The spring sales season, the final month of the home buyer tax credits and fewer foreclosures on the market pumped home prices higher in April, according to data released Wednesday from local area Realtors groups. The median sales price in the Twin Cities metro area jumped to $169,800 -- an 11 percent increase from last April. This is the fourth consecutive month of year-over-year price increases -- something not seen since June 2004, long before the housing market hit its peak. It also marked four straight months of month-over-month increases, with prices up more than 8 percent since January.
"This sustained pattern of median price growth is reassuring and may indicate stability in the market," said Brad Fisher, president of the Minneapolis Area Association of Realtors. But given that the federal tax credit of up to $8,000 for new and repeat home buyers expired at the end of April, Fisher was reluctant to declare any long-term victories. "The jury is still out on how the market will look several months after the credit has expired," he said.
Credit-motivated shoppers helped pending sales rise during the month as well. There were 5,781 signed purchase agreements in April -- an increase of 10.9 percent over last April and the most in a month since August 2005. So far this year, there have been 17,095 pending sales -- up 8.5 percent from the 15,759 sales in the year-ago period. Closed sales are up as well.
Realtors anticipate the first weeks of May to be strong too, as some late April tax-credit sales won't show up until then.
Even now, some agents say business hasn't slowed much since the credit ended. Cheryl Kempenich, an agent with Coldwell Banker Burnet, said she's been up until midnight working on offers this week.
In addition to increasing demand thanks to the tax incentive, Pat Paulson, an agent with Exit Lakes Realty and president-elect of the Minneapolis association, credits fewer foreclosures in the market, which tend to depress prices, for helping median prices to rebound. "The main reason for the price increase is the mix of homes that's selling," he said. More traditional homes and short sales sold this April compared with last April, while the number of pending foreclosure sales fell.
But the median sale prices in the traditional and short-sale categories remain down from last year. The median sale price in April for homes put on the market by regular sellers was $199,650 -- a 2.6 percent decrease. Prices for short sales were off 1.5 percent to $147,750 in April. But Paulson is encouraged by the stabilization in median price in the traditional sellers segment, which has hovered around $200,000 every month this year.
With a fairly balanced market, where the number of homes for sale pretty much matches demand, Paulson doesn't expect to see prices increase much. But he doesn't expect them to fall, either, unless foreclosures grow. Still, others fear prices are going down. Scott Anderson, senior economist with Wells Fargo Securities, has predicted that home prices in the Twin Cities could fall between 3 and 5 percent in the next year.
The news comes the same day that real estate search firm Trulia.com released a study showing that in May, 40 percent of the homes for sale in the city of Minneapolis dropped their price at least once, with an average reduction of 8 percent. That's the highest out of 50 cities tracked. Ken Shuman, spokesman for Trulia.com, couldn't pinpoint why Minneapolis came out on top. But he fingered tax credits and increased competition during the peak selling season as reasons that sellers would go lower.
Data released by foreclosure database publisher RealtyTrac on Thursday show foreclosure-related filings -- default notices, sheriff's sales and bank repossessions -- decreased nationwide in April compared with the prior month and to April 2009. In Minnesota, one out of every 712 households received such a filing -- a nearly 13 percent decrease from March and 7.7 percent decrease from April 2009.
Kara McGuire • 612-673-7293