It’s halftime for the 2014 housing market, and so far the score is down.
Homes sales are trailing last year’s by nearly 10 percent after bad weather delayed the spring selling season. But with prices and listings on the rise, there’s growing confidence that this will be a strong year.
“People are feeling really good about real estate,” said David Wells, an agent with Coldwell Banker Burnet who recently sold two houses within a day of hitting the market.
Fueling the optimism is a decline in foreclosures and short sales, which usually put a drag on home prices. In June, there was a 12 percent jump in pending sales of traditional homes, causing median values to rise 4.7 percent to $219,000. Overall, however, sales in June were down 2.2 percent to 5,531 sales, according to a report Monday from the Minneapolis Area Association of Realtors.
While a decline in sales might suggest a crack in the recovery, there’s broad agreement that the Twin Cities market is improving more quickly than in much of the nation. The latest Case-Shiller report showed that home prices here are increasing faster than the national average, and CoreLogic recently said the average foreclosure rate in the metro is below the national average.
“The gains in inventory combined with declines in foreclosure sales puts us in a unique position,” said Emily Green, president of the Minneapolis Area Association of Realtors. “With supply up and demand for foreclosures virtually disappearing, price growth may moderate but should remain positive.”
Home sales across the metro got off to a rocky start this year. A brutal winter delayed the spring market several months, causing double-digit declines in closings during the earliest months of the year. Recent data show a moderation in those declines. During June, pending sales — an indication of future closings — increased 0.1 percent, and for the week ending July 5, pending sales jumped 17 percent.
The June report shows another critical shift in the market: With home prices approaching pre-crash levels, fewer people have a mortgage that exceeds the value of their house, enabling more would-be sellers to put their house on the market. Last month, 8,315 properties were added to the listing pool, an 8.9 percent increase over last year, giving buyers more choices than they’ve had in some time.
Still, buyers in many areas are outbidding each other and houses are selling more quickly than they did last year. The average property took 69 days to sell last month, 7 percent faster than last year. This was especially prevalent in Edina, southwest Minneapolis and the Macalester-Groveland neighborhood in St. Paul, where demand for move-in-ready houses outstrips supply.
When Lee Anderson and William Fehrenbach, for example, decided to trade their pristine Arts and Crafts bungalow in Edina’s Morningside neighborhood for a contemporary downtown Minneapolis condo, they had a feeling their place in Edina might go quickly. They had two offers for the house before there was a For Sale sign on the lawn. “It’s a special property,” said Anderson, “But we wouldn’t have moved forward without selling our home.” The house closed last week for $840,000.
Their agent, David Wells, said that while Anderson and Fehrenbach found a condo they love, in some parts of the metro, buyers are frustrated by a lack of turnkey choices. In some cases, buyers are simply getting a late start.
“It felt like we had a late spring market,” Wells said, noting that he’s on pace to have more sales than last year. “Houses that aren’t selling either have a problem or are overpriced.”