Home sales in the Twin Cities surged last month, setting the stage for the best spring market since the housing crash in 2008.
Buyers signed 5,301 purchase agreements, a 30 percent increase over last year, the Minneapolis Area Association of Realtors said Friday. Prices rose nearly 11 percent.
“Buyers and sellers really came out swinging last month,” said Mike Hoffman, president of the Minneapolis Area Association of Realtors (MAAR).
With the recovery now approaching its eighth year and foreclosure rates at pre-recession lows, there are few barriers in the way of a near-complete recovery.
One that remains: about one in seven homeowners in the Twin Cities owes more than their house is worth. That keeps them from selling their home, contributing to tight supplies in the market, particularly for homes at entry-level prices below $200,000.
Svenja Gudell, Zillow’s senior director of economic research, said that while a negative equity rate of 15 percent is better than the national average, it’s still an impediment to the recovery.
“This is all promising news that the recovery is ongoing,” Gudell said. “But we’re not back to normal.”
The biggest improvement in the market has been the shift from a recovery driven by investors to one driven by traditional buyers like Adam and Kristen Scoll, who recently sold a 1950s rambler to upgrade to a bigger house for their expanding family. Selling their starter house was much easier than buying one.
“I felt more empowered as a seller than as a buyer,” said Kristen Scoll. “We did have a lot of interest right away, and our home sold much quicker than I had anticipated. For us, the process of selling our home went much faster than the process of purchasing a new home.”
Adam Scoll said they were able to sell their house with few concessions, but as a buyer they had little leverage.
“Not to mention that we felt pressure in terms of finding a home before we had to move out of our current one,” he said.
Such traditional sales made up 85 percent of all closed sales last month, on par with late 2007. Last month, there were 3,907 closings, 21 percent higher than last year and the most since March 2006, when there were 4,296.
Though buyers are encountering a more stringent lending environment, mortgage rates remain near record lows. The average 30-year fixed-rate mortgage has been hovering at 3.7 percent, compared with a long-term average near 7 percent.
Kim Pease, a sales agent with Coldwell Banker Burnet, said low rates “got buyers out.”
March wasn’t her best month ever for sales, but it ranks among the strongest since the housing crash, she said, and she expects the momentum to continue. Her listings that are in move-in ready condition have sold within days. A house in St. Louis Park that she listed for $499,900 sold this week after just 10 days on the market.
“The good old-fashioned first-timers have come out,” she said.