There are 2 problems with our local real estate market, well make that three.
1) the housing downturn nationally (no housing market escaped this)
2) Un-employment (some areas are harder hit than others)
3) Financing regulations, underwriting standards and burdensome regulations. (all housing markets were hit).
For the twin cities, I believe our biggest problem of the 3 right now is the lack of jobs. It is difficult to buy a home if you don’t have a job, unless of course you pay cash.. It is also scary to the move-up buyers if there is uncertainty with their employment. As we lose jobs, we lose households and population contributing to even further price erosion (Detroit is an extreme example of this..) Granted we are not at Detroit’s level and from an unemployment rate we look fairly good compared to the rest of the nation. Saying “we are not as bad as the other guy” is just a rationalization, we still have a jobs problem.
Minneapolis St Paul Business Journal just published this article about a 2.3% medical device tax enacted by the Federal health care overhaul last year. The tax is to take effect in 2013 and according to this article we could lose 2,767 medical device jobs. It appears as if Rep. Erik Paulsen, R-Minn., and U.S. Sen. Amy Klobuchar, D-Minn have been working on eliminating this tax.
- Hennepin County & Minneapolis/St. Paul, Minnesota Unemployment Rates August 31 2011 (craigkamman.wordpress.com)
- Minnesota Unemployment Rate up to 7.2% August 19,2011 (craigkamman.wordpress.com)
- CoreLogics Home Price Index, how Minnesota ranks nationally July 2011 (craigkamman.wordpress.com)
- Twin Cities Real Estate Market Pent up Demand (craigkamman.wordpress.com)