Housing affordability bolstered by low interest ratesMinnesotans, including those in the Alexandria area, are finding homeownership more affordable.
Minnesotans, including those in the Alexandria area, are finding homeownership more affordable.
Historically low interest rates – hovering around 4 percent for a 30-year fixed rate mortgage – have resulted in reduced monthly housing payments, making it easier to purchase a home, according to the Minnesota Association of Realtors.
“Slower sales activity and aggressive Federal Reserve Board actions have lowered the rates on fixed term mortgages,” said Russ Portele, president of the association. “Because of the lower interest rates, home buyers at every price point are able to purchase homes at much lower monthly costs than they would have five, 10 or even 20 years ago.”
Consumers with good credit, home equity and consistent employment are benefiting the most from this market, Portele said. Many sellers understand that a 10 percent price reduction on their existing home price is worthwhile because they’ll save at least that amount on the higher priced home they plan to buy, he said.
“We’re seeing a number of sellers motivated by the low rates and outstanding values,” said Portele. “Many are looking to move-up to larger homes which are more affordable than they expected because of suppressed prices and low interest rates.”
Home prices, both the median and average, have stabilized and remain at about the 2009 price level.
In Alexandria, home prices have declined slightly – 3 percent from last year.
Statewide, the median home price was $154,000 in October 2010, a few hundred dollars higher than in 2009.
The average price is $186,843, an increase of $4,872 when compared with the average sold price in October 2009.
Median home prices across Minnesota:
Seven-county metro – $175,750, up 3.4 percent
Duluth area – $133,000, up 2.3 percent
Brainerd area – $145,000, up 5.8 percent.
St. Cloud area – $136,000, down 1.2 percent
Mankato area – $118,900, down 5.6 percent
Rochester area – $132,900, down 0.1 percent.
Alexandria area – $111,500, down 3.0 percent
Fergus Falls area – $101,000, down 5.1 percent
Detroit Lakes area – $152,000, up 8.6 percent
Grand Rapids – $118,000, down 5.6 percent
Southwest Minnesota – $98,000, down 4.9 percent
Iron Range area – $78,800, up 0.4 percent
However, home sales statewide continue to struggle. Inventory levels are high as the market absorbs more foreclosed and distressed sellers’ properties, the realtor association noted. This makes for stiff competition for the homeowners looking to trade-up.