The Great Real Estate Downturn may be nearing an end.
Area realtors reported Wednesday that residential real estate prices across the Twin Cities region are on the rebound; the median price of homes sold in March was up 6.4 percent from the same month last year—the first such year-over-year increase since October 2010.
The news was good in Minnetonka, where the median price was up 5.8 percent over March 2011, according to a report from the Minneapolis Area Association of Realtors (MAAR).
Last month in Minnetonka, median sales price jumped from $207,950 in March 2011 to $220,000 this year. New listings increased almost 15 percent over March of last year, from 109 to 125. Also, the percent of original list price received ascended from 86.5 percent last year to 90 percent this year.
Eric Stafford, a realtor with the Coldwell Banker Burnet Minnetonka office, said they are seeing more non-distressed homes on the market. These are traditional sales of homes, meaning those that not foreclosures or short sales.
"We're seeing that demand pick up, and that's probably pushed the price up," Stafford said. "The average sale price on a traditional home is slightly higher (than a distressed home) just because it has been maintained and presented to the market."
As for the percent of the original list price increase, Stafford said he's seeing firsthand the list prices and sale prices getting closer.
"A $300,000 house last year may have been selling around $250,000 to $260,000," he said. "Now if you price it at $300,000, it's probably worth close to $300,000."
Regionally, realtors reported several signs of an improving market. In addition to the median price boost:
- The price-per-square-foot measurement of home value increased for the first time since June 2010.
- Pending home sales were up 20.4 percent in March and are already higher than any month in 2007, 2008 or 2011.
- The months supply of inventory, the amount of time it would take to sell every home on the market, fell nearly 40 percent to 4.6 months. That’s the lowest reading for any month since January 2006.
- Compared to the year prior, sellers are getting a greater share of their asking price from buyers.
Andy Fazendin, MAAR’s president-elect, was reluctant to declare the downturn in housing prices at an official end. But he said, “It’s looking increasingly likely the worst is behind us. We continue to see encouraging signals from the market that allow for an improving view on residential real estate in 2012.”
The improved median price is, in large part, a reflection of the changing market. Distressed properties sold through foreclosures and short sales made up only 34.6 percent of all new listings in March, the smallest share since July 2008.
Meanwhile, realtors say an unusually warm March helped boost buyer activity, and the market received additional boosts from low interest rates, affordable prices and a sense of urgency caused by tightened inventories. The number of homes for sale continued to drop, down 27.5 percent from last year to 17,081 active listings, the lowest inventory reading for any month since January 2004.
In Minnetonka, the inventory was down 29 percent from this March to last March. With only 289 homes on the market, it would take 5.2 months burn through the inventory compared to 7.3 months last year at this time.
"Usually when we start seeing positive trends in pricing, the inventory starts going down," Stafford said.