Business & Tech

Burnsville Real Estate: On the Road to Recovery?

Over the last 12 months, Realtors cut local housing stock in half, increasing sales by almost 28 percent — but prices remain lax.

A year-end review of real estate figures shows that Burnsville's residential real estate market is slowly rebounding from the devastating crash beginning in 2007: Sales are up, the flow of incoming listings is down and sellers enjoyed quicker turnaround than in 2010.

Prices, however, continued to fall.

Most striking was the reduction in overall inventory over 2011. In December of 2011, the city had just 3.6 months of inventory left, a 56.9 percent drop from December 2010, when residential properties sat on the market for 8.4 months on average. 

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Closed sales rose from a total of 599 in 2010 to 764 in 2011, while new listings dropped off by 18.5 percent.

In spite of these encouraging indicators, the median price shed thousands over the last 12-month period, falling from $167,000 to $149,000. 

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Trends in Burnsville track closely with the rest of the region. Overall, the Twin Cities real estate forecast is still chilly, but there are at least a few rays of sunshine poking through the clouds.

In 2011, the median sales price of homes in the 13-county Twin Cities region fell to $150,000, down 11.7 percent from the already depressed levels of 2010. (The area’s median sales price peaked at $230,000 in 2006.)

Inventory, however, fell a dramatic 28.7 percent from 2010, and is now at the lowest level in eight years. The time it would take to sell off all active properties in the region—a standard measure of real estate inventory—has dropped 36.5 percent to 4.5 months.

Ordinarily, a big drop in inventory would lead almost immediately to rising home prices. But the region’s median price is still depressed by the flood of foreclosures and short sales, said Richard Tucker, president of the St. Paul Area Association of REALTORS® and vice president of Coldwell Banker Burnet in Burnsville.

Exactly half of all closed sales in 2011 were either foreclosures or short sales — a slightly higher percentage than in 2010 or 2009, when such properties represented 47.9 percent and 48.9 percent of sales, respectively. “Distressed properties” typically go for about 60 cents on the dollar when compared to traditional homes.

The real estate market has witnessed a unique situation in the “past four or five years,” Tucker said.  At the beginning of the downturn, “we were at very high inventory levels. … the economic crisis forced all that to go down.

“The last piece of (the) recovery will be (an improvement in the) average sales price,” triggered by a scarcity of supply, Tucker said. “That’s the direction we’re heading.”

Tucker noted that this month the National Association of Home Builders included the Twin Cities in its list of 76 “improving housing markets,” which measures housing permits, employment and housing prices for at least six months. 

Among other “optimistic indicators” cited: The region’s relatively low 5.4 percent unemployment rate, historically low interest rates and the fact that rental-vacancy rates in the region are at record lows.


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