Unusually warm temperatures, low mortgage rates and stiff competition for homes brought out the house hunters last month, making it the best February for home sales since the real estate downturn began in 2006.
Buyers signed 3,756 purchase agreements in the metro area, a 34 percent increase compared with last year, the Minneapolis Area Association of Realtors said on Monday. For closed sales, February was the eighth consecutive month of year-over-year gains.
"It was really hot," said Remax Results agent Luanne Lind, speaking of the sales increase. "I'm just praying that it holds."
Lind, who works out of the firm's Eden Prairie office, said the unusually warm weather has 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 because buying conditions all around are much easier than they've been during past winters.
"Last year I was crawling through snowbanks in some places," said Cari Linn, president of the Minneapolis Area Association of Realtors. "It's just been much easier to show properties this year."
Falling inventories in the Twin Cities are also creating a sense of urgency among buyers who are used to having plenty of choices. During February, there was 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. Agents say this phenomenon is resulting in multiple bids on some homes.
John Wanninger of Lakes Sotheby's International Realty said inventory is so tight in Edina that many properties are selling even before they hit the market or with multiple offers.
And there's increased interest in high-end houses. He was host at an open house at a new $1.5 million home near 50th and France for the Spring Preview Parade of Homes, and by the end, more than 1,000 lookers toured the home, even though it was already sold.
"Traffic was incredible this past weekend," Wanninger said.
But the market still has its troubles, agents say. While closed sales were up 23 percent last month, prices remain soft and deals require a lot of effort to come together. Lind, for instance, signed five deals in February, but the tight credit environment made the financing process difficult.
Distressed sales are also a key problem. Foreclosures and short sales represented almost 60 percent of all closed sales last month, causing the median sale price of all sales to fall 1.4 percent, to $138,500. While prices are down, it was the lowest price decline in 16 months.
Despite growing demand, sellers are finding that buyers have high expectations, whether it comes to price or condition of the house. Dana George said he and his siblings started getting their house ready for the market in October. They cleaned, painted, redid the floors and remodeled the kitchen hoping to sell the Richfield starter house within 90 days.
"Today's buyers are looking for homes that are in move-in condition," he said. "They're expectations are a little higher than they used to be."
The $199,000 house went on the market in early February and sold within 20 days.
"It's a great feeling to get an offer so fast," George said.
Jim Buchta 612-673-7376