46% have negative equity in home

  • Article by: PATRICK KENNEDY , Star Tribune
  • Updated: May 10, 2011 - 6:21 AM

As prices keep falling in Twin Cities, more mortgage holders go underwater.

hide

For sale signs dotted the lawns of homes along Lyndale Avenue in Minneapolis.

Photo: Elizabeth Flores, Star Tribune

CameraStar Tribune photo galleries

Cameraview larger

The housing market in the Twin Cities continues to decline, with nearly half of all mortgage holders underwater on their home loan and prices continuing to plummet.

In the Twin Cities, 46.2 percent of single-family homeowners owe more on the mortgage than the home is worth, according to the latest report from Zillow.com. That's up from 42 percent at the end of last year and 38.7 percent a year ago.

Nationally, negative equity reached a new high with 28.4 percent of all single-family homes with mortgages underwater, up from 27 percent in the fourth quarter.

"Home value declines are currently equal to those we experienced during the darkest days of the housing recession," said Stan Humphries, Zillow's chief economist, in a statement.

The median home price fell to $159,000 in the metro area in March, down 4.8 percent in the first quarter and 15.1 percent compared to last March, according to Zillow. The declines outpaced the nation, which saw prices fall 3 percent in the quarter and 8.2 percent compared to a year ago.

The real estate research firm now predicts home prices won't hit bottom until 2012 at the earliest. Previously, Zillow had expected a bottom in home values this year. Then Zillow expects a long period of below-normal real estate appreciation.

The falling prices mirror trends from several other recent studies, including monthly sales reports from the Minneapolis Area Association of Realtors. They showed the median sales price in April in the Twin Cities was $146,000 which was down 14.2 percent from last April, but above the $140,000 median price in March. The group's full monthly report on April sales will be released Wednesday.

Brad Fisher, president of the Minneapolis Area Association of Realtors and a Realtor in Plymouth, says the high number of foreclosures and short sales are keeping prices depressed.

"On the pending sales side the number of bank-owned or short sales are over 50 percent of our sales and have been since the start of the year," Fisher said.

Those bank-mediated sales typically have significantly lower prices than traditional sales. More traditional listings could help that, but those sellers want to wait for prices to rebound. "We have not seen our traditional seller come back into the spring market yet," Fisher said.

Greg Sax, spokesman for the Minneapolis Area Association of Realtors, acknowledged the local trend in falling home prices but anticipates some better news soon. "We think it's going to perform better this summer than last summer, but not overwhelmingly better."

Among other things the Minneapolis Area Association of Realtors measures is the number of new listings. Data for the week ended April 23 shows the three-month average in the number of new listings declined 27.1 percent to 19,587, but the association cautions that it is still seeing effects of the tax credit-induced spike in market activity. That tax credit ended April 30, 2010, and Sax anticipates the association should start seeing some better comparisons.

"This should be the last week of our apples to oranges comparison," Sax said.

Some local real estate agents question Zillow's data because it's based on public tax records that often are incomplete or inaccurate.

According to Zillow's report, few areas in the country showed increases in the first quarter. Median home prices in the Fort Myers, Fla., area rose 2.4 percent in the quarter, followed by the Champaign-Urbana, Ill., area and Honolulu, up 0.3 percent. Only Honolulu showed a year-over-year increase, 1.8 percent.

Home values have fallen 35.6 percent in the Minneapolis-St. Paul metro area since peaking in the summer of 2006, when the median home value was $246,800, Zillow reported.

Compared to last March no area in the Twin Cities showed positive gains; homes in Bloomington lost 10.5 percent; Minneapolis lost 10.9 percent; St. Paul lost 13.1 percent, and homes in Hanover fared the worst, losing a third of their value, 33.3 percent.

Patrick Kennedy • 612-673-7926

  • get related content delivered to your inbox

  • manage my email subscriptions

ADVERTISEMENT

Connect with twitterConnect with facebookConnect with Google+Connect with PinterestConnect with PinterestConnect with RssfeedConnect with email newsletters

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

 
Close