Lots of homes, but few takers so far
Every first and third Saturday of the month at 9:30 a.m., Tim Peterson sits in a well-lit meeting room in the basement of the Rosemount National Bank, waiting to speak to people who want to buy a house.
Peterson, a mortgage consultant from Bell Mortgage, runs a first-time home buyers' clinic, tailored to customers who want to purchase homes around here. Yet Peterson's only ever talked to 20 people through the clinic.
It's a surprising number, as Peterson has been holding the free clinic for over a year now. The economy may be tight, but now's one of the best times to buy a home, especially for first-time home buyers. According to Peterson, low interest rates and the housing market being as low as it ever has been make for a buyer's market, especially in Rosemount, which has about 200 homes for sale and about 100 homes in foreclosure in any given week. Although a federal tax credit for first-time homebuyers will expire this month, market conditions should remain the same for homebuyers for quite some time.
"As long as interest rates stay low, it's still a pretty good time to buy homes," said Shane Maki, real estate broker and owner of Midwest Realty of Minnesota.
Even better, the rates and fees for various realtors and mortgage companies are similar across the board. There's also a bevy of mortgage consultants, real estate agents and home inspection business competing with one another for business from homebuyers who are testing their options.
"The only real reason to use one company over another is service and speed," Peterson said, "because rates and fees are going to be really tight ... extremely competitive."
One of Peterson's jobs, aside from helping people secure mortgages, is explaining the often complicated process of finding and paying for a home. Because of the downturn in housing market, the number of loan programs a company can use to finance homes has been drastically reduced, as there simply aren't enough program options that work in the recession.
The most common loan program, mortgage insurance under the Federal Housing Administration, requires little cash to close a loan and has insured more than 34 million properties since the program started in 1934. In essence, those who don't want to use Fannie Mae or Freddie Mac loans, or who haven't served in the military, which would make them eligible for a loan through the Department of Veteran's Affairs, sign up for the FHA loan program.
While Peterson may not see many people looking to buy in Rosemount, and Maki is working primarily with investment property in town, Rosemount is set to further expand over the next couple of years. New housing units over the past several years have been snatched up by mostly young families, and the Metropolitan Council predicts Rosemount will expand by 3,500 housing units between now and 2020, based on projections in the city's 2030 comprehensive plan.
What's more, first-time home buyers are expected to continue to be the driving force in the housing market for several years to come. Don't hold your breath for the market to stay this way forever, though.
"We're all kind of waiting to see what happens next," Maki said.