Real Estate Update

Real Estate Weekly Update
June 13, 2011

For the week ending June 4, both buyer and seller activity continued to outpace year-ago levels in the Twin Cities. New listings were up 10.6 percent over the same week in 2010, and pending sales were up an encouraging 34.7 percent. That marks the fifth consecutive week of year-over-year gains in new listings and the fourth consecutive week of year-over-year gains in pending sales.

Those are refreshing market signals that allow for some cautious optimism, yet we must also posit that the changing story has more to do with last year than this year. Once the credit expired in 2010, sales and listing activity fell rather sharply. For example, sales volumes went from nearly 1,500 during the final week of April 2010 to 600 four weeks later.

The overall number of active listings for sale was down 10.7 percent (to 24,097 units). After six straight weeks of decelerating inventory declines, the year-over-year decreases have started to grow again. The conclusion to this week’s story: There’s change…and then there’s the rate of change.

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Sales Up, Foreclosure Rate Drops as Distressed Segment Leans Toward Recovery

PS-May_2009-2010-2011

Pending sales for May 2011 in the 13-county Twin Cities metropolitan area were up 13.2 percent over last year’s post-tax credit market. The 4,428 signed contracts was the second year-over-year increase in the past 13 months.

Sellers introduced 7,021 new properties to the market, a 10.8 percent increase from the year prior. Inventory shrunk 11.8 percent to 25,636 units—the lowest May inventory count since 2005. The overall median sales price declined 12.6% to $152,950 as value-minded consumers continued to shop for bargains.

Prices and sales varied significantly by market segment. Traditional (non-distressed) prices were up 1.4 percent to $200,700. Foreclosure prices were down 16.4 percent to $104,450, and short sale prices were down 5.6 percent to $135,000. The foreclosure rate fell to 31.9 percent in May while the distressed sales rate—which includes foreclosures and short sales—fell to 41.8 percent from a rate of 55.5 percent in January 2011. Traditional pending sales were up 12.1 percent, while foreclosure pending sales increased 67.0 percent and short sales were up 25.4 percent.

Distressed properties made up only 29.8 percent of all new listings—the lowest level since April 2010. The fact that comparatively more homes in financial distress are selling off the market than are entering the market is a positive sign.
On average, it now takes 148 days for a home to sell, marking three consecutive months of declines. Months supply of inventory, now at 8.5 months, is down from nearly 12.0 months during the summer of 2008.

For the first time in years, there is statistical proof of change in the local housing market not associated with temporary governmental incentives. This is welcome news for real estate professionals and consumers alike. It has been made abundantly clear that housing is a definitive driver of the economy at large.

As reported by the Minneapolis Area Association of Realtors.

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