Minneapolis Real Estate in 2012:
What to expect in Minneapolis real estate in 2012 for interest rates, home prices, new construction, foreclosures, short sales, and rental properties.
Although the percentage of sales of distressed homes is expected to rise, the federal government's latest national mortgage loan-modification program is expected to allow as many as 2 million homeowners to refinance, says Mark Zandi, chief economist at Moody's Analytics. Zandi says that further home-price declines nationwide should cap at 3% to 5% and that 2012 will be the year that prices finally stabilize, setting the stage for gains in 2013. Page 97 of The Department of Housing and Urban Development Budget for 2012 
details monies allocated to help the real estate market in 2012.
Minneapolis Real Estate in 2012
Home Prices
What is the outlook for home prices in the next few months in Minneapolis real estate in 2012? Can we expect an influx in bank owned properties being pushed on the market. We can expect another wave that will cause a price drop. Jack Otter answers that normally housing is about 18% impact in a recovery. Unfortunately today we are in a negative rather than 19%. The Fed seems to have signaled that interest rates will probably hold. The ratio of median home price to median family income — has fallen to 2.6, below the historical ratio of 2. There are many fabulous HUD home deals, at a fraction of the price, some as low as $1000 down: the opportunities are really significant.
Mortgage Loan Delinquency Rates
New loans going into delinquency are expected slow in 2012. Overall, 2012 is expected to be the leveling off year, slow bouncing along. If you are a buyer there is no hurry but now is a good time. If you are a seller, home property values should have leveled out but may dip slightly with the next release of bank owned properties. Fewer borrowers will fall behind on their payments next year, thanks to the strengthening economy and refinancings. The share of delinquent borrowers is already down more than a quarter from the peak a couple of years ago. But many borrowers who fell behind on their payments during the housing crisis are still in limbo: last year’s robo-signing controversy threw a wrench in the gears of the "help stop foreclosure process". That means that some delinquent loans haven’t yet gone through the foreclosure process. Once a settlement is reached with banks over robo-signing, the Minneapolis real estate market can expect to see a new wave of foreclosures and foreclosure sales.
Interest Rates
Editor Jill Schclesinger of Money Watch.com says that interest rates, if they change, may be pushed ever further down. It is not like interest rates are rising anytime soon. The banks have 2-3 million properties that they have not closed on yet even though the mortgage holder has moved out and the home is empty. That does not include the high number of additional home loans that have fallen into delinquency but notices have not been sent. When these additional homes are released onto the Minneapolis real estate market, the new inventory will cause prices to tick down. Many individuals may feel stuck at the moment. In the last 8 - 10 years we have the lowest number of people moving due to the housing economic crisis. Gradual economic recovery is good news for the Minneapolis real estate housing market - even if it means higher mortgage rates – because higher mortgage interest rates should go hand-in-hand with greater housing demand.
Home Closings
Careful planning will always pay off. For those that must bring a check to closing, a review may show that they cannot count on cash out of their existing home. Adding the overhang of the supply on the market effects bottom line selling prices. Sellers need the professional care of their real estate agent to best predetermine what they can expect to net at closing and have on hand for their next home purchase.
New Construction
For home buyers with good credit and funding in supply new construction costs are reasonable to help you build your custom home. Some economists feel that the economy needs several years of keeping the number new homes built in check, in order to balance things. The message is "stop building stuff until we can decrease supply." You may be better off buying an existing home and working with it. Keep in mind real costs of new construction: builders must hire and pay a crew and pay for materials. To tackle growth-killing high living costs in the Minneapolis real estate market head on, local governments need to get rid of height restrictions and arduous permitting processes, which hold back urban construction and push development to the suburbs. In 2012, the Minneapolis housing market can enjoy rising prices, new construction or both, if we can start the year with stronger job growth and fewer empty homes holding back the market.
Read more predictions for Minneapolis real estate in 2012 at trilla.com.
Homeowners Wanting Mortgage Modifications
Many feel that there is too much government already in the political air and oppose more Federal help with loan modifications. HARP efforts for refinancing in 2011 fell short of hopes and only apx. 70,000 people got help. There is light - even a 2 % average increase in some real estate pockets is taken as encouraging. More homes being purchased will reduced inventory and help the Minneapolis real estate housing market to recover faster. The key here is closing costs. Contact Jenna Thuening to see if you should trade closing costs for simply putting an additional $5,000 down on your mortgage balance. REO stand for bank owned.
What to expect in 2012 For Vacant Land
Much of raw vacant land is stilling waiting for banks to have greater lending capability.
Rental Properties
Rental home prices are rising slowing. With fewer people buying homes and more people losing their homes to foreclosures, rental demand is increasing. High rents will hold back economic growth if businesses can’t pay already strained Minnesota workers enough to have a roof over their heads. Home city-dwellers won’t get relief until late 2012: that’s when a wave of new multi-unit construction projects that started late this year will be completed and available for rent.
What to Expect in 2012 in Commercial Real Estate
In November 2011, The University of St Thomas released it's semiannual Commercial Real Estate Survey. The findings indicate a less optimistic outlook for commercial real estate than the survey found six
months ago. The index for the amount of equity required by lenders was 60.2; this is a slight decrease from the 62.5 recorded last spring. This indicates a continued belief that the credit markets will return to more normal loan-to-value requirements which will help to make financing more obtainable with better terms. The land-price index remained essentially unchanged at 38.1 this fall compared to 37.5 last spring.
Short Sales Effects On Future Home Purchases
In this climate, if you are able to obtain a three year rent toward purchase option, make sure that you have an attorney look at your paperwork to make sure that you understand the details. Before signing, you have an important window to make careful use of negotiations. Your lease option document should include what percentage of your rent can go towards your purchase option. As families move due to foreclosures, we expect more families will be seeking rental homes with Minneapolis real estate in 2012. There are FHA deals you can get for 4% interest for life. You can learn more at HUDhomestore.com.