The housing free-fall appears to be over as a spate of mid-year data shows that by most measures the housing market has turned a corner. During the first six months of the year, home sales in the Twin Cities area increased 17.4 percent over last year and climbed 13.8 percent in June, according to data released today by the Minneapolis Area Association of Realtors (MAAR).
The market is getting a lift from historically low mortgage rates, low inventory and declines in foreclosure sales, which helped boost the median price of sales during June to $179,500, a 10.7 percent increase over last year. “It’s difficult to find a negative trend in the local housing market right now,” said Cari Linn, MAAR’s president and a sales agent with Coldwell Banker Burnet.”
When factoring in recent declines in the number of heavily-discounted distressed sales and other issues that can have a statistical effect on the data, the median price of closed sales during June was up 5.1 percent, according to a new home price index from MAAR.
The report offers clear evidence that certain market fundamentals have improved dramatically, but a full recovery is far off. Inventory levels continue to decline as willing sellers withhold putting their homes on the market. Meanwhile, foreclosures are clogging the market as well. Inventory was down 31 percent during June and distressed sales represented only 34.6 percent of all sales, the lowest level since fall 2008. While good for sellers who are getting multiple offers on their properties, those inventory declines are to a certain extent crippling the recovery because so many would-be buyers can’t find what they want, and aren’t able to take advantage of record low mortgage rates.
RealtyTrac said this morning that so far this year there were more than 14,000 properties with foreclosure filings in the state. That was a nearly 10 percent increase from the previous six month period, but a 4 percent decline from the same period last year. With home prices beginning to stabilize, the number of homeowners who owe more than their house is worth has begun to recede slightly.
CoreLogic said today that in the Twin Cities 19.2 percent, or 97,681 residential properties with a mortgage, were in negative equity territory during the first quarter compared with 21.7 percent during the previous quarter. Nationwide the trend was similar.
Today's reports are a clear indication that the market is beginning to stabilize, but is still far from a rebound. Mark Fleming, CoreLogic's chief economist, called it a "meaningful improvement." Earlier this week, the group said that during May home prices in the Twin Cities, including distressed sales, increased 1.1 percent compared with last year and were up 0.1 percent from April. That's a pretty good indication of what's happening out there because CoreLogic uses public property records to track repeat sales of the same property.
Also in today's housing news: Freddie Mac said that the average 30-year fixed-rate mortgage has now fallen to 3.56 percent - another record low.