Tight supply of homes for sale stymies families and metro marketby Annie Baxter, Minnesota Public Radio
MINNEAPOLIS — The glut of homes that the housing crisis dumped into the real estate market has largely dried up.
By the end of last year the supply of homes for sale in the Twin Cities hit its lowest level in 10 years. Reluctant sellers are partly responsible for those low inventories. Many homeowners still feel uneasy about putting their homes up for sale.
At the Coleman family home in south Minneapolis, they count themselves lucky that no one has had an "accident" -- the kind children have when they cannot get to the bathroom in time because the only one in the house is occupied.
"The bathroom is going to give Mommy a nervous breakdown," said Karlyn Coleman. "It's not good. Someone ends up yelling every morning."
Coleman and her husband, Craig, have two sons, ages 13 and 8. They live in a gray stucco bungalow, which they share with a few dogs. (Their bathroom is outside, at least.)
The Colemans would like a bigger place with another bathroom, but they are hesitant to put their house on the market.
It's partly a financial consideration. Karlyn works part-time as a substitute teacher; her husband is a partner in a law firm. Karlyn would like them both to be drawing full-time incomes before they take on a bigger mortgage.
She also worries about how long it would take to sell. Some nearby homes have sold quickly, while some have not.
"There's a house across the street that hasn't sold. It's a beautiful house," she said. "I don't know if it's in foreclosure or what it is. And you hear things in the bigger picture that the market's getting better. But it's hard to drive past the 'for sale' sign that's been there for a year now -- two years."
Craig Coleman acknowledged that their plans to sell are more talk than action.
"There is a sense of inertia, being in your house and not facing the process of moving and all the transactions inherent in that," he said. "So I guess I haven't felt like I've been pushed past inertia yet."
That's a common situation: Potential sellers are still on the sidelines. Prices have been rebounding, but the supply of homes for sale is at lows not seen since before the housing crisis.
"Inventory is a problem," said Andy Fazendin, the president of the Minneapolis Area Association of Realtors. "I would say it's slowing down the recovery of the market as we speak."
A few years ago, Fazendin said, the Twin Cities housing market was overrun with homes for sale, many of them foreclosures. But the great recession made buyers scarce -- they were too scared to take on new mortgages when layoffs were rampant.
Then the economy improved.
"And at the end of 2011 we saw a flip, and all of a sudden now we find a place where there's a ton of buyers and not enough sellers," Fazendin said.
The law of supply and demand suggests that if inventory remains tight, buyers will wage bidding wars on the few homes that are for sale. And prices, which have been rising, will jump further. That could draw out more sellers.
But so far, prices are not rising as dramatically as the supply has fallen.
And Fazendin worries that low supply will actually just discourage buyers and curtail the market's recovery.
"And really, the only thing that's going to solve the problem is more listings," he said
Some analysts say more foreclosures could once again hit the market, but the number of people behind on their mortgages in Minnesota is declining.
For the Colemans, the family talked about why they would like to move. Eight-year-old Auggie is tired of sharing a room in the attic with his brother, Alex.
"Because you snore," he told his brother.
And Alex, 13, complained that the ceiling in the attic is too low.
"My friend jumped off the couch and hit his head on the ceiling and got hurt," said Alex, emphasizing that he wants a space "where you can stand up."
But the Colemans have a price ceiling they don't want to hit, either. And so far Karlyn Coleman hasn't seen any home listings that meet their price and space requirements.
Meanwhile, her husband doesn't mind waiting for the right house.
For now, it seems like many other homeowners are like Craig Coleman --- willing to get by with what they have until they are sure that something better is out there.
- Morning Edition, 02/04/2013, 7:20 a.m.