Tom Sweeney, Star Tribune
Eager home buyers have prices on the rise in Minnesota
- Article by: JIM BUCHTA
- Star Tribune
- April 20, 2012 - 6:05 AM
Minnesota home prices got a healthy bump in March as confident buyers snapped up costlier houses.
The median sale price rose 7.1 percent last month to $135,000, the biggest year-over-year increase since April 2010, according to a report from the Minnesota Association of Realtors. Sales were also up in March, rising 7.5 percent year over year to 6,134.
The statewide numbers mirrored robust sales in the Twin Cities area in March, which brought the metro area its first monthly increase in nearly two years.
An improving economy is motivating shoppers to purchase higher-priced homes, agents say. Regions of the state with large employers and healthy job markets are seeing the strongest gains.
Warmer weather has also given the market a boost. And because shopping conditions have been favorable, house hunters who might have waited until April to start their search came out in March, giving demand a lift.
"Buyers have a more confident psyche," said Duane Sauke, managing broker at the ReMax Results office in Rochester.
The southeast region of Minnesota, which includes Rochester, saw a particularly hefty jump, with median prices rising 10.9 percent to $127,500. Rochester is home to the Mayo Clinic and IBM.
Meanwhile, prices rose 8.1 percent to $154,000 in the seven-county Twin Cities region.
The price increases being seen across Minnesota are boosting confidence among real estate analysts that a meaningful recovery is on the way for the housing sector.
In the Twin Cities, that optimism has manifested itself in more cases of sellers receiving multiple offers and houses selling on average in shorter amounts of time than the aggravatingly slow pace of the past few years.
Meanwhile, buying activity is beginning to veer away from such a heavy concentration in distressed transactions and toward higher-priced traditional sales.
Still, the headwinds haven't totally gone away.
In most regions of the state, high foreclosure rates remain a major drag on prices, said Chris Galler, the association's CEO.
With many homes in foreclosure but not yet on the market and with a significant number of owners still facing the threat of foreclosure, the market could remain pressured by distressed sales.
In 10 of the 13 regions tracked in the report, sales were up compared with last year, but prices were up in only eight of those regions.
Prices were down as much as 31 percent in the Upper Minnesota Valley region, but up as much as 25 percent in the West Central Region.
While demand is strengthening in a meaningful way, the median sale price has risen in part because people are buying pricier houses.
In Olmstead County, for example, there were fewer sales of houses priced between $90,000 and $140,000 in March than there were houses priced at $140,000 to $200,000. The reverse was true last year.
Those more expensive sales are creating a statistical shift that's showing up in a higher median sale price.
"Prices are, of course, still a big area for improvement," Galler said. "But when we take out distressed properties, we're seeing significant increases in what homes are selling for."
Generally, the weakest markets are those that are farthest from communities where there is job growth and economic momentum.
"Communities where people have to travel an extended distance to an economic center are probably still feeling some slowness in their economy," Sauke said.
Jim Buchta • 612-673-7376
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