Fewer listings and a deep well of buyers helped spark an unusually high number of multiple offers during April, bolstering home prices and the notion that the housing market is on the mend.
In this May 12, 2011 photo, a real estate sign announces a pending residential home sale in Wayland, Mass. Pending home sales fell in April with regional variations following increases in February and March, with unusual weather and economic softness adding to ongoing problems that are hobbling a recovery, according to the National Association of Realtors(R).
Fewer listings and a deeper well of buyers sparked the Twin Cities housing market in April, as home sales and prices climbed for the second consecutive month.
Throughout the metro area, the number of closed sales last month rose 7.1 percent compared with last year, while the median price of those deals jumped 12.4 percent to $163,000, according to data released Thursday by the Minneapolis Area Association of Realtors.
An improving economy and warmer weather are motivating more home buyers to enter the market and consider higher-priced homes, agents say. The positive momentum comes at an ideal time, as the housing market's busiest months are just around the corner.
"We're impressed with the changes that have taken hold in recent months," said Andy Fazendin, the association's president-elect.
The rising sale prices reflect greater competition among home buyers, agents say, a dynamic that just didn't exist a year ago. The market also has benefited from a steep decline in the number of foreclosure sales.
In the aftermath of the Great Recession, distressed sales typically have represented more than half of all home purchases, but such transactions fell to 43 percent of all closings last month. At the same time, sales of traditional listings jumped nearly 60 percent.
With inventory at its lowest level since 2004, buyers are ready to pounce, especially on houses in turnkey condition.
"Inventory is so low that if there's something good that comes up, there are many buyers just waiting," said Marti Estey, an agent with ReMax Results.
Agents say the recent activity suggests that the market is clearly beginning to rebound, though it has a long way to go before it reaches prerecession health.
Estey says she has been involved in several home purchases where there have been multiple offers, including a house in Lino Lakes that had seven bids. If the house is in good condition and reasonably priced, then it will get a lot of attention from buyers, agents say.
"Those waiting for falling prices will likely be disappointed," Fazendin said.
While sellers are finding there's more interest in their homes, they aren't always getting an offer that matches what they think their house is worth. In fact, the average price per-square-foot of sales this year is up only 1.6 percent. A new home-price index developed by the Minneapolis Area Association of Realtors, which factors in seasonality and statistical variations, concludes that prices climbed only 2.7 percent in April.
"This is consistent with a market changing course," said Cari Linn, president of the Minneapolis Area Association of Realtors.
Meanwhile, a new report from Fiserv Case-Shiller Indexes shows that while prices in the short term are struggling to gain traction, there is reason for optimism. The group said that while Twin Cities prices are expected to fall another 2.3 percent by the end of next year, the market will post a 5 percent annual gain by the fourth quarter of 2013.
There is already evidence, however, that buyers are willing to be a little more aggressive with their offers. Sellers are getting a higher percentage of their asking price -- 93 percent. And the median price of new listings is up almost 7 percent -- a sign that sellers believe that buyers are willing to pay a bit more.
Sellers are emboldened, in part, because there are so few listings. The number of houses on the market fell for the 15th consecutive month to the lowest level since January 2004. At the current sales pace, the existing inventory would last just 4.6 months. And houses are selling faster, too. On average, homes sold in 135 days, down almost 15 percent from last year.
"There's very limited high-quality, move-in-ready inventory out there," Fazendin said.
Jim Buchta 612-673-7376