The Wall Street Journal published a story today on page 2 with the following headline, “Drop in Home Prices Picked Up Speed in January.”  The article detailed the latest results from the S&P Case-Shiller Index which showed further declines in home prices.   The article remained very gloomy – especially if you’re a home seller – but toward the end of the article they published some positive comments such as bank owned properties receiving multiple offers and it’s getting tougher for buyers to find some of those deals that had been so prevalent.

The article then goes on to quote economist Thomas Lawler whom the Journal said “had been a longtime housing bear.”   Lawler’s quote is found on the headline of this blog entry.

For all the buyers out there, the newspapers are not going to pick a bottom, nor are they going to correctly call a bottom.  Like I’ve said several times before, prices will be a lagging indicator for the market bottom.  Once prices have definitely turned, the bottom will have been long since gone.   Transaction activity is a more important gauge than pricing and yet no one covers it.   Prices are easy to cover and they grab the headlines.   I don’t think you’re going to see “Transactions Increase by 15% in January!”

There is a lot of transition in the real estate market right now, and some areas are strong…yes, even here in the Twin Cities believe it or not.

The Minnesota Legislature is moving forward with a bill that will raise the State Deed tax by 50%.   For those of you who are not familiar with this, is the State of Minnesota receives a tax of $33 for every $10,000 in sales price.  Hennepin County bumps it up by a buck so it’s $34 per $10,000.  It’s unclear yet if they plan to increase the mortgage registration tax, but in all likelihood, that is on the table as well.  The mortgage registration tax is paid for by the buyer at closing.  That is $24 per $10,000 of the mortgage amount.
For a typical $300,000 home in Plymouth that is sold.  Instead of paying $1,020 of Deed tax, you will now be paying $500 more for a total of $1,530.

The Legislature figures no one will see this or care about it because it will just get buried in the HUD with all the other closing costs.

The bill in question is called the “Housing Solutions Act.”
I will have more information and commentary as to what’s going on down at the Legislature with regard to new bills that they are considering.  Needless to say, our private property rights are under attack.  More later…