We are seeing a general return to sanity in the real estate market in the US. Just like the Tech Bubble caused people to lose sight of what truly makes a company valuable, so did the real estate bubble lead to confusion as to what makes a house valuable. People were buying houses for all the wrong reasons.

During the boom everyone was thinking like an investor, unfortunately 99% of those people were unqualified. This has led to the current correction in the market, during which smart people are buying. The foreclosure market has opened up opportunities for bargain buying.

Home sales continued their recent upward streak for the week ending,
with pending sales posting a 21.1 percent increase over the same week in 2007.
While this doesn’t match the extreme increases seen throughout September, it remains a positive indicator of recent buyer demand.

Just shy of 50% of the properties bought during the week were lender-mediated foreclosures or short sales—47.3 percent.

New listings declined by 10.0 percent for the same time period
comparison and are down 11.5 percent over the last three months.
The total supply of active homes for sale sits 9.4 percent below this time last year.

Inventory should decline for the rest of the year as traditional home sellers take their homes off the market with greater frequency during the fall and winter months, waiting for the inherent optimism and renewed spirit of spring’s thaw.

Highlighting a common theme of this blog, the core cities of Minneapolis and St. Paul are benefiting most from the
price appreciation trend of the last five years. Next in line are some of the developing ex-urban areas and most of the first ring suburban communities.

This is further confirmation of the importance of location in choosing real estate. Commuting an hour or more makes outer ring homes inherently unattractive and when you remove the promise of an ever inflating real estate bubble, people get back to the basics of real estate– Where do I want to live?

Downtown Minneapolis Market remains dynamic. The combination of attractive new developments and a demographic shift in which “baby boomers” and empty nesters seek to retain their youth by enjoying the benefits urban living opposed to suburbs.

This contributes to the commercial success of lofts in the North loop (Warehouse district) and Mill Ruins areas. Also latest High Rise projects like “The Carlyle” and the “Yvy Tower” have seen a strong interest from buyers. Both have seen over 90% of units reserved within the first two days of availibilty.

With a booming entertainment district circling Block E and a “Renaissance” of the Mississippi River banks, Downtown Minneapolis offers to date its best growth, leaving room yet for more affordable real estate. Projects to come…

Uptown Minneapolis shows a remaining interest for ‘condo conversions”. With yet a limited offer and continuously growing demand. Linden Hills neighborhood of Southwest Minneapolis has successfully joined the pack of conversion developments.