Motivated by record low mortgage rates, pre-crash prices and limited options, Twin Cities home buyers signed 3,756 purchase agreements last month, a 34 percent increase compared with last year at this time and the best February since 2006, according to data released this morning by the Minneapolis Area Association of Realtors.
Though buyers were out in force, foreclosures continued to represent more than 40 percent of all sales, causing the median sale price of all closed sales last month to fall 1.4 percent to $138,000. That was the lowest price decline in 16 months.
"The mix of homes selling is slowly starting to change which has translated into the smallest price decline since October 2010,” said Cari Linn, President of the Minneapolis Area Association of Realtors. “Subsiding price declines are a sign of market rebalance"
Not all pending sales will close, especially at a time when prices are falling and appraisals are under scrutiny, but closed sales were up 22.8 percent. Unusually warm weather, mortgage rates below 4 percent and a limited supply of listings have created a much earlier spring market than is typical. Sales usually start to increase in a meaningful way in March, but over the past few months sales have been elevated in no small part because buying conditions all around are much easier than they have been during recent winters.
For the past few years buyers have had the luxury of plenty of choices, but inventory levels have been steadily falling in part because so many sellers are reluctant to list at a time when prices are still falling, and because sales have been on the rise. During February there was only a 1.1 percent increase in new listings, causing overall inventory levels to fall 27 percent to 16,689, the lowest number of homes for sale since 2003.
Tight supplies are creating a sense of urgency that didn't exist last year and reports of multiple offers are on the rise, especially in places like Edina, where foreclosure rates have been relatively low. John Wanninger of Lakes Sotheby's International Realty said that inventory is so tight, many properties are selling even before they hit the market, and that the Edina market is "booming."