Real estate is officially a hot investment again.
The Minneapolis Area Association of Realtors (MAAR) announced that for the sixth consecutive month, local real estate prices were up in August on a year-over-year basis. The median price, regionwide, was up 15.5 percent from the same month last year, to $179,000. And the average sales price was $222,922, up 10.4 percent and marking the seventh consecutive month of annual increases.
Even in the boom period from January 2003 to January 2004, median prices in the Twin Cities area were only increasing by about 7 percent a year.
In Burnsville, local real estate prices led the pack. The median price was up 29.4 percent, jumping from $135,250 in August of last year to $175,000. The average sales price rose 12.4 percent to $167,758.
Inventory has also fallen, from six months to three, and homes are typically spending 22 percent less time on the market—all indicators that the market is turning in sellers' favor.
Regionwide, nearly every housing market measure has indicated improvement for at least six months now. In August, for instance:
- There were 4,877 pending sales, up 19.5 percent and marking the 16th consecutive month of increase.
- There were 4,883 closed sales, up 12.3 percent, marking the 14th consecutive month of increase.
- In June 2012, closed sales fell just six units short of a nearly six-year high.
Part of the reason for rising prices is supply, which has declined compared to demand. In August, there were 16,348 homes for sale, down 30.5 percent from the same month last year and marking the 19th consecutive month of decreases. Inventory levels are at their lowest since the hot market of December 2003, a nearly nine-year low.
Inventory levels, in fact, have come down a total of 54.5 percent from their July 2007 peak, when the market was at its worst.
"With inventory levels nearing 10-year lows, buyers are scrambling to find the perfect house," said Cari Linn, MAAR’s president. "The next step of recovery will be getting hesitant … sellers back into the market."
Also, the “distressed” market is making less and less of an impact on Twin Cities area home prices; in August, foreclosures and short sales comprised less than a third of the new listings, a far lower rate than was seen during the depths of the area’s real estate downturn.