The housing market in the Twin Cities enjoyed its best month in nearly a decade in April, boosting confidence in the recovery — and prices.
Buyers signed 6,329 purchase agreements in the 13-county metro area. That’s the most since June 2005 and a 26 percent increase over last year, according to the Minneapolis Area Association of Realtors (MAAR).
Prices were up, as well. The median price of all sales last month was $215,600, a 10 percent increase over last year.
“Buyers are truly out in force this spring,” said Mike Hoffman, MAAR’s president. “Climbing rents, consistent job growth and finally some beginning signs of wage growth are all encouraging Twin Citizens to invest in homeownership.”
After a disappointing 2014, when sales fell 7 percent, home sales are rising sharply again because of low mortgage rates, higher home prices and steep declines in foreclosures.
“I don’t recall a spring market this strong,” said Dave Doran, broker for Exit Realty Metro in Minneapolis, who entered the business a dozen years ago. “If you are on the fence about listing your home at this time, I think you may be pleasantly surprised with the market value.”
For buyers, persistently low mortgage rates have been a major lure. Despite expectations that the average 30-year fixed rate mortgage would now be nearing 5 percent, that 30-year mortgage average has remained below 4 percent, nearly half its historical average.
At the same time, getting a mortgage is now a little easier than it’s been during recent years. With the recovery on solid footing and lenders seeing more economic stability, lending standards loosened slightly during April, especially for those seeking a government-backed mortgage, according to a mortgage credit availability report released Tuesday by the Mortgage Bankers Association.
Despite improvements in nearly every sector of the housing market, nearly 1 in 7 homeowners still owe more than their house is worth. That situation is rapidly changing as home prices rise, lifting thousands of homeowners out of negative equity and into the market.
That’s one of the reasons there were 8,613 new listings last month, a 10.7 percent increase over last year. And the bulk of those listings came from traditional sellers rather than banks and investors.
But sales are outpacing supply in some parts of the metro area, and the total number of properties for sale at the end of the month fell 1.9 percent. During April there were 4,701 closings, a 21 percent increase from last year. At the current sales pace, there are now only enough properties to last 3.4 months.
This imbalance between supply and demand is creating serious competition among buyers. About 20 percent of sellers are getting multiple bids for their homes. In 2005, the peak year for multiple bids, one in three sellers received more than one offer.
The competition is particularly visible in Minneapolis and St. Paul, where demand is especially strong for starter houses in move-in ready condition.
When Sue and Drew Boxrud, for example, sensed that house prices in their St. Paul neighborhood were finally on the rise, they were seduced by the prospect of a newer, larger house. The couple, with a new baby, had already replaced the roof and the windows, and did everything their agent, Doran, told them to do to get it ready for sale.
“We were really nervous,” Drew Boxrud said. “We weren’t sure that we’d get enough to get the new house we wanted.”
After shopping around a bit, the Boxruds were not able to find exactly what they wanted in their $300,000 to $400,000 price range, so they decided to build a house in Lakeville. They put their belongings in storage and moved into the basement of Drew’s parents’ house in Ham Lake.
At 11 p.m. on a recent Friday they listed their house for $157,000. By the next day at 9 p.m., they had 13 showings and three offers, including one for $6,000 over the list price.
“We have heard so much about how long it can take to sell a house,” Sue Boxrud said. “We were shocked and pleasantly surprised.”