll refrain from expounding on my views of immigration, politics or the dillema this presents from a humanitarian point of view. What I would like to mention is how this has the potential to effect our local real estate market.
Let's start with what we know.
- The real estate market has been on a downturn
- There are more houses on the market this year than there were last year
- Average days on the market for the Twin Cities Metro have increased to 80 days.
- Due to amazing interest rates and a glut of inventory buyers have "bought forward" meaning those that were going to buy, and even those were thinking of buying, have. We have to wait now for new buyers to enter the market, because we "used up" our buyers faster than we anticipated.
- Due to mis-managed consumer debt and an influx of "exotic" mortgages, we are entering an uncertain time with a record number of foreclosures
- We started the year with about 60,000 homes on the market
- If we use previous housing trends over the last 2 years to predict this years housing trends, we can reasonably expect somewhere around 75,000-80,000 houses on the market in late August when inventory usually spikes.
Hypothetical Case Study:
Brooklyn Park has the largest population of Liberians. Officials estimated there are potentially 3,000-5,000 who may be pulling up stakes to return to Liberia. After 16 years of living here, many will have houses and mortgages that will be left behind. In a city the size of Brooklyn Park, even an extra 50 houses on the market will have a huge impact. Simple laws of supply and demand say if the inventory goes up, demand goes down, prices drop. If this happens, you can bet the number of days on the market will increase not only for Brooklyn Park, other surrounding NW suburbs such as New Hope, Golden Valley, Brooklyn Center, and others. You see, if a buyer is looking for a home in a nearby suburb, and is able to buy the same house for signficantly less in Brooklyn Park (because of lower prices) this will effect the number of buyers purchasing in neighboring suburbs. Nothing happens in a vacuum. We will all be effected by this mass exodus if it does occur.
I posted about the importance of getting your home on the market early this year. With this news it makes it even more important to act early. Below is a quote from the Star Trib article:
"We anticipate a spike of houses for sale," Joel Spoonheim, Brooklyn Park economic and redevelopment director, told city officials in a recent memo. "Our fear is that this may result in a significant increase in rental property or vacant homes as the ownership market may not be able to absorb this abrupt influx."
Hey Joel, the "ownership market" can't absorb the inventory we have right now!