Across the Twin Cities region, the month of May provided more evidence that a real estate recovery is under way.
The median regionwide sales price was $169,000, up 10.5 percent from the same month last year. That represented the third-largest year-over-year jump since January 2004 and the third consecutive month of year-over-year gains.
Median prices have risen 22.5 percent since February (from $138,000 to $169,000), and are now at the highest level since October 2010.
Part of that was due to decreased supply. The number of homes for sale has dropped for 16 consecutive months, down 31.1 percent from last May to 17,262 active listings—the lowest inventory reading for any month since January 2004.
“We are seeing a shortage, for sure,” said Stacy Zachman of Edina Realty, St. Michael. “There just aren’t a lot of people putting themselves out there right now because the market was so scary for a while.”
That trend continued in May; during the month, buyers signed 5,130 purchase agreements, 27.3 percent higher than the same month last year, and sellers introduced 6,599 properties to the market, 6 percent less than May 2011. This combination of activity drove down the number of homes for sale on the market to 17,262, down 31.1 percent.
As a result, "Residential home prices have been increasing steadily," said Cari Linn, MAAR’s president. "It's been a positive change for our local housing market and it's been a long time coming."
Linn noted that another factor in the median price rise is the fact that so-called “distressed properties” now comprise a smaller share of overall sales. Traditional homes now sell for a median price of $205,000, foreclosures sell for $116,350 and short sales go for $135,000, so the smaller proportion of the latter translates into median price gains.
Traditional closed sales were up 50.1 percent, while foreclosures fell 12.8 percent and short sales increased 12.9 percent. Together, distressed homes made up 31.1 percent of all new listings and 39.4 percent of all closed sales, the smallest shares since June 2008 and September 2008, respectively.
Homes sold in 125 days, on average, down 19.6 percent from last May. Sellers received an average of 94.5 percent of their list price, up 3.8 percent from 91.1 percent last May.
Wright County’s Economic Development Partnership attempted to tackle some of the questions last week with a special session on real estate in the region. Thursday's event, Real Estate in Wright County, was held at Huikko's in Buffalo on June 14th and featured speakers from Great Northern Bank and Edina Realty, summarizing statistics and trends in the commercial and residential markets.
The result: A recovery is coming, but slowly. And while housing starts have hit rock bottom, it seems buyers are struggling to find the perfect fit in this predominantly buyer’s market, thanks to a shortage of middle-level options.