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Underwater mortgages keep housing inventory near historic lows

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The percentage of homeowners in the Twin Cities metro with an underwater mortgage outpaces the national average, Twin Cities Business reports.

Nationally, the average for underwater homes is 25.4 percent. However, many Minnesota counties are higher, including Sherburne, 44 percent; Chisago, 41 percent; Dakota, 37 percent; Scott, 36 percent; Ramsey, 33 percent; Hennepin, 32 percent; Washington, 31 percent; and Carver, 29 percent.

"Thousands of people are still trapped in their homes because of negative equity," Chip Halbach, executive director of the Minnesota Housing Project, told Fox 9.

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“Until this situation improves, the Twin Cities market will continue to see historically low numbers of homes available for sale,” Herb Tousley, director of real estate programs at the University of St. Thomas, said in a statement, Twin Cities Business reports. “Increasing median sale prices will improve homeowners’ equity positions and many more will emerge from negative equity and no longer be underwater.”

The number of homes listed for sale in the metro has been consistently running 25 to 30 percent below the number available during the same time the prior year, according to a study from the University of St. Thomas' Shenehon Center for Real Estate.

The Pioneer Press notes the Minneapolis-St. Paul area saw a 12.5 percent increase in housing prices in March compared with March 2012, according to the latest Standard and Poors/Case-Shiller index released earlier this week.

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