Business & Tech

Local Housing Market "Bouncing Along the Bottom"

A quarterly report shows the average sale price of homes, number of homes on the market and number of closed sales have all dropped.

Falling sales prices, fewer new listings, fewer closed sales.

The picture the Minneapolis Area Association of Realtors paints of the local housing market in the first quarter of 2011 is, by most accounts, a grim one.

The average sale price for homes in Inver Grove Heights stood at $192,654 in the first quarter of 2011 — a 12.2 percent decline over the average sales price of homes during the same period in 2010. During the same period, the number of new listings on the market dropped by nearly 20 percent, while the average number of days a home stayed on the market before it sold increased from 124 to 181, according to the association’s report, which was released earlier this month.

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The Minneapolis Area Association of Realtors releases quarterly reports for communities in the metropolitan area, as well as a regional overview.

“This is one of the first years we haven’t had the [federal] tax credit for first-time buyers. This is first spring market in a while that has taken a hit,” said Edina Realty Sales Manager Tony Haider, who works with agents in the Inver Grove Heights area. “We’re bouncing along the bottom.”

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Short sales and foreclosures comprise roughly 50 percent of the local market, which may be one reason why the average sales price for homes in Inver Grove Heights declined, Haider said. Those properties are frequently distressed and can drag the average sale price down, he said.

But Haider also believes the unseasonably cold spring has put a damper on home sales.

“The weather this spring and this winter held people back form getting back out and looking at things,” Haider said.

Local Realtor Paul Johnson blamed the poor market on consumer cautiousness.

“I think that the buyers that are coming to the market probably have lower salaries than they did four to five years go, and I think there’s this general conservatism now, this new mentality,” Johnson said. “People now are really a lot more aware of their financial situation.”

The silver lining, according to Johnson?

“For a sellers who wants to move up, I think they have never found a time when there’s less of a gap between the sales price [of their current home] and the purchase price of their next home.”

 The Regional Outlook

The Twin Cities real estate market as a whole also continued its downward spiral in the first quarter, with new listings plummeting almost 25 percent compared to the first quarter of 2010, pending sales down almost 11 percent and the median sales price down almost 12 percent.

Like, Haider, MAAR communications director Greg Sax also blamed the lack of tax incentives for the fresh decline.

“These are a comparison to last year, which was a tax incentive year,” Sax said. “So the numbers are going to be down, no matter what. At the same time, we are seeing that lender-mediated properties are still dominating the market. We’d like to see fewer of those, but it is what it is.”

The only slightly bright spot in the first-quarter statistics: The number of closed sales was up almost 1 percent in the Twin Cities.

But the other regional numbers added to the dismal picture:

The median sales price for a new home -- the price at which half the homes cost more, and half cost less, as opposed to the average price -- dropped from $162,000 in the first quarter of 2010 to $143,000 in 2011.

The percentage of the original list price fell from 93.5 percent in 2010 to 88.4 percent in 2011. In other words, houses listed for $100,000 tended to sell, on average, for $88,400. The average number of days between when a property is first listed to when an offer is accepted swelled from 132 days in the first three months of 2010 to 153 days in the first quarter of this year.

The number of new listings fell from 23,754 in the first quarter of 2010 to 17,845 during the same period this year. That number included newly listed lender-mediated homes -- foreclosures and short sales.

In spite of the numbers, Cari Lynn, president-elect of MAAR, expressed optimism.

“Layoffs have decreased, and we are building on 13 consecutive months of job growth, which bodes well for local real estate,” she said in a statement. “In addition to new housing demand, we should eventually see the mortgage delinquency rate drop and fewer distressed sales pressuring prices downward.”

Sax also pronounced the real estate industry “cautiously optimistic” about the upcoming summer and fall.

“That’s where we feel like we’ll start to see some relief,” he said. “It isn’t going to be extreme, but it won’t be as trying as last summer.”

To view the reports, click on the PDF files attached to this article.


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