Twin Cities pending home sales plummeted in June.
Signed purchase agreements were down roughly 40 percent compared to a year ago, according to data released Monday.
Experts blame the expiration of federal homebuyer tax credits for the the big drop in signed purchase agreements. Sales spiked earlier this year and then throttled down dramatically since the credits ended in April.
Some sellers, like Cindy Case, aren't quite ready to let the tax credits go.
"Here is our $8,000 rebate check that would be good until August 21st," Case said. "We are offering our own, essentially, tax credit that isn't available from the government, but we're offering as a credit toward buying out home."
Case and her husband threw an event last week at their Minneapolis home near Lake Harriet to attract buyers. Their three-bedroom house is listed around $675,000, and the couple has already dropped the price by $25,000 during its month on the market.
To further entice buyers, they decided to throw an open house and party and offer the $8,000 rebate. The tactics developed out of creativity as well as frustration.
"You do all the things you're supposed to do, and you wait, and we're not waiters," said Case.
But experts seem to think the current housing market is going to require a fair amount of patience.
"We really have never faced this before. And I think that's the biggest question right now is how long is this going to last? We don't have any basis to judge this by," said Brad Fisher, president of the Minneapolis Area Association of Realtors.
Fisher said he expected the June drop-off in sales -- the numbers also fell considerably in May, before the homebuyer credit was extended. Fisher says the credits prompted first time homebuyers to make purchases earlier in the year than they may have otherwise. Without a deadline to drive them, those buyers are retreating.
Their retrenchment may have some benefits. The median Twin Cities home price climbed in June to $182,000 -- up 5 percent compared to the same month last year.
Foreclosures posted the biggest annual price increase of 8 percent. Traditional homes and short sales also enjoyed year-over-year price gains of 3.6 percent and 3.1 percent, respectively. Fisher says that's because there are fewer first-time homebuyers out there.
"What happened when you take out that first-time homebuyer that's buying at the lower end of the scale, and we start to sell more houses in the middle and upper brackets, it automatically pushes that mix up, and we'll probably continue to see that even through July," Fisher said.
However, as the first-time homebuyers return, that may drive the median price down again, he said.
The market's ups and downs have to do with a lot more than just first-time buyers, said Jeanne Boeh, an economist at Augsburg College.
"The bigger question is how do we change the supply side, how do we get the banks to decrease the time it takes to agree to a short sale, before we go to foreclosure, how do we move people out of those houses and how do we get the jobs so people feel confident to buy the homes without an $8000 tax credit?" Boeh said.
Until those questions are answered, Boeh said, there will be too many houses and not enough buyers. The supply-demand ratio shot up nearly 47 percent in June compared to a year ago. There are more than seven homes for every buyer.
With those odds, more sellers might adopt tactics like Cindy Case and John Foley.
By the end of their house party, Foley says about 30 people came through. He had expected a couple hundred, but he's trying to stay optimistic.
"All we need is one," Foley said.
One who will actually make an offer, of course. So far, that hasn't happened.
(MPR News reporter Rupa Shenoy contributed to this report.)