A Tale of Two Markets

Read Jim Buchta's Article
in Today's Star Trib

Jim Buchta, the Star Tribune's top real estate reporter, has an excellent article in today's paper surveying the Twin Cities housing market ("Best Sellers: Foreclosures"). And I'm saying that not just because I'm quoted and served as background for the story.

In particular, Buchta does a very nice job conveying that the local market -- like many others nationally -- has essentially cleaved into two. One market consists of lender-mediated properties (foreclosures and short sales) that are selling at dramatic discounts. The other market consists of traditional, owner-occupied homes that are selling for relatively small markdowns -- or even appreciating, in a few cases.

The difference between the two markets is stark: the '08 change in local prices ranges from Mahtomedi's up 11%, to Minneapolis' Camden neighborhood, which experienced a 54% drop.

So what does '09 hold in store? As Buchta notes:

'Tremendous uncertainty still plagues the market. Consumer confidence remains at record lows. Inventory levels hover near record highs despite recent declines in new listings. And rising unemployment hampers predictions for the coming year.'

What does all that add up to?

Here's one prominent local realtor's take (okay, mine): 'I don't think anyone has that kind of foresight. If they did, what would they be doing selling real estate in Minneapolis?" said Ross Kaplan, a sales agent with Edina Realty in south Minneapolis. "I would be dubious about anyone who says they know what's going to happen."