Thought I would end the year with a bad pun. Is there any other kind?
The fourth floor of the Landmark Center. It has been an interesting year and I will start publishing year end numbers later this week. In 2007 average home prices went down slightly in St. Paul. They did go up in some neighborhoods. Housing is not just about prices. A home is also a place to live. In my case I also work out of my home. To me the place is priceless but it doesn’t have anything to do with money. We bought it during a "bad" market and watched it depreciate three years in a row. Today we would not be able to rent the smallest studio apartment for the amount of money that we pay for our mortgage each month.
In 2008 I don’t think home values in St. Paul will go up, but I am not sure they will go down either. I don’t anticipate much of a change from 2007 except that there will be more foreclosures, fewer lenders and fewer Realtors. I predict that the city of St. Paul will start doing something about the 1573 registered vacant homes that are now on the books. Many of these are bank owned and some are category 2 or 3 structures.
With the Cat 2′s and 3′s the city will not let any one live in them until the certain repairs are made. Some of the homes would be great for first time home buyers but those buyers often do not have enough money to do the repairs and can not use the first time home buyer financing. The investors, speculators and flippers have not been buying much real estate this year. Most St. Paul residents would like to see the homes occupied again and the banks, even though they don’t know how to sell real estate, would like to get them off their books too. During the next year that will be one of the biggest issues facing the local real estate market.
So I will say farewell to 2007, and I look forward to 2008 and wish you all a happy new year.
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Glad to hear that you’re staying in the business, Ms. Boardman, and thanks for your prediction.
By saying that “In 2008, I don’t think home values in St. Paul will go up, but I am not sure they will go down, either,” you’re sounding more optimistic than most anyone else I’ve read — the consensus seems to be that even if housing prices don’t decrease in nominal dollars, there’s virtually no chance that prices will keep up with inflation. So, even though a St. Paul house having a market value of $100k today might still have a market value of $100k next December 31, in fact 3-5% of the real value of that home will have disappeared due to inflation, because the dollars received from a sale would be worth less.
For you to be correct that home values (as opposed to prices) won’t go down in 2008, that house would have to be able to sell for $104k or so next New Year’s Eve. I’m skeptical that that will be the case with very many houses.
But, if you are right, a lot of buyers no doubt will continue to rent, as affordability continues to be the largest barrier to entry, in my opinion.
Best wishes for the New Year,
Bubble_Up
I do think that Saint Paul is (so far) faring better than the national average, at least as far as I can take the numbers that Teresa gives us and swirl them around in the bottom of a teacup.
The foreclosed and vacant properties are a serious problem, but there is a chance the city will stay on top of that. These are actually old problems that appeared to go away in good times due to the action of “investors” who snapped them up. I don’t know how many of them the city can grab, but the daunting number 1573 has to be weighed against grabbing them for pennies on the dollar. It’s up to non-profits like District Councils and CDCs to find the bucks to fix them up. That’s the real problem, IMHO.
But there are a lot of signs locally that, except for condos, we’re doing OK. I’ll take that for now, and just hope it stays that way through 2008.
Teresa – Happy New Year! May 2008 bring some government action toward ending the vacant foreclosed properties in St.Paul. It is a problem many cities have around the country. I would love to see more community loan programs which assist in rehabbing these beautiful homes.
As always, a great picture and pun:)