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This one's for all those with hammers

Minnesota State Roundup

September 1, 2009


Ron Wirtz Editor, fedgazette
This one's for all those with hammers

When it comes to housing, news reports from around the state trumpet something typically heard in a country music ballad: Down so long this feels like up.

For example, six cities in the St. Cloud region issued all of 11 housing permits in May, yet local industry officials said the $8,000 federal tax credit for first-time home buyers was winnowing down the number of houses for sale, a precursor to more building permits.

In the Twin Cities, things got so bad that the industry is celebrating a modest drop in the percentage of distressed (or “lender-mediated”) homes, which went from about 60 percent of all home sales to about 40 percent earlier this summer; the total number of such homes on the market in July dropped by 18 percent from a year earlier.

But a dark side might still be lurking. Closed sales of such houses more than doubled over this period, which industry officials also attributed to the tax credit for first-time home buyers. The program likely offers limited demand, but the supply of such homes continues to climb, rising by 9 percent over this period.

Some places do, however, appear to be on the mend. In June, Rochester housing permits returned to levels from a year earlier, and permits for all types of construction rose to their highest level in 13 months.

Ron Wirtz
Editor, fedgazette

Ron Wirtz is a Minneapolis Fed regional outreach director. Ron tracks current business conditions, with a focus on employment and wages, construction, real estate, consumer spending, and tourism. In this role, he networks with businesses in the Bank’s six-state region and gives frequent speeches on economic conditions. Follow him on Twitter @RonWirtz.