Here is my opportunity to play Nostradomus, no not really but I will give it a go about what I think will happen in the Twin Cities real estate market in the upcoming year. The biggest thing, we are still not out of feeling the wave of foreclosures. I think the most of subprime mortgage debt has been worked through, still some to come. Foreclosures now moving to prime borrowers and Alt-A loans because of job loss is the next thing to worry about.
Buyers in the Twin Cities
Plenty of deals will remain in the real estate marketplace throughout the cities and suburbs. Affordability will sink to levels not seen in sometime, while median wages will remain where they are. Making it the right time for certain people. Home buyers might be missing out on a deal of a lifetime, but how many times have they heard that 
Statistics are important and make sure your Realtor(r) has them. Real time stats are readily available and check them out here. Demand more.
Will mortgage rates hit that mythical 4.5% or possibly lower? Basic principle has always been as home values go up, values decrease and vice versa but that is not we are seeing. With the fed lowering rates, they want you to put money into assets for the short term thus driving mortgage rates down by investing mortgage backed securities. Unfortunately because of all the money they are printing inflation worries and the value of the dollar dropping will continue to drive fear.
I don’t see this lasting very long rates. Once we have hit that equilibrium, where stability returns rates will trend up again. Stability will hopefully return to sometime in the summer time but the bottom will be hard to predict.
Owning a home is not for everyone and there are a lot of people that are still fundamentally not ready to own a home and that works. Renting is still and remains a very viable option.
Sellers will still have to be creative
With foreclosures continuing to put downward pressure on home values, Twin Cities home owners will have to buckle down. If at all possible hold off on selling until 2010. What? You won’t hear a lot of agents say that but I am sure I will take some heat for that one.
The one thing home sellers have going for them is interest rates falling and hopefully this helps out. Don’t count on it though because buyers confidence is shattered. They have to possibly be willing to accept the fact that home prices might continue to fall. Remaining in a house for 7-10 years might be hard for some to acknowledge given in recent years people could buy and sell within a couple of years making money doing it.
Will the Norm return
The biggest thing that has to be fixed is consumer confidence, until this problem is solved nobody knows. It would be nice if would happen soon for everybody’s sake.
Meh, take them for what they are worth. Just my two cents.
