The City of Minneapolis will be holding a series of open houses in early 2008 in order to hear from the public about the draft of the 2030 comprehensive plan and how it fits in with a theme of sustainable growth.  People can comment online.

I have a suggestion for city leaders in Minneapolis…clean up the rampant crime problem in the city. That’s the best way I can see that you will have sustainable growth.

I read this interesting article from Diana Olick of CNBC and it reminded me of a situation when I was living in the Bay Area after September 11, 2001.

After the terrorist attacks of 9-11, it was extremely difficult for people to sell their homes in the Bay Area. Everyone figured another terrorist attack was imminent so the buyers were scarce. If you really needed to sell, one could expect to take a 30-35% haircut in the price of their home. There clearly was a lack of confidence amongst buyers.

What’s interesting to note is that as time went on, buyers eventually got their confidence back, but it took some time. In fact, it wasn’t until January 2003 before buyers came back with authority. In the Bay Area, more $1 million+ homes were sold in January 2003 than the previous 16 months combined! It was a matter of no additional shoes dropping (i.e. expected terrorist attacks in the Bay Area) and the U.S. government was going on the offensive to fight terrorism.

Right now, it seems to me that buyers are still concerned that other shoes may drop. It’s easy enough to expect it with the bad news everyday about the housing market. Until we finally see a sustained period where the bad news finally starts to diminish, buyers will likely remain skitish.

Housing is driving by psychology…Diana Olick goes on to state the following:

No, the bulk of the problem among buyers and sellers alike is fear. Fear of yet another unknown, like maybe Countrywide calling it quits or a major public builder throwing in the towel.

Countrywide Financial Corp CFC 8.94 UNCH 0%

NYSE

Quote | Chart | News | Profile | Add to Watchlist

[CFC 8.94 --- UNCH (0%) ] cnbc_quoteComponent_init_getData(“CFC”,”WSODQ_COMPONENT_CFC_ID0EYBAC15839609″,”WSODQ”,”true”); 

Okay, I know, it’s the big bad media instilling all the fear, but us aside, the housing numbers — that is, sales and starts statistics, as well as earnings reports from lenders and builders — are real, and that’s what’s keeping everyone at bay. Sellers are sitting, refusing to lower prices enough; buyers are sitting, refusing to catch a falling knife.

She then asks…

What turns it around? It won’t be another Fed cut, and it won’t be a settling in the credit markets.

Prices are going to have to come down far enough for people to think they’re getting good deals again. It’s up to the sellers to turn this market around, or at least turn back time to normal days when buying a house didn’t require taking out a risky loan that was never intended to be remitted. Those loans don’t exist, and those buyers don’t exist.

The market has changed. It is now up to the sellers to pursue the buyers in the market. The way you pursue buyers today is by price.

I couldn’t agree with her more about how this market will need to turn around. Generally speaking, sellers are going to need to come down 5-10% in order to entice buyers back in to this market.