More homes changed hands in the Twin Cities last year than any other year in a decade, and the median price was just 4.5 percent below the all-time peak in 2006.
In the 13-county metro area, 56,930 homes were sold, nearly 14 percent more than in 2014, as a strong job market and low mortgage rates bolstered real estate. The median price rose 7 percent to $220,000, the Minneapolis Area Association of Realtors said Wednesday.
Only 2004 and 2005 saw a higher volume of sales.
“Last year really showcased the durability of our economic and housing recovery, despite a few obstacles,” said Judy Shields, the association’s president.
The numbers could have been even better if more homes had been available for sale. Despite a 5.1 percent increase in new listings, the total number of properties for sale at the end of the year was down nearly 22 percent.
The number of homes on the market, enough to last two months, hit an unprecedented low, another indication of the deep imbalance between buyers and sellers. The market is considered balanced when there are five months’ worth of homes for sale.
That imbalance was particularly notable in several Minneapolis neighborhoods and first-ring suburbs. In Edina, for example, closings were up 5.8 percent during the year, with the strongest demand — and most limited supply — for houses in the $500,000 to $750,000 range, said Chad Larsen of the Berg Larsen Group at Coldwell Banker Burnet. Many of those properties were purchased primarily to be torn down and replaced with bigger houses.
Even several exurban markets that were particularly hard hit by the downturn saw big gains in sales, many of them involving first-time buyers. In Isanti, known for its inexpensive new houses on large lots, sales rose 38 percent.
Upper-bracket buyers were also out in force. Sales of $1-million-plus houses increased by double-digits last year, but the market was highly segmented by price range, said Larsen, with sales of the most expensive houses leveling off.
In many areas, demand outstripped supply, pushing prices to new highs in several communities, including Edina, St. Louis Park, Minnetonka and southwest Minneapolis.
Higher prices and a shortage of listings made being an entry-level buyer last year particularly challenging, especially because there was a steep decline in heavily discounted foreclosures. At their peak, foreclosures and short sales represented nearly 60 percent of all sales, compared with just 11 percent last year.
Real estate agents are optimistic about 2016. Greg Mason, president and CEO of Edina Realty Home Services, said that companywide there has been a healthy increase in new listing calls compared with last year, suggesting stronger sales and more options for buyers this year. “We’ll continue to see rents outpace inflation,” he said. “And we’ll see a lot of activity with millennials and boomerang buyers coming back into the market.”
Though it was clearly a seller’s market last year, buyers have been armed with endless amounts of sales data gleaned online and few are willing to overpay.
After her youngest child left for college, Kate Helm and her husband decided it was time to sell their 6,000-square-foot house in Edina’s Golf Terrace Heights neighborhood.
“We no longer need a home the size of ours,” she said, “and thought it would be fun to move to a smaller place that we could ‘fix up’ and enjoy for a number of years.”
Though her agent, Larsen, prepared her for the possibility that the $1.5 million house could sell in days, she knows that a quick deal isn’t certain.
“Twenty-two years ago, when we were last in the market, it seemed things were a bit more predictable,” she said “We recognize that, now, we may have to wait for the right buyer to come along, and so we are prepared to be patient.”