Homes Are More Affordable Now Than Ever!

Forget the negative hype about the housing market. Homes in the Twin Cities metropolitan area are more affordable than ever. If you are wondering whether you should purchase a home, consider these facts:

• The Minneapolis Area Association of REALTORS® (MAAR) recently reported that we are experiencing a “massive upswing in housing affordability” in our area. The MAAR Housing Affordability Index grew seven points in November to 138, the highest November mark since 2004.

• Forbes magazine recently ranked Minneapolis the number one “Most Affordable Place to Live Well” out of the 50 largest metropolitan areas in the country. The ranking was based on housing affordability; cost of living; access to arts and leisure activities; and a quality of life index that measures the strength of the schools, quality of health care, and crime and poverty rates. Forbes noted that the most important criteria in the number one ranking was housing affordability. In the last quarter, 61 percent of the area’s homes that were sold were available to the median household earner, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index. Compare that to one of the least affordable cities San Francisco where only 5.7 percent of the area’s homes are available to the median income earner.

• One important factor contributing to housing affordability is the historically low interest rate, which was 6.X percent as of (Date).

• In addition, home prices in the Twin Cities metropolitan area are moderating, with more and more motivated sellers willing to make positive adjustments to their original asking prices.

• Rents are increasing, and first-time homebuyers’ mortgage payments may be only slightly more than their apartment rent after considering tax advantages. In addition, studies show that homeowners accumulate significantly more wealth than renters. A study by the Federal Reserve found that homeowners had a median net worth of $184,400 compared to renters’ median net worth of $4,000 in 2004.

• Real estate is one of the best and safest long-term investments. Over 10 years, a $10,000 investment in the stock market at a normal 10 percent market rate of return would yield nearly $16,000. Compare that to a 5 percent ($10,000) down payment on a $200,000 home at a normal appreciation rate of 5 percent over the same 10 year period. Through the power of leverage, your return would be $125,000—nearly eight times the stock market return.

• In addition, homeowners benefit from favorable tax laws, including deductions on mortgage interest and property taxes and up to $500,000 in capital gains tax exemptions on personal residences at the time of sale.

• There is a wide variety of high quality homes available in all price ranges and communities in the Twin Cities. You can choose from new construction, existing homes, starter homes, move-up homes, luxury properties, condominiums, co-ops, townhomes, and lofts.

Don’t miss this real estate window of opportunity.