The Twin Cities housing market continues to struggle. New numbers out Monday show home sales were down in August along with sales prices.
Experts say it'll likely stay a buyer's market for awhile longer.
Pending sales were down more than 30 percent in August compared to last year, and people who did sell got an average of 91 percent of their original asking price -- that's about a 3 percent drop from last August. Housing inventory was up by about 8 percent, the largest spike since February of 2008, according to the latest numbers from the Minneapolis Area Association of Realtors.
Jessica Ellison and her husband love their two-bedroom house in the Crocus Hill neighborhood of St. Paul, but with one bathroom and no basement, it's getting a little tight for their growing family.
"After our second child was born we decided that we need a little more space and we thought that this would be a good time to sell."
They put it on the market in April, hoping a first-time homebuyer would take advantage of the federal tax credit before it ended. But the house didn't sell.
To try and attract buyers, the Ellisons lowered their asking price -- twice. Now, the house is listed for less than what they bought it for.
"My husband and I were a little naive about the whole situation. We thought we have this great little house in a great location but there is so much else out there that we are competeting with," Jessica Ellison said.
Jeanne Boeh, an economics professor at Augsburg College, says the inventory is keeping the market sluggish.
"There still is a big shadow inventory," Boeh said. "Overall, we are selling less houses because a lot of people are sitting on the sidelines and as long as there is this amount of foreclosures and short sales, more traditional sellers are not likely to venture into the market especially because the average length of time of houses on the market is so long right now, well over a year."
There were about 6,300 completed foreclosures in the state during the second quarter of this year, up slightly over last year, according to another report released today by the Minnesota Housing Partnership.
But the number of people behind on their mortgages fell this quarter.
Chip Halbach, executive director of the Minnesota Housing Partnership, says that's a positive sign but it's too soon to celebrate the end of the housing crisis.
"What we are seeing is a small improvement in a very difficult situation and that small improvement is hopeful but there are hundreds of thousands of families across the state either in homeownership or rental paying half of their income for housing so we have a long ways to go," Halbach said.
Unemployment in Minnesota was about 7 percent in the second quarter. The Housing Partnership found that employment in housing construction hit a 15-year low during that time.
Halbach says getting more people back to work is key to improving the housing market.
Minneapolis Area Association of Realtors President-elect Pat Paulson agrees.
"When we are in a recession, at least the past several times, it seems like housing tends to bring us out of the recession. I don't know if we are going to do that this time," he said.
"I think we are waiting for the jobs to come to bring us out of the slump so we may have to kind of switch roles here. The economy I think needs to generate some more jobs and some other industries and then people will start buying houses more."
Paulson says it's likely to be a buyer's market for awhile longer. The good news, he says, is that home prices seem to have finally stabilized.
Jessica Ellison says she's hoping that's true, so she and her family can take advantage of the low home prices and move into a bigger place.
"It's hard for us to feel alone in this situation, like it's just us going through this but it is very frustrating because we are ready now," she said. "We are so invested in the idea of moving and getting a bigger place to raise our family because we want to have more kids. It's very discouraging."
Ellison says they'll take their house off the market and try again in the spring if they don't sell it soon.