The future is uncertain, and it doesn't much matter what we think or feel about it.
In this market, I'm a buyer. America may have hit the end of the road, but, maybe not. I'm betting on maybe not.
The key will be 2 things.
1 unemployment and economic recovery. If you see improvement there house prices might appreciate.
2 money supply. Far to much has been printed recently. If things go wrong (and it could) hyper inflation could occur. That could lead to 20+% interest rates. I am not sure of that would increase house prices to make up for the loss of money-value or if it would drive them further down as borrowing money gets to expensive. If incomes do not rise I expect house prices to really fall hard. If incomes rise as fast anything could happen.
The upward mobility of move-up home buyers is likely to aid Minneapolis in its recovery from the housing downturn, and St. Paul should follow suit. There's nothing tricky about the recovery in the Twin Cities other than a second wave of foreclosures expected that will send home values on a bumpy ride for a while.
When the winter snows thaw in the Twin Cities home buyers looking for bargain rate deals will be out in abundance riding with real estate agents to find their new homes and other deals. Minneapolis and St. Paul are forecast to see average housing values deflate just 3.2% in 2010, hardly a move that should keep anyone from buying a home.
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Consider that if you don't own your home, then you are paying someone else's mortgage and creating wealth for them. Sometimes renting is an appropriate use of your money, but if you intend to stay in the area for an extended period buying will make sense in the long run.
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Yes, you are wise to acknowledge that none of us has a crystal ball. Sales are pretty flat over all right now and are expected to be for a while now. So, my guess is that you won't see any visible appreciation until at least 2012 or 2013. I believe one person's answer here says you might experience 4-5% in the first years might be a bit ambitious. I would say your value might be flat for the first couple of years and then begin to climb commensurate with normal appreciation (hopefully), which would be 3-5% per year.
But, I want to qualify all of this by saying that if anyone had asked us 5 years ago if we'd see unprecedented amounts of foreclosure and a reversal in prices to values from the 1990s (1970s in some ares) and that it would last THIS long, we would all have said, "Well, historically, that's never happened before, so it can't happen." ..........just saying
It also, obviously, has a lot to do with overall national/international economic trends. If we have soaring interest rates--resulting in mortgage rates of 14%-16% (as we did back in the late 1970s), then everything will slow down and you may see negative appreciation. And it's quite likely that interest and mortgage rates will rise from their present levels.
As for what I expect: In some areas of the country, appreciation is already occurring at a 5%-7% or greater rate. I expect, generally, for slow growth 1%-3% for the next 12-18 months. Then more rapid appreciation--4%-6% annually.
I'm not as optimistic as Elizabeth. But she easily could be right.
Hope that helps.