March lifts the market for Twin Cities area homes

Tina Loskota wanted to put her childhood home up for sale before the home buyer tax credits expire on April 30. So instead of spending the rare warm March outside, she combed through decades of keepsakes and updated the property. In just three days, the five-bedroom Bloomington home had a purchase agreement for more than the $300,000 asking price.

Sellers such as Loskota helped push March listings 27 percent higher than they were this time last year, according to data from local Realtors groups. There were 9,991 listings in March 2010, compared with 7,870 listings last year. Pending and closed sales also rose.

For the third consecutive month the median sales price ticked higher, too. In March, half the homes sold for more than $165,000, half sold for less -- a 7.1 percent increase over March 2009. Add it all up and "we are clearly in a recovery," said Leonard MacKinnon, director of marketing for Coldwell Banker Burnet.

"Everybody in our office is working their tail off right now," said Matt Loskota, Tina's husband and a broker with Edina Realty. They had more showings last week than at any point in 2009. "There's just a ton of activity," he said.

How long it lasts is the main question. Activity always picks up in the spring, and the tax credit has pumped up the excitement factor.

"The end of the home buyer credit could cool things off quickly," Scott Anderson, senior economist with Wells Fargo Securities, said. "Government supports push potential sales forward in time and often leave a period of fallow demand in their wake." If new listings continue to outpace sales, prices may have to drop.

Foreclosures down

Broader signs of economic recovery should help the housing market maintain some momentum. The Dow Jones industrial average jumped another psychological hurdle on Monday, closing above 11,000 for the first time since September 2008. The Dow is still off 22 percent from its October 2007 peak, but is up 68 percent from its March 2009 low.

The Twin Cities was the only metropolitan area with more than 1 million residents to see a year-over-year decrease in the unemployment rate in February, the U.S. Bureau of Labor Statistics announced Friday. Minnesota's 7.3 percent unemployment rate in February was lower than the national rate of 9.7 percent.

"We need people to believe they are going to be employed long term and that they have confidence enough to make major purchases," MacKinnon said.

Good economic news can turn into bad news for home buyers, pushing interest rates higher. While rates are still historically low, the 30-year-fixed rate climbed above 5 percent in recent weeks and could rise to 5.6 percent by mid-May, according to Keith Gumbinger, mortgage analyst with the financial publisher HSH Associates.