Twin Cities homeowners got another dose of bad news Tuesday when a closely watched national index showed its first double-digit drop in metro home prices compared with a year ago.
January's 10 percent decline is hardly a shock. Just two weeks ago, Twin Cities-area Realtors reported that the median sale price in February slipped below $200,000 for the first time in four years, and even that normally optimistic group has a gloomy outlook for the rest of the year.
THE BRIGHT SIDE
The Twin Cities area isn't the worst market in the country. The S&P/Case-Shiller home price index for single-family homes put the Twin Cities right on the national average for 20 metro areas from Atlanta to Washington, D.C.
Charlotte, N.C., led the nation with a 1.8 percent rise -- the only one of the 20 cities to show an increase -- while Las Vegas and Miami were the big losers, down 19.3 percent.
And by one measure, Twin Cities home foreclosures were below the national average at the end of December. Foreclosures affected about 0.3 percent of the mortgages in the Twin Cities area, said First American CoreLogic Inc., a real estate information and analytics firm in Santa Ana, Calif. That's far better than Chicago, where metro-area foreclosures were 2.5 percent of all home mortgages, or Detroit and Denver, where foreclosures were 2.4 percent of mortgages, First American said. The national average was 0.7 percent.
Thomas Musil, director of the Shenehon Center for Real Estate at the University of St. Thomas, is among those who expect the price decline to continue this year. Here's why:
Home foreclosures will continue this year, driven by rising interest rates for adjustable rate mortgages.
Tightened loan requirements for would-be buyers.
A lack of consumer confidence that causes people to wait for further interest rate decreases before they buy. March U.S. consumer confidence dropped to a five-year low this month, according to the Conference Board.
But ... we're helped by our historically stable housing prices. Because real estate never went sky-high in the Twin Cities, there was less of the speculation that contributed to the national foreclosure crisis.
Steve Alexander • 612-673-4553