Traditional sellers are waiting for the spring thaw; distress sellers aren't. Result? Lower median sales.
Holly Holt showed a third-floor condo on Friday to Karen Elshazly of Orono. The Zenith Condominium, on S. 2nd Street near the Guthrie Theater, overlooks the Mississippi River and Gold Medal Park. Holt said that a recent price cut on units at the Zenith has generated more interest.
Luanne Lind is optimistic that, come spring, home buyers finally will get the hint that these are the best buying conditions in decades. But for now the Eden Prairie-based Remax Results agent says the market was nothing but challenging.
And numbers released Friday by the Minneapolis Area Association of Realtors confirm that assessment. Existing home sales dropped 39.1 percent in November compared with last year and dipped almost 4 percent from October. There was one bright spot -- the market did slightly better last month than it did two years ago; closed sales during November were up 1.8 percent from 2008.
It's not unusual for the November chill and holiday hubbub to put a damper on the late-winter housing market. Buyers are busy being festive, and house shopping isn't as much fun when it's cold. At the same time, sellers don't want to be bothered by buyers, and many think it's best to wait for the spring thaw. The situation is even more complicated this year. Credit is still tight. Economic uncertainty lingers. And buyers and sellers alike await signs that the market has turned.
That's unlikely in the short term. On a seasonally adjusted basis, the sales pace in November stood at 35,200, down almost 40 percent from last year but up 13 percent from October.
Lind said there was little to motivate buyers. Though mortgage interest rates have risen in recent weeks, they're still below 5 percent. And there are plenty of options for buyers. During November there were 24,620 listings on the market, 12.1 percent ahead of last year, but 11.2 percent behind 2008.
Many traditional sellers are waiting for better weather and a better market. Banks aren't. Distress sales, including foreclosures and short sales, continue to flow into the market, putting downward pressure on prices. Due in part to those nontraditional listings, the number of new listings that hit the market during November was 3 percent higher than it was last year, but almost 5 percent lower than 2008.
And so far this year the number of new listings lags behind last year by almost 2 percent -- a sign that sellers are waiting in the wings.
Lind said that she's advising her clients not to wait to buy or sell. For buyers, waiting could mean competing with an increase in buyers in the spring. And for sellers it means more competition from other listings. She offered that same advice to Heather Cripps, who closed on the sale of her Bloomington house last month. She bought the house four years ago, but got married, was laid off from her job and knew that the house would have to go. Losing $52,000 was painful, but now that prices have fallen even further since she listed it earlier this year, she's grateful that she heeded her agent's advice and cut her losses.
"I was told, and I believe, that it isn't going to get any better," she said.
Condo activity grows
Holly Holt, a sales agent with Keller Williams Integrity Lakes who specializes in downtown condos, is seeing some positive signs. November was a particularly busy month for her. While traffic at open houses she's hosted has been slow, the buyers who come through have been serious, Holt said. She's working with several whom she met at those open houses who are intent on buying.
"Traffic at open houses used to be crazy," Holt said. "But I think people were checking out the novelty of downtown living and thinking about it as a long-term goal. But now people are ready."
At a recent open house, where she's listed a 2,100-square-foot condo in the Zenith building for $649,900, she met a woman who listed her suburban house in 2008 and couldn't sell it so took it off the market. Now she's realizing that condo prices have come down, as well, and is ready to make the move.
Last month the median sale prices of closed transactions in the metro area fell 2.5 percent to $165,700 from November 2009. A slight uptick in sales of upper-bracket houses helped offset declines in sale prices on many bank-owned listings and other distress sales.
Holt, who said that a recent price cut on the Zenith condo has generated more interest, said her experience tells her that there's lots of pent-up demand.
"I think some people are just tired of waiting for bottom," she said. "And with rumors of interest rates going up, people want to act now."
Jim Buchta • 612-673-7376