The housing market improved last year, but a recovery is still elusive as foreclosures and short sales continue to flood the market.
Home sales in the Twin Cities metro area during the year rose 8.2 percent compared with 2010, but the median sale price fell 11.7 percent to $150,000, according to data released Tuesday morning by several Twin Cities-area Realtors' groups.
During the year there were 41,429 home sales. Half of those closed sales were either foreclosures or short sales, up from the previous years. Annual sales are at their highest level since 2006, excluding 2009 when the market got a boost from the home buyer's tax credit.
Those distressed sales are putting significant downward pressure on prices. The median sale price ($150,000) fell to its lowest level in more than a decade. At the peak, the median sale price hit $230,000 in 2006.
Officials from the St. Paul Area Association of Realtors and the Minneapolis Area Association of Realtors hailed a significant decline in the number of listings on the market as an indication that there could be upward pressure on prices in the coming months as a scarcity of listings creates competition among buyers.
"We are pleased with the recovery we saw in 2011," said Richard Tucker, president of the St. Paul Area Association of Realtors. "Price increases will be the final piece of the recovery."
Inventory levels during the year were 28.7 percent lower than 2010 and 41.4 percent lower than 2007, causing the absorption rate - the number of months that it would take to sell the existing inventory to fall to 4.5 months. Agents consider the market to be in balance when there's a 5-month supply of houses on the market.