Editorial: For sale: Signs of hope for real estate

Editorial: For sale: Signs of hope for real estate
It's a buyer's market if you're in it for the long haul.


Realtor Greg Bauman started worrying about the health of the Twin Cities real estate market when prospective buyers began calling him from California to bid on homes based solely on Internet listings.

It seemed odd to Bauman that buyers would skip the step of actually visiting the properties. The phenomenon was yet another sign that speculation in residential real estate was out of control. Although bad-news headlines have been the norm ever since -- and no one can predict when we'll reach the bottom of the housing cycle -- this is no time to panic.

For existing homeowners, this week's news that the median sale price dropped 12.5 percent in February to $195,060 was sobering, especially versus a median of $225,000 in 2006. Back when those California cyber speculators were calling Bauman, homeowners and potential buyers were riding a wave of median increases of 8 or 9 percent a year.

But a drop in the median is not all bad news. Bauman, who serves as president of the St. Paul Area Association of Realtors, points out that the big February dip signaled a purging of lower-priced properties, including bank-owned houses. Sales of homes priced below $150,000, including some that had been foreclosed upon, was a key factor. The purge is a necessary part of the market cleansing now taking place throughout the Twin Cities.

The upside to falling prices is that some buyers who were priced out of the market during the frenzy of speculation will now be able to find larger, affordable homes as prices fall. Many of those will be first-time buyers who will benefit from newly increased FHA loan limits and low interest rates.

As the Realtors will tell you, it's a good time to be a buyer.