The house in St. Paul was for sale in December. During the early part of 2011, annual price declines in the Twin Cities were consistently among the largest in the country. In November, the declines were more moderate.
Richard Tsong-Taatarii, Star Tribune
Drop in home prices slows
- Article by: JIM BUCHTA
- Star Tribune
- February 1, 2012 - 8:06 AM
Twin Cities home prices late last year fell at a much slower rate than in previous months.
The Standard & Poor's/Case-Shiller home price index released Tuesday said local prices dropped 5 percent in November while the nation declined 3.7 percent. Though the Twin Cities was higher than the national average, it was one of the smallest annual declines in several months. Back in May, annual prices were down 11.7 percent.
"In six months that's a pretty decent recovery," said Maureen Maitland, vice president for S&P Indices.
Nevertheless, Maitland said she's concerned that several recent month-to-month price declines might result in softer prices. From October to November, for instance, prices were down 0.7 percent.
"If you continue that negative trend, the annual rates will turn back down," she said.
Of the 20 cities tracked by the report, the index rose on an annual basis only in Detroit and Washington. Atlanta posted the worst performance; prices fell nearly 12 percent compared with November 2010.
The November index for the Twin Cities stood at 113.25, which means that housing prices have increased 13.25 percent since the index baseline of 100 was established in 2000. By comparison, the S&P's 20-city composite stood at 138.49, meaning that home prices in the nation's 20 biggest markets have risen 38.49 percent since 2000.
During the early part of 2011, annual price declines in the Twin Cities were consistently among the largest in the country, an indication that the area is working its way through foreclosure inventory faster than other cities. Foreclosures in the Twin Cities have typically represented a much higher percentage of all sales than the national average even though the region's foreclosure rate is below the national average.
David Blitzer, the chairman of the index committee at Standard & Poor's, said that he's particularly concerned about the overhang of foreclosures that haven't yet hit the market. Banks are now stepping up foreclosure proceedings in the wake of the robo-signing scandal, which caused lenders to reevaluate the way foreclosures are processed.
Blitzer said that because the Twin Cities is a relatively small market and the number of home sales continues to fall, it's likely that the index will be particularly volatile over the coming year.
Case-Shiller tracks repeat sales of single-family houses for a rolling three-month average. Broader surveys suggest similar price weakness. According to the Minneapolis Area Association of Realtors, the median sale price of all properties that were sold last year in the Twin Cities through the Regional Multiple Listing Service fell almost 12 percent compared with the previous year. That report includes all housing types, including condos, townhouses and duplexes. In November, prices for those categories were down almost 12 percent.
David Arbit, market analyst for the Minneapolis Area Association of Realtors, said that price is only one indicator of the health of the market. He said that with sales up and inventory down, the absorption rate -- how long the inventory would last at the current sales pace -- has fallen to just a few months. He expects those price declines to stabilize in the coming year as foreclosure rates fall and low inventory helps to bolster prices.
On Tuesday, the Fiserv/Case-Shiller Indexes said Twin Cities-area home prices are expected to fall another 1.2 percent between the third quarter of 2011 and 2012.
Jim Buchta • 612-673-7376
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