Home prices in the Twin Cities have been quietly moving upward this summer, according to a widely followed index that shows prices up 9.0 percent from March to July.
The increase in the Standard and Poor’s Case-Shiller index was the second-biggest in the nation for that period. Even adjusted to eliminate the normal effect of seasonal fluctuations, prices were up 2.1 percent, behind only Detroit.
Maureen Maitland, a vice president at S&P Indices, said that while the month-to-month numbers that came out Tuesday are positive, she’s cautious about calling it a trend because there just haven’t been enough signs of strength. “Right now there’s still so much uncertainty,” she said, “It’s a tough call for people on all sides.”
From June to July the Minneapolis index was up 2.6 percent, also second to Detroit among the 20 metro areas that Case-Shiller tracks. Nationwide, the index was up 0.9 percent from June to July. But even with increases in recent months, the index still shows Minneapolis prices down the most in the nation over the past year, 9.1 percent. Only two markets were up for the year – Detroit and Washington, D.C. Maitland said declines in the number of transactions in the Twin Cities and elsewhere have added volatility to the data, making it more difficult to draw clear conclusions on a month-to-month basis. A case in point: The federal home buyer’s tax credit spurred home sales until it expired in April 2010. In May 2010, the price index for the Twin Cities was up 12 percent compared with the previous year. Then the monthly declines returned. Aside from general economic conditions, the index has been influenced by the number of foreclosure sales.In the Twin Cities the percentage of all home sales that are foreclosures has consistently been higher than the national average. Some months foreclosures and short sales represent upwards of 30 to 40 percent of all deals.
The Case-Shiller report is closely watched because it tracks repeat sales of the same houses, not including condominiums and townhouses. But some argue that it still doesn’t give a complete picture of what’s happening in the market. Herb Tousley, the director of real estate programs at the University of St. Thomas, said his department created an index that makes use of several data sets to get a more up to date picture of the market. That includes inventory levels, days on market and the proportion of distressed sales to traditional sales, among other metrics.
The latest report, which excludes distressed sales but includes condominiums and other housing types, was released earlier this month. It showed that in August the market was relatively flat with the index increasing from 799 in July to 800 in August. Further research showed that in the Twin Cities a disproportionately high number of houses priced at less than $150,000 sold during the past few months, he said, skewing the median sale price downward. Foreclosures and short sales represented about 40 percent of all sales in August, Tousley said.
Another real estate research company, CoreLogic, said Tuesday that the number of houses that are in default or in foreclosure fell during July for the third straight month. This “shadow inventory” is falling because mortgage defaults are on the decline. CoreLogic said that the shadow inventory during July declined slightly to 1.6 million units, or a 5-month supply —from 1.9 million — a six-month supply — a year ago. Shadow inventory peaked at 2 million units in January 2010, when there was a 8.4 month supply of listings on the market. Overall inventory levels across the country have fallen, with shadow inventory representing 29 percent of the combined shadow and visible inventories.