While being a home owner has never been more valuable as a tool for stability and wealth building, the ups and downs of the housing market in the Twin Cities is presenting challenges this year, specially to first time buyers.
By presidential proclamation, June is National Homeownership Month, when real estate companies, mortgage brokers and banks “promote the benefits of homeownership and recommit to creating opportunities for future homeowners,” making this a good time to look at the benefits of owning a home.
“There’s a lot of information out there. It can be a confusing, daunting task. Taking the step into home ownership is a journey that begins with understanding that process, making sure you can get that financing lined up,” said Stephen Spears, community bank team lead for Bremer Bank in an interview with WCCO Radio's Steve Thomson. “We want to make sure we are doing our part in informing, educating and setting people on there right track to be good and sustainable homeowners."
Spears recommends that before people begin visiting Open Houses that they meet with a professional who can help them qualify for financing and be ready to make an offer if they find a suitable residence. He noted that currently in the Twin Cities, the supply of homes for sale is tight and interest rates are trending higher; mortgage rates in May of 2022 stood at 5.10% but had jumped to 6.79% by May of this year.
“It is a more difficult time right now given that interest rates have risen, home values have risen,” Spears cautioned. “It is very easy to get over-extended, certainly, during these times when home values are higher.”
Minnesota offers a number of programs that can provide grants, down payment assistance and access to low-interest loans for qualified first time home-owners. In some of the programs, “first time home buyer” is defined as someone who has not had an ownership interest in a home for the last three years.
Spears said that Bremer Bank has added a community impact manager, a professional specifically hired to work with these home buyers. He focuses on connecting them with the products and assistance that are available to them.
According to real estate company Redfin, the median price for a home in Minneapolis stands at $368,000. Although that sounds high, it is down 1.6% compared to a year ago and well below the nation’s median home price, which is $408,000.
Spears does not want those numbers to discourage people who have the dream of owning their own home.
“It is always the right rime to buy a home if you’re prepared. The value of home ownership in any statistic you’re looking at around wealth building, it is the number one catalyst to stronger wealth in the future, generational wealth,” he said. “Markets do go up and down but they always typically correct higher than where they were before.”
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