This was a very good summer for the 13-county Twin Cities housing market. Researchers at the Shenehon Center for Real Estate at the University of St. Thomas’ Opus College of Business say that between June and August, the median price of a non-distressed home increased nearly $6,000.
A “non-distressed” sale is one that does not involve foreclosure or a short sale, where a home is sold for less than the outstanding mortgage balance.
The median price of a non-distressed home in the metro area was $214,000 in June, $217,000 in July, and $219,900 in August; moreover, the August 2012 price is up 8.3 percent over the August 2011 price.
“This is the most significant increase that has been observed in the last six years, with the exception of the period between April 2009 and September 2010 when the market was artificially stimulated by the Federal Homebuyers Tax Credit,” said Herb Tousley, director of real estate programs at the university.
The increases seen in July and August continue a trend in which the median price of a home is higher than it was in the previous year. By this time last year, the median price had already peaked and had been declining for three months.
Is the Twin Cities housing market recovery for real? Despite six consecutive months of positive data, Tousley said we would still need to see several more months of growth before making that claim.
“At this time it appears that the traditional (non-distressed) median price for the remaining months of 2012 will remain above 2011 levels, even allowing for a decline in median sales prices that normally occurs in the late fall and early winter months,” Tousley said.
“If median prices are able to remain above last year’s levels through the fall and winter, and into the spring of next year, that will be a good indication that the Twin Cities area housing market has bottomed out and is on the path to a sustained recovery,” he said.
The rapid increase in the year-over-year prices that has been observed since February “is an additional indicator of the strength of this recovery period.”
Looking ahead to early 2013
Tousley predicts that as prices continue to rise, the inventory of homes for sale should begin to increase as more homeowners decide to put their homes on the market.
“The increased number of homes available for sale, combined with historically very low interest rates, should lead to a continued recovery in the first half of 2013,” he said.
St. Thomas’ composite index
In addition to the sale price of homes throughout the Twin Cities, St. Thomas’ composite index uses eight additional data elements to track the health of the traditional, foreclosure and short-sale markets. They are: number of closed sales, proportion of distressed to traditional sales, days on the market, month’s supply, number of pending sales, number of new listings, number of homes for sale, and sale price as a percentage of asking price.
The index for traditional or non-distressed homes in August was 1020. That is 16 points higher than July and the highest level recorded since October 2006, when it was 1021.
The index for the foreclosure market saw its fourth consecutive monthly improvement; it went up 1.4 percent, from 692 in July to 702 in August.
The index for short sales went down slightly, from 794 in July to 783 in August, a drop of 1.4 percent.
Taken together, the percentage of foreclosures and short sales that closed in August stood at 36 percent of all sales, considerably lower than the 45 percent in August 2011.
For more information
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.