By Starrla Cray
WRIGHT COUNTY, MN Like the rest of Minnesota, the housing market in Wright, McLeod, Carver, and Meeker counties has seen better days, but lately, there’s been a glimmer of hope.
“The inventory is definitely declining,” said Gina Sievert, an appraiser for McLeod and Meeker counties, as well as portions of Wright County.
Nationwide, mortgage applications recently increased for the first time in seven months, according to the Mortgage Bankers Association.
The increase may be short-lived, however.
“It might be a little blip of market activity,” Paul Jorgensen, an assessor for the Wright County area said.
The change of seasons may have contributed to the jump in home sales, he said.
“We always have a seasonal influx of buyers in spring and early summer,” Jorgensen said. “It might be the end of it. Who knows?”
Growth in the number of sales is not necessarily a positive trend, because many of these sales may involve foreclosures and other sales made out of financial desperation, according to population notes from the Minnesota State Demographic Center.
From the end of 2008 to the first part of 2009, the number of home sales in Minnesota grew 21.9 percent, while most states reported declining numbers of sales.
In Wright County, certain types of housing have been more sought after than others, Jorgensen said.
“For houses in the lower price ranges, there’s a lot more demand,“ he said. “It’s the $8,000 tax credit and low interest rates.”
On April 2, interest rates for a 30-year conventional fixed rate mortgage were averaging 4.78 percent, the lowest levels since they started being tracked in 1971, according to an article from Examiner.com.
The Federal Reserve has been keeping interest rates low, Jorgensen said, but “it’s questionable if they’ll keep doing that.”
Rates have already increased a little, at 5.44 percent for the week ending June 19, according to the Mortgage Bankers Association, but they are still lower than they were a few years ago. In September 2003, for example, mortgage rates were 6.44 percent.
Housing prices in the higher range haven’t seen any kind of stability, Jorgensen said.
“The $300,000 to $400,000 lakefront property just isn’t selling,” he said.
In Minnesota, the median listing price for a home is $158,900, according to www.realtor.com.
McLeod County is just under the average, with a median listing price of $140,000. Meeker County is even lower, at $119,900. Wright County is higher, with the median listing price of $184,900.
At $259,900, Carver County is much higher than the state average. However, the estimated median house or condo value in 2007 was $32,000 higher for Carver County, according to www.citydata.com. Carver County had the highest median sales prices in the first nine months of 2008, the Minnesota Demographics Center reported.
When the housing decline began, prices and number of sales dropped more in the Twin Cities area than in the rest of the state, but housing still remains more expensive in these areas.
Smaller towns may have been more impacted by the housing decline, Sievert said.
“The Montrose, Waverly, Winsted, Lester Prairie towns when the bubble burst, it hit these smaller towns a little harder,” she said. “There’s a smaller buyer pool.”
Somewhat larger towns, such as Hutchinson, Glencoe, and Norwood Young America, haven’t declined as greatly, she said.
“The cities I call ‘regional hub-type communities’ have tended to hold their values somewhat better,” Sievert said. “That’s not to say they’re not declining as well, though.”
A few years ago, these “hub” communities had very high increases in pricing, so people tended to look for housing in the smaller communities, she explained.
Now, the prices in the larger towns have dropped, and there aren’t as many buyers for the smaller communities.
“The incentive to drive those extra few miles isn’t there at all,” she said.
The recent slight increase in sales may be partly because of the time of year. Normally, June is the top month for sales, and this was true even in 2008, the state demographic web site reported.
However, the “peak” early-summer sales are still way below previous years. In 2004, there were 9,344 sales in June. Four years later, it was 3,961.
The prices also dropped dramatically. From January to September 2007 to the same time period in 2008, Wright County saw a 31 percent decline in number of sales, and a 12.3 percent drop in median house prices.
The price decline wasn’t as steep in other nearby counties, but they still felt a hit.
McLeod County had a 5 percent drop in prices and Carver County went down 3.4 percent. Meeker County only had a slight decline, at .5 percent, but the number of house sales decreased from 337 to 186.
“Lender-mediated sales, which is short sale and foreclosed properties, are making up a larger percentage of listings and sales right now,” Sievert said.
Many traditional sellers are waiting to list their homes until these homes are not “over-saturating” the market, she said.
In the past two to three months, Sievert said she’s noticed an increase in investors buying foreclosed properties to fix up and resell at a higher price.
“I think it just got to a point where the prices dropped,” she said. “There’s a little money to be made there.”
Sievert said she estimates at least “one more rough year” for housing prices and sales.
“There have been some signs that the decline has started to slow,” she said. “Whether we’re at the absolute bottom or not, I don’t know. I think we still have a little bit of growing pains to get through.”
Even when prices do go up, Sievert doubts they will be as high as they once were.
“For many years, we may not recover those boom times,” she said.
As for types of properties to recover quickest, Sievert said she expects the in-town properties to go up faster than the one- to 10-acre hobby farms.
“We’ve gone through these cycles before,” she said. “Now, 20 years later, people hardly remember it.”
“It’s very unlikely this will last forever,” she added. “Be patient and try not to panic.”