Twin Cities home prices declined in November by the smallest amount in more than two years as the inventory of homes for sale returned to more-normal levels. Those are the latest glimmers of a market on the mend found in the monthly housing numbers released Thursday by the Minneapolis Area Association of Realtors (MAAR).
"We are bottomed out. We are on the road to recovery," said MAAR president Steve Havig.
The metro area's $170,000 median sale price in November is up a skosh from $169,000 in October and the same as September. And while $170,000 is down 3 percent from a year ago, it's not a big double-digit drop like the declines earlier this year. That's a flash of hope for homeowners weary of watching their equity vaporize.
A surge in sales helped the cause, with a hand from the government. Closed sales, down from October, jumped nearly 70 percent from a year ago to 4,304, thanks in part to the bump from buyers rushing to take advantage of the $8,000 first-time home buyers tax credit which was originally slated to end in late November. That rush is expected to taper off this month, historically a slow one for home sales. The tax credit has since been extended to the end of April and expanded to include a new $6,500 tax credit for some repeat home buyers.
November's pending sales, a sign of future activity, fell to 2,987, down 36 percent from October but 10 percent higher than a year ago. MAAR's monthly numbers are not seasonally adjusted.
Brisk sales last month helped shrink the number of homes listed for sale. Listings dropped to 21,959, down from previous months and about 20 percent less than a year ago. That's about a six-month supply of inventory for sale. A five-month supply is generally considered a balanced market.
Another ray of light: About one-third of the final sales last month were lender-mediated, down from about 60 percent of sales at the start of the year. Lender-mediated sales are some type of foreclosure or short sale where a lender agrees to have homeowners sell a house for less than they owe on it. The resulting bargain-basement prices have been a drag on overall values.
The road ahead remains bumpy. One problem, Havig said, is that banks and lenders continue to stumble with short sales.
"We have everywhere from a three- to nine-month lag in response time from lenders on short sales [offers]," said Havig. He noted that the inventory of foreclosures has dropped, but the supply of short sales remains high.
There's also more pain in the pipeline as Minnesotans struggle with unemployment. Nearly 7 percent of Minnesota homeowners with mortgages are late on their payments, according to the Mortgage Bankers Association. That's the highest since 1979, when the association started tracking delinquencies at the state level. And it's a signal that more lenders and struggling homeowners will be forced to put homes on the market, depressing prices.
Mark Zandi, chief economist at Moody's Economy.com, recently released a sober 2010 forecast calling for still more trouble in the nation's housing market, partly because of job losses. He predicted that median home prices in the metro area will fall another 5 percent next year, then pick up about 2 percent in 2011.
Jennifer Bjorhus • 612-673-4683