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You know the drill. Low supply and high demand has made for sizeable housing price gains and unwelcome amounts of stress for many Minnesotans toiling away to find a home. We recently discussed how things have panned out so far in 2017, highlighting the aforementioned upward pressure on prices. However, as reported in the Star Tribune, the favorable economy still hasn’t done quite enough for a large fraction of homeowners to make selling worth their while. In a situation described as “effective negative equity”, these homeowners have less than 20% equity in their home, which, after the cost of the sale, wouldn’t leave enough for a down payment on their next home. Unfortunately, the number of homeowners in this situation is surprisingly high, with the Star Tribune reporting that more than 20% of Twin Cities homeowners fall into this category.


Financial reasons for selling or not selling a home are some of the most convincing. So, with roughly 20% of homeowners being in a state where it’s not financially advantageous to sell, it’s no wonder we have a housing supply shortage. The article does well in pointing out that there are places where effective negative equity is more or less prevalent. The Star Tribune even has a search engine dedicated to relaying the effective negative equity concentration amounts. Negative equity pockets are more likely to be found in outer ring suburbs (and even further out) where home values haven’t rebounded as quickly following the recession. Furthermore, as stated in the article, “The problem tends to be most acute in communities that are most popular with those first-time buyers, people who are most likely to have bought homes with low down payments.”


Buying or selling a home is obviously a massively important financial decision. There are countless factors that come into play, and it can be overwhelming, even at arm’s length. Your Realtor should help you weed through some of the factors and can link you up with other professionals to help with others (i.e. a mortgage broker). Many Real Estate agents can come across as “salesy”. They might even have the token slicked-back hair and cloud of cologne. Lucky for you, I don’t even have hair. But really, I don’t treat my relationships with my clients as a salesperson. I want you to make the best decision for yourself, and I will do my utmost to mentor you in what I believe is the best direction. Please reach out (call 952-258-3100 or email) if you ever have a question regarding your housing situation.


Photo credit: user jogonesoft,