We invited readers recently to send us questions about the Minnesota housing market to see if we could tap MPR’s Public Insight Network for some answers.
Here’s the first fruit of that effort.
Check out the questions and his answers below — and then keep the conversation going. If you have thoughts to add, post below or send them to me directly.
This is an experiment, so keeping it going depends on your feedback and your questions. Use this handy form to send in your own questions.
Here we go.
1.) Extenuating circumstances aside – is it a good time to sell a townhome at a loss to purchase a home that would have been out of reach 1-2 years ago?
Many people get tied up on the whole “selling at a loss” thing – all real estate is relative. For buyers making a lateral or upward move, in most cases the price on the new home they want to purchase has made a similar (or potentially larger) price decline in the last few years. So while you may “lose” on the sell side, you are likely making it up on the buy side.
This does require that you have the cash to pay the costs to sell and still have enough to purchase – selling and buying isn’t cheap so some of the savings on the new house will be eaten up in transaction costs but if the move makes sense for your situation, then go for it.
2.) I am a current renter and would like to purchase a house in the next year or so. I will also be getting married in about 6 months and am trying to figure out whether to buy before or after the wedding. Should I be afraid that long term interest rates will rise precipitously in the next six months, or can I afford to take my time before buying?
Ah, the Crystal Ball Question. Rates are going to go up… eventually. That could be in a few months or could be a year. When they do begin to climb, they may climb very quickly, leaving little time to react. The tax credit of $8000 to 1st time buyers and $6500 for repeat buyers who have lived in their current home 5+ years expires April 30th so there’s some good incentive to purchase now to take advantage of both the record low rates and the tax credit.
On the other hand, weddings can be expensive and there’s a lot going on in your life right now. Speak with your fiancée and together look at your calendar and finances. If you can do something before the end of April, you may get both the tax credit and a phenomenal rate – waiting is a little bit of a gamble and if you can lock things in now you have one less thing to stress about later.
3.) Did proximity to the light-rail have a positive effect on home values located nearby? If so, what distance out did the effect end?
This is a tough question due to the great state of flux in our housing market recently and the subjectiveness of the effect. Some homes are so close to the rail lines that the added noise and traffic is likely a detriment, while those just a few houses away may suffer no ill effects.
While being close to transit is a big perk for some, I think it is hard to quantify effect in a dollar amount or percentage of value that the houses surrounding light rail may have had since this amenity is valued differently by different people. I would believe that in more transit-dependent cities we’d see a more clear effect.