MINNEAPOLIS – Jessica Harrison thought she knew what to expect when she decided to look for a house: a buyer’s market.

And why not? Prices in Minneapolis, as in much of the country, are down sharply since 2009. And with so many foreclosed properties for sale, Harrison was certain she would find a good deal fast.

Additional Photos

Jessica Harrison stands in front of the home she bought this month in Minneapolis. Harrison, a schoolteacher, looked at countless homes in a two-year search. “A lot of the houses needed a lot of work, and I didn’t have the money or resources to do that,” she says. McClatchy-Tribune

Instead, the teacher waded through countless homes during what became a two-year search.

Most houses needed too much work. When she found a move-in-ready house, she lost out to bids she couldn’t match. Harrison tried to buy a home through a short sale, too, but the deal fell through after six months.

She finally reached a deal on a tidy house in south Minneapolis and expects to close at the end of this month.

“There were multiple properties available, but I wanted to get a house that I could move into,” Harrison said. “A lot of the houses needed a lot of work, and I didn’t have the money or resources to do that.”

Homebuyers can no longer assume that it’s easy to buy a cheap house in a good location. Make no mistake: There are still more sellers than buyers. But the decline in listings and the quality of the options are slowing the search for those on the hunt, as would-be sellers are holding on to their homes until the market improves. U.S. home listings in September fell to a four-year low, according to Realtor.com.

“(Buyers) have to be patient until the right home comes along,” said Ryan Haagenson, a sales agent with RE/MAX Results in Minneapolis. “And ready to pull the trigger when it does.”

Homebuyers can run into complications during their search in other ways. Often, they may come across houses that appear to be available but already have an offer.

When an offer is made on a house that is foreclosed or going through a short sale, third-party approval is required, usually from a bank. In those cases, the agent isn’t required to change the status of the listing from active to pending.

During a recent house hunt for a client, Sarah Fischer Johnson, a sales agent with Edina Realty, found 28 three-bedroom townhouses in Shakopee, Minn. They were priced from $250,000 to $350,000, but nine of them already had offers awaiting lender approval.

“The data would lead any buyer to believe that it’s a buyer’s market,” she said. “No, and that’s the sad part.”

Barb Duthler, a sales agent with RE/MAX Results in Minneapolis, said the primary problem in the market is that prospective sellers aren’t listing because they owe more than the house is worth.

This points to deeper trouble in the market, said Jeanne Boeh, an economics professor at Augsburg College.

“The average person who doesn’t have to sell is looking at it this way: If I don’t have to sell, why would I?”

That means there could be a significant backlog of inventory that will hit the market once prices rise. But that won’t happen until demand exceeds supply, an important first step toward price recovery.

Related Stories