Minnesota Real Estate Market Showing Stability
The housing market in Minnesota is showing signs of stability, even as home sales across the United States decline.
According to the Minnesota Association of Realtors, there were 7,284 home sales within the state during January and February - a 5.7% increase over the same period last year.
Nationwide, home sales remained mostly flat in the first two months of 2011, as compared to 2010. On a seasonally adjusted basis, however, February sales fell 9.6%, as reported by the National Association of Realtors.
"Home sales are being constrained by the twin problems of unnecessarily tight credit, and a measurable level of contract cancellations from some appraisals not supporting prices negotiated between buyers and sellers," said Lawrence Yun, chief economist for the national Realtors group. "This tug and pull is causing a gradual but uneven recovery."
The latest data shows the housing market is volatile both locally and nationally as the economy struggles to regain traction and the mortgage industry is overhauled. The biggest obstacle facing a real estate recovery is the foreclosure crisis, which dominates every market and puts downward pressure on home prices.
Across the country, prices decrease to the lowest level in nearly nine years. Even in Minnesota, sale prices continue to decline. During February the median sale price of all closed sales fell 8% to $129,900. The low prices have been luring bargain shoppers into the market, but haven't done much to move mid-range and higher-end properties.
While statewide sales figures indicate gains, that's not true throughout the state. During January and February, four of Minnesota's thirteen regions showed declines in sales and only five showed an increase in the median sales price.
The regions that did well have strong economies tied to a growth industry, such as farming communities where high-demand crops like corn and wheat are grown. In the northwest region, sales rose 27%. Areas that rely heavily on manufacturing however, like the Arrowhead region including Duluth, sales were down 10.9%.
In the seven-county Twin Cities metro area, where most of the real estate transactions are occurring, the number of closed sales during January and February rose 3.9%.
Though January and February are typically the slowest months of the year for real estate sales, analysts pay close attention to activity during these months. They use this time to gauge the spring buying season, which typically starts in March. The future may not be as clear, because agents say that harsh weather this winter has likely kept many buyers at home.