Twin Cities housing recovery gains steam
- Article by: Jim Buchta
- Star Tribune
- March 26, 2013 - 10:05 PM
The housing recovery continues to gain steam, according to a raft of reports released Tuesday.
Most telling, the closely watched S&P/Case-Shiller home price index for the Twin Cities metro area increased 12.1 percent during January — the sixth-highest among the 20 metro areas tracked by the index. Every region the index tracks showed an increase, with the 20-city composite posting an 8.1 percent rise.
“This marks the highest increase since the housing bubble burst,” said David Blitzer, chair of the index committee. “Economic data continues to support the housing recovery.”
Even New York, which has logged more than two years of consecutive year-over-year declines, posted a positive return in January. Phoenix, Las Vegas and San Francisco posted the highest gains.
Home builders are also seeing improvements. On Tuesday, the U.S. Commerce Department said new U.S. home sales in February were more than 12 percent higher than last year, but fell nearly 5 percent from January, in part because of seasonal volatility. The report showed that inventory of new homes is lean, falling to a 4.4-month supply at the current sales pace.
Gains in new and existing home sales are happening despite elevated levels of mortgage foreclosures. But delinquencies, an indicator of future foreclosure rates, suggest foreclosure rates will continue to fall. CoreLogic said this week that during January, 3.79 percent of mortgage loans in the Twin Cities area were 90 days or more delinquent, compared with 4.93 percent last year.
Prices in the Twin Cities and beyond are being lifted by growing demand and a shortages of listings in some areas. At the current sales pace, the supply of listings in the Twin Cities would last about three months, reports the Minneapolis Area Association of Realtors, compared with nearly five months last year.
Motivated by near-record low mortgage rates and growing confidence in the recovery, buyers in some areas are finding themselves competing with others and paying more than the list price, which is boosting prices.
Prices are also getting a boost from a persistent decline in the number of foreclosure sales, which have flooded the market and depressed prices.
According to a residential real estate price report released Tuesday by the Shenehon Center for Real Estate at the University of St. Thomas’ Opus College of Business, there were 921 foreclosure sales in February 2013, compared with 1,191 in February last year.
By another measure, the percentage of traditional (non-distressed) sales in February 2012 was 43.5 percent of the total, and this February it is 55.3 percent of the total.
“As we move into the spring and summer of this year we should see a stronger housing market that is dominated by traditional sales,” said Herb Tousley, director of real estate programs at the university.
Tousley said he expects home prices to increase in the coming months because of normal seasonal fluctuations and because of the tight inventory of homes on the market. “As median sale prices increase and homeowners’ equity positions improve, more homes should be listed for sale.”
Jim Buchta • 612-673-7376
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