Arrows on the Twin Cities real estate chart pointed upward for the fifth consecutive month, according to the Residential Real Estate Price Report Index, a monthly analysis of the 13-county Twin Cities area prepared by the Shenehon Center for Real Estate at the University of St. Thomas’ Opus College of Business.
“Twin Cities’ housing data for June continued to show encouraging signs for the fifth month in a row,” observed Herb Tousley, director of real estate programs at the university.
Will the trend will continue? “In 2011 the market was in a similar condition after a spring and early summer run-up, only to be derailed by a lack of confidence created by the federal debt-level-ceiling controversy, the U.S. government credit downgrade, and the emergence of financial problems in Europe,” Tousley said.
“Barring any serious external shocks, the second half of 2012 will test the durability of gains made in the first half of the year,” he said. “Historically, sales volume and median prices have decreased in the second half of the year.
“Will sales volumes and median prices continue to exceed last year’s levels? If the answer is yes, then it would appear the market has established the beginning of a sustained recovery,” he said.
Tousley cautioned that recent market gains do not mean the mortgage foreclosure crisis is behind us. “There are still many properties that need to be sold and the relatively high rate of distressed property sales is going to be with us for several years,” he said. Distressed property sales are foreclosures or short sales, which are homes sold for a price less than the outstanding mortgage balance.
Here are some of the encouraging signs found in June’s market data:
- The median sale price of all three types of homes has been increasing since the beginning of the year. From January to June of this year, the median sale price for traditional homes (not foreclosures or short sales) increased from $209,400 to $229,000 for single-family homes, from $153,000 to $165,000 for town homes, and from $121,500 to $144,000 for condos.
- The volume of sales has increased from January to June. For homes less than $140,000, sales increased from 797 to 982; for homes from $140,000 to $200,000, sales increased from 432 to 975; for homes from $200,000 to $300,000, sales increased from 336 to 982; and for homes more than $300,000, sales increased from 339 to 943.
- As a percentage of all homes sold, the number of lower-priced homes decreased while the number of higher-priced homes increased. For homes less than $140,000, the percentage of total sales dropped from 42 percent in January to 25 percent in June. For homes more than $300,000, the percentage increased from 18 percent in January to 25 percent in June.
- The $214,900 median price for a traditional (non-distressed) home in June 2012 is 3.3 percent higher than the $208,000 price in June 2011. That is significant because this marks the first time since February 2011 that the median price of a traditional home has been higher than the previous year.
- St. Thomas’ composite index uses nine data elements to track the health of the traditional, foreclosure and short-sale markets. The overall June index of 983 was the highest since September 2007, when it was 997.
- The composite index that only measures foreclosures increased from 660 to 690 from May to June. There are indications that the foreclosure market is finding a bottom.
- The inventory of homes on the market continues to be very low and the supply of lower-priced homes continues to fall. This lower inventory, coupled with record-low mortgage rates, is creating a very active market for lower-priced properties. Many of them receive multiple offers and are selling within days of their listing.
More details 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.