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The question is: when will speculators start playing in the market for Minnesota residential real estate.

It is a question for which good arguments can be made on either side of the issue.

There certainly are bargains available. That does not mean, however, that the market as it stands now is one in which can expect to quickly flip properties. Yes, it is true that there was a 12 percent decrease in the number of home foreclosures last year, but the market has been in decline since 2005 and it is too soon to say the bottom has been reached and it is up from here.

There was an 1800 unit reduction in 2009 of the number of homes disposed of at sheriffs auctions. This may be a sign of good times ahead, or it may be that after five years of declines, the chaff has been removed and now even formerly solid mortgages are in dire straights.

There is, on the other hand, reason to think the Minnesota foreclosures numbers may resume an upward trend as 2010 plays out. Pessimism rests in the states stubbornly high unemployment rate. Officials expect the rate will remain in 9 percent range throughout 2010 with at most a . 5 percent drop. And prospects for 2011 are about the same. Efforts to reduce Minnesota foreclosures in 2009 included mortgage restructurings, in response to demands from the federal government, and significant changes in Minnesota foreclosures processes courtesy of the state government. Yet, despite these efforts, less than 1800 homes were saved from foreclosures compared to the 2008 total.

The mortgage restructuring efforts had the goal of lowering monthly payments for homeowners to no more than 30 percent of household income. While this was successful where there was an income, it was frequently only a temporary stop gap. Homeowners who had gotten behind in their payments due to losing their jobs and then failed to find new work before running out of unemployment benefits found themselves unable to afford even the restructured payment scheme. Under Minnesota's amended foreclosure rules, homeowners who have been served with a forced sale date have the option of requesting a postponement in the sale of five months. While this certainly saved some dwellings, it was not as successful as had been hoped due to the ongoing lack of decent paying employment.

The new foreclosure legislation also increased the responsibility of mortgage holders to maintain abandoned properties.

These responsibilities include securing the premises, changing the locks, protecting the dwelling from the elements and maintaining the surrounding land in a manner consistent with community standards.

There is some consideration that these new responsibilities have been enough to keep many investors out of either the market for foreclosed homes or out of the home mortgage sector entirely, tightening an already battened-down supply of money. Supporters of the amended foreclosure process point out that all expenses incurred by the lender in maintaining abandoned properties may be added to the outstanding balance on the mortgage. Detractors counter with a rather tough argument to contradict.

They point out that trying to recover your costs from someone you will likely force into bankruptcy is pointless. Analysts of all persuasions are agreed that a full recovery of the Minnesota real estate market cannot occur in the absence of a significant reduction of the states high unemployment.

It is difficult to see when this might be. For bargain hunters, there are certainly deals to be under the gavel of sheriffs auctions. But the time is not yet ripe for a return to the house flipping days of yore in the Minnesota foreclosures arena.
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