Our troubled economy

One eye on home deals, another on the bailout

As a government rescue for lenders looms, home buyers and sellers are watching to see just what it might mean for them.

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Gabe Johnson, now living in St.Louis Park, talked with real estate agent Jane Workman at an open house in Minneapolis.

Photo: David Brewster, Star Tribune

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Gabe Johnson, 28, of St. Louis Park, chose house-hunting over watching the Vikings and Twins on Sunday. But he was treated to color commentary of a different sort, courtesy of Jane Workman, a Realtor for Coldwell Banker Burnet.

Workman cheerily greeted Johnson as he stepped into a meticulously kept four-bedroom, two-bath house just off Minneapolis' scenic Minnehaha Parkway -- its price recently reduced by $20,000 -- and barely took a breath. Living in south Minneapolis, she told Johnson, opens doors to book clubs and block clubs, neighborhood parties, bike trails and proximity to downtown and the Mall of America.

But Johnson isn't buying -- yet. The trial lawyer rents an apartment and can't buy until he unloads his Duluth townhouse. When the market shifts, though, "I'll know what I want," he said.

As news of a federal bailout for lenders looms, Johnson falls into one of two groups found at open houses. His group is "sitting on the sidelines, waiting and watching," said John Shaw, a sales manager for Edina Realty.

The other group are "smart people finding deals," Shaw said.

Both types could be found at Twin Cities open houses on Sunday.

In St. Paul's St. Anthony Park neighborhood, Rolf Addy, 30, brushed his hand across the counter of a converted condominium, opened closets, asked about square footage and garage space, and studied printed materials. "What kind of association fees are we talking about?" he asked.

But the first-time home buyer has a far bigger question: What does this financial bailout mean for him?

The bailout "is definitely on my radar," Addy said. "And honestly, I hate to say it, I'd like it delayed." He's hoping to capitalize on "a bad market," he said. A rescue package might mean a higher home price for him and his wife, Min Min, 32.

"Oh, wow!" said Beth Harrington of Minneapolis as she walked through an updated three-bedroom, two-bath house at 50th Street and 15th Avenue S. in Minneapolis. She's looking to go from her one-and-a-half story bungalow to something bigger, preferably with a fireplace. "I like the beams and the open floor plan," she said. The house she was viewing was built in 1928 and is selling for $344,000.

But like Johnson, who did find a renter for his Duluth townhouse, she has to sell her nearby home first; its price recently dropped by $10,000.

When will thaw begin?

Realtor Lisa Boe, with Keller Williams, held a two-hour open house Saturday in Woodbury, where street corners are littered with colorful "for sale" signs. No one showed. A couple of weekends back, an open house at the same spot got "a fair amount of Parade of Homes traffic," she said.

It could have been the weather, she said, or the Twins game. Generally, the market's not as bad as people might think, because of people looking for deals, she said.

But with another Minnesota winter not far off, even a bailout might not warm things up soon enough to see relief this year. "Liquidity will start coming into the market immediately," Shaw predicted. "But that doesn't mean that the average person on the street will feel like there's an opportunity to make a move. Consumer confidence might have its own timing."

Other Realtors and mortgage brokers, who say they've fielded bailout calls and e-mails from clients, concur. Ronny Loew, a mortgage planner for Minnesota Home Loan Partners at Cornerstone Mortgage, expects that a package will "help the housing market form a bottom" and an eventual "foundation for recovery." He points to what could happen if it doesn't pass.

"You've heard the expression, 'No one will lend you money unless you can prove you don't need it,'" he said. "That is where we are headed if this doesn't pass."

grosenblum@startribune.com • 612-673-7350 jross@startribune.com • 612-673-7168

  • about this series

  • The Star Tribune's coverage of the housing crisis, the credit crunch and their effect on Minnesotans.

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