The resale price of homes is dropping faster in Minneapolis than in almost any other U.S. city.
The Case-Schiller housing price index has just been released for December and it shows a massive drop in the resale price of homes here — 4.6 percent — in one month. It is the largest single-month decline since Minneapolis was added to the index in 1989, and puts the region right up there with Phoenix on the list of basket-case cities.
The price of a home is now at spring 2002 levels.
It’s hard to say what this means because at the same time, the sales of homes is increasing — albeit slightly — according to MPR’s Jess Mador.
“I think we need at this point is a certain amount of patience,” David Blitzer, the chairman of Standard & Poor’s Index Committee told CNBC this morning. “Right away there’s a lag in any numbers that come out a month, a month and a half… there’s a lag in people getting going. Mortgage rates have come down. It’s very difficult for people to qualify for loans. The banking system, now that the horse is out of the barn, has locked the barn up very tight. This is also the slow period. You gotta hang on ’til late in the second quarter in the summer before all the stars are aligned.”
Only Phoenix (-5.1%) and Las Vegas (-4.8%) dropped more than Minneapolis in the month.
For the year, Minneapolis housing prices dropped
21.1% 18.4%, about the same as the entire country. The pace of the price drop is not changing much increasing slightly, however. In the last six months of the year, Minneapolis prices dropped a little more than 10%.
At 11, NPR’s John Ydstie, will join Gary Eichten on Midday to answer questions about the economy. I’ll live-blog it here.
Update 9:31 a.m. – In response to a question from a reader asking for a comparison between the current rapid drop in home prices compared to the rapid increase in home prices during the “boom years,” I played with the spreadsheet and found these factoids: