A flurry of reports suggests that the housing recovery in the Twin Cities is outpacing the nation’s.
On Tuesday, the Case-Shiller home price index for the Twin Cities metro increased 12 percent during December — the fifth-largest annual increase among the 20 metro areas tracked by the group. Other reports also showed continuing improvement in market fundamentals, including a larger-than-expected increase in new home sales, plummeting inventory and steady declines in the number of people who can’t pay their mortgage.
“The worst seems to be behind us,” said Craig Lazzara, a senior director at S&P Dow Jones Indices, which conducts the Case-Shiller survey.
Lazzara said it was the first annual increase in the Twin Cities since 2005. He said that a diverse economy and a lower-than-average unemployment rate is helping accelerate the recovery in the Twin Cities.
December’s Case-Shiller index stood at 126, which means that prices are now 26 percent higher than they were in January 2000. A composite of 20 metro areas tracked by the group showed only a 6.8 percent increase from a year earlier. The biggest gainer, Phoenix, saw a 23 percent increase. New York was the only metro area to show a decline.
Also Tuesday, the University of St. Thomas issued its monthly residential real estate price report index, which shows that the housing market is off to a strong start this year with price gains driven by the lowest inventory in nearly a decade. During January only 4.28 homes were for sale for every home sold. A year ago that ratio stood at 6.8 homes. Herb Tousley, director of the real estate program at the University of St Thomas, said a market that is well-balanced between buyers and sellers typically has a ratio between six and 10 homes for sale for every one sold.
“The good news for sellers is that as we move into the spring market more potential buyers will find a limited number of homes for sale, which will put upward pressure on prices,” he said.
That shortage also is driving a robust turnaround in home construction. The U.S. Commerce Department said that new home sales across the country exceeded expectations in January, surging 15.6 percent to 437,000 units. Sales during the prior month were revised higher, and home prices moderated during the month, reflecting fewer foreclosure sales. That report doesn’t include local data, but construction activity in the Twin Cities metro increased nearly 100 percent last year. During January the Builders Association of the Twin Cities reported a double-digit increase in the number of permits issued to build single-family houses.
CoreLogic said that the foreclosure rate in the Twin Cities metro area during December was 1.27 percent, a decline of 0.71 percentage point compared with December 2011. While still at crisis levels, foreclosure activity in the region was lower than the national foreclosure rate, which was 2.96 percent for December 2012. Mortgage delinquencies, an indication of future foreclosures, also declined. CoreLogic said that during December, 3.89 percent of all mortgages were 90 days or more delinquent compared with 4.97 percent for the same period last year.
Experts attribute the declines to an increase in new jobs and improvements in efforts to help homeowners stay current on the mortgage.
Tousley said that he expects the good news to continue throughout the year.
“This is a continuation of the encouraging trends we’ve been seeing for a while,” he said.