A residential real estate malaise?

We pretty much knew it was coming. Home sales were bound to take a dive after the federal home buying tax credits ended in April.

But maybe we didn't realize the extent of the hangover until my colleague Molly Bloom checked in recently with real estate pros in MPR's Public Insight Network.

Many of the responses she got back show a deep frustration right now among typically upbeat people whose livings are tied to residential real estate.

No one used the word malaise (yes, I'm old enough to remember Jimmy Carter's "malaise" speech) but that's what it feels like.

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"The next big story is that foreclosures are creeping up and that this isn't over," said Teresa Boardman, a St. Paul Realtor who writes the St. Paul Real Estate blog.

"The rest of this year is going to be very slow. Prices may tick down again.... Buyers have more choices but already the absorption rates are going up. The numbers are what I would expect to see in the fall, not during the height of the buying season."

"Values are still dropping. Look at your assessed value and reduce it by 10 - 20 percent and you will be close to sale price," said Jake Ehlers, a real estate broker from Plymouth, "There will be more foreclosures until we can get decent jobs, not $8 per hour jobs."

Click on the map icons below to see what others told us about the housing market around them. If we get more responses we'll post more, so please add your voice to the discussion.

Most of the responses we got were from The Cities. But Benjamin Denton, a real estate lawyer in Pipestone told us things were improving around him. The southwest Minnesota economy has stayed pretty resilient during the recession with a jobless rate consistently below the state average.

The market there was hobbled, though, by the feds suspending a popular rural home loan guarantee program.

Young homeowners, Denton said, "could get a home here in Pipestone with no down payment and also no mortgage insurance through that program. It's been a concern whether the funding will come back -- it's been responsible for home sales from young families more than the tax credit."

Twin Cities mortgage broker Carlos Gutierrez said his business was "reasonably active with people refinancing with low rates." All of his clients were on track to close their deals by June 30, the deadline to complete a purchase to still get the tax credit.

Others, though, see financing hassles as an ongoing problem to getting deals done.

"Lenders are so afraid to make loans that Fannie Mae or Freddie Mac might force them to buy back, that they are setting guidelines even the most credit-worthy buyers are having trouble meeting," said Jim Luger, an Edina real estate broker who owns a company with 40 agents.

"In my 37 years of real estate practice, I have never seen so many transaction fall-throughs because of lender underwriting rejections," Luger said. "The credit tourniquet has stopped the flow of money, and gangrene is starting to kill an already sick housing market."

The Minneapolis Area Association of Realtors noted Monday that "pending sales in the Twin Cities housing market trended up for the first time in four weeks," adding:

This may be a sign that the drastic drops in sales seen in May and early June were simply temporary aftershock reactions to the tax-credit build up and that demand will slowly return over the course of the summer, but it's far too early to say that with any certainty.

"We are getting more applications. The difficulty is getting the loans closed," said Bill Dreischmeier, a home loan originator in Andover. "Lending requirements are very strict." The biggest problem, though, is getting a "high enough appraised value to do the loan. Last month I was able to close only one of six loan applications."

UPDATE: The National Association of Realtors today noted that nationally, "approximately 180,000 home buyers who signed a contract in good faith to receive the tax credit may not be able to finalize by the end of June due to delays in the mortgage process, particularly for short sales.

Collectively, our Network sources are showing us the challenge.

It's a complex market that depends on lots of different cogs working together -- people with jobs who want to buy houses, a market that can absorb short sales and foreclosures, a financing system that can expertly measure risk.

None of those cogs are functioning great at this point. Until they do, the housing markets will continue to stagger.

Melissa Melnick , a Realtor from St. Louis Park, came up with one novel solution.

"People don't really acknowledge this, but I believe immigration reform and housing are tied together. If there is a reform, imagine all of the people who would then be able to purchase a home."

I talk to undocumented immigrants quite often who would love to purchase a home but they can't get a loan. Many of them are doubling and tripling up. If there are supposed to be around 12 million undocumented immigrants, even a fraction of those people who would purchase would help the market.

Got an idea or insight on Minnesota's housing and mortgage markets? Drop us a line.

6/28 UPDATE: Here's a new MPR story on why some home buyer tax credit deals won't get done by the Wednesday deadline.