A sharp increase in the median price of a home last month was one of several signs pointing to a return to a healthier housing market in the 13-county Twin Cities area, according to an analysis released today by the Shenehon Center for Real Estate at the University of St. Thomas’ Opus College of Business.
The university’s researchers, however, offered a note of caution. “We will need to see many more months of data before we can say that we are on the road to recovery,” said Herb Tousley, director of real estate programs at St. Thomas.
The Shenehon Center publishes a monthly Residential Real Estate Price Report Index that tracks median prices and other data for traditional home sales as well as the two kinds of distressed sales: short sales (homes sold for a price less than the outstanding mortgage balance), and sales where the home’s mortgage has been foreclosed.
Here are key findings from the center’s analysis of March data:
- The median price for traditional-sale homes increased just over 8 percent, from $180,000 in February to $195,000 in March. It was the largest single month-to-month increase since the middle of 2010, when the market was stimulated by a federal tax credit.
- For traditional-sale, single-family homes, the median price increased from $200,000 in February to $214,000 in March.
- For traditional-sale condos, the median price increased from $111,000 in February to $130,000 in March.
- Sales volume is up in all three categories: traditional sale, short sale and foreclosure.
- While the number of homes on the market remains at historic low levels, change is expected for two reasons. First, the month of March saw new listings come on the market faster than homes were being sold. Second, discretionary sellers (those who would like to sell but don’t have to sell right now) will be encouraged to put their homes on the market as prices trend upward.
- The median price of foreclosed sales appears to be finding a bottom, the number of days on the market continues to decline and the percentage of distressed sales appears to be moderating.
- The percentage of distressed sales (short and foreclosure sales) fell below 50 percent for the first time in the last four months. These distressed properties need to clear the market for a meaningful recovery to take place.
“These are all signs of the beginnings of the return to a healthier housing market,” Tousley said. He added, however, that the housing market in the Twin Cities still has a long way to go to get back to normal.
“One month of good data does not mean that our troubles are over,” he said. “Median prices and sales volumes will have to continue to exceed previous year’s levels for the balance of 2012.”
St. Thomas’ composite index uses nine data elements to track the health of the traditional, foreclosure and short-sale markets. Tousley described the March index as “a turnaround month” for traditional housing sales; the index moved from 895 to 908. The short-sale index increased from 723 to 741 while the foreclosure index remained unchanged at 610. The index scores reflect changes since the apex of the housing-market bubble in early 2005, when each category was assigned an index number of 1,000.
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.