Summer Signs of Optimism in Twin Cities Real Estate
Despite continuing economic uncertainty, the housing market in the Twin Cities area showed modest signs of improvement in July.
At the end of the month, pending Twin Cities real estate sales were up 42.7% over the same month of the previous year, when sales were dropping after the tax credit expired for first-time home buyers. It was the third consecutive month of double-digit, year-over-year gains in pending sales, according to data released by the Minneapolis Area Association of Realtors.
Home prices have not yet rebounded and a new report suggests that foreclosures will continue to dominate the market. In spite of this, market watchers see reasons to be optimistic.
Declining inventory is the most promising sign. With sellers reluctant to brave the tough market, new listing activity was down 16% in July compared with last year, helping send total inventory down 19% from a year ago. About 24,000 homes are on the market today.
Similar tentatively good news recently came from a report on the Twin Cities housing market from the University of St. Thomas.
The University of St. Thomas’s Real Estate Index, which is based on nine market indicators, increased from 784 in June to 799 in July; the index was 847 in July 2010. While closed sales were up 34 percent compared with last year, the report showed that the median sale prices of all closed sales dropped three percent from June to July, from $165,000 to $160,000.Compared with 2010 prices were down 8.5 percent. Excluding foreclosures and short sales, prices were down only 1.5 percent from June to July and down 10.4 percent from July 2010 to 2011.
The Minnesota Association of Realtors said that throughout the state the number of closed home sales during July was down 33.5% with the median sale price of those deals down 6.5%. These are comparisons to July 2010. Despite an uptick in sales activity this summer, the number of sales so far this year is down 4.1%, with prices down almost 9%.
That's not the story for everyone. More reason to be optimistic is that some people are having great luck selling their houses. This year, real estate observers are seeing more of those bidding wars that haven't been seen since prices peaked in 2006. Many real estate observers believe today's prices are at or near bottom, motivating buyers to take advantage of the opportunity. Depending on the home, the location and its listing price, some properties have been receiving multiple offers. Home owners have even been selling above listing price.
"We have a long way to go to stabilize, of course, but I'm hopeful that we've seen the bottom," said Jennifer Snyder, a Woodbury agent and president of the St. Paul Area Association of Realtors.
That people are pricing better is demonstrated by these numbers from the Minneapolis Area Association of Realtors: In June, the most recent month for which data are available, homes were selling for 91.4% of their original asking price. It had been about 89%. During the 2004 through 2006 boom years, it was normally above 95%.
Twin Cities eal estate agents say they're seeing multiple offers on bargain foreclosure properties as well as traditional sales at historically low prices in desirable neighborhoods such as Highland, Macalester-Groveland and some South Minneapolis neighborhoods as well as in the suburbs.