With data from December now in, history will record that 2012 was the year the Twin Cities housing market finally bottomed out and began to recover.
The market’s low point came in February 2012. Since then, the median sale prices recorded in 2012 have exceeded the 2011 levels every month, according to the Residential Real Estate Price Report Index, a monthly analysis of the 13-county metro area prepared by the Shenehon Center for Real Estate at the University of St. Thomas’ Opus College of Business.
Each month the center tracks nine housing-market data elements, including the median price for three types of sales: nondistressed or traditional-type sales, foreclosures, and short sales (when a home is sold for less than the outstanding mortgage balance).
The overall median sale price for all categories of homes in the Twin Cities peaked at $238,000 more than six years ago, in June 2006. That overall median price hit its low point in February 2012 at $138,250.
Herb Tousley, director of real estate programs at the university, said housing data from December “continues to exhibit many of the positive market trends that have been observed for much of 2012.”
The median sale price in December 2012 for all categories of homes was $168,404, a gain of 16.2 percent over December 2011 when it was $145,000.
The median price of a nondistressed home in the Twin Cities peaked in June 2006 at $239,900 and reached its low point in February 2012 at $180,000. Since last February the median price for these traditional home sales increased steadily until peaking in August 2012 at $219,700. The median price then began its seasonal, fourth-quarter decline, ending at $208,000 in December 2012. That was a 9.2 percent increase over December 2011.
Tousley said the volume of closed sales in December 2012 was 3,380, which was almost identical to December 2011. The difference, he said, was that only 38.6 percent of the homes sold in December 2012 were distressed properties (foreclosures and short sales) compared to 50.2 percent in December 2011.
St. Thomas uses sale price and other data elements to create a composite index that tracks the health of the traditional, foreclosure and short-sale markets. When comparing 2012 to 2011, the traditional-sale index is up 10 percent, the foreclosure-sale index is up 13.5 percent, and the short-sale index is up 7.4 percent.
The inventory of homes on the market remains at historically low levels. There were 11,842 Twin Cities homes for sale in December 2012, down from 17,416 the previous December. Also compared to a year ago, the number of pending sales was up 6.7 percent and the number of new listings was down 15.5 percent. “This suggests that the number of homes on the market will continue to be very low for the next several months,” Tousley said.
“2012 also will be noted as a year when the inventory of homes for sale declined to unprecedented low levels,” he said. “The fact that many homeowners were under water or had little equity in their homes, along with feelings of general economic uncertainty, kept many homeowners who normally would be sellers on the sidelines.”
Tousley points to factors now in place that will lead to higher median prices, more homes on the market, an increase in new construction and fewer foreclosure and short sales. His point-by-point analysis:
More details about the market can be found on the Shenehon Center’s website.
Research for the monthly reports is conducted by Tousley and Dr. Thomas Hamilton, associate professor of real estate at the university. The index is available free via email from Tousley at email@example.com.