Limited supplies and strong demand continue boosting house prices in the Twin Cities metro, but the gains here have been only slightly less robust than elsewhere in the nation. The latest S&P/Case-Shiller Home Price Index shows a 4.5 percent gain in the Twin Cities compared with 5.3 year-over-gain nationwide by the end of February. Twin Cities buyers should be glad they're not on the West Coast where the biggest increases are being reported. In Portland, Oregon, for example, the index increased a stunning 11.9 percent followed by Seattle (11.0 percent) and Denver (9.7 percent)

Both the local and national gains had moderated a bit, compared to the most recent report, in part because of a shortage of entry-level houses and a rising supply of upper-bracket houses. Bigger increases in sales of starter houses are being tempered by more moderate increases in more expensive ones.

The Case-Shiller report is an oft-watched and slightly unusual measure of what's happening in the market because it compares resales of the same property to track values during a three-month period. Others, including the monthly sales report from the Minneapolis Area Association of Realtors, tracks the median sales price of all closings during a particular month. According to that measure, prices are rising at a much stronger pace.

In her latest analysis of the market, Zillow's chief economist, Svenja Gudell, said that today’s Case-Shiller report should be assuring to those who are worried that they'll be priced out of the market. She said that price gains are rising at a more moderate and "largely sustainable clip," but notes a potentially troubling trend: A growing disparity between first-time and move-up buyer.  

“Inventory of entry-level and middle-tier homes is down sharply, and home prices in those segments are rising more quickly as demand stays strong and the economy keeps chugging along. At the same time, inventory at the top of the market is more available, and prices are growing far more slowly. Heading into spring, buyers looking for the most expensive homes will find somewhat softening prices, a larger selection of homes to choose from and more limited competition. Entry-level and mid-market buyers – typically the housing market’s bread and butter – are likely to face stiff competition, rapidly rising prices and very limited inventory. The patience of many buyers will be tested in coming months.”

  

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