Time for a Midwest News update while the markets are slow...
Home-sales market cools to only 'hot,' but prices rise
Neal Gendler
Star Tribune
Wednesday, June 20, 2001
An increase in the number of houses for sale appears to be calming the Twin Cities housing market, but even as market times lengthen, prices continue to rise.
In May, the median price for a single-family home in the 13-county metropolitan area reached $168,500, up 12.6 percent from $149,700 in May 2000.
For the first five months of the year, the median -- the point with half of sales above, half below -- was $164,000, up 13.1 percent from $145,000 during the same
period in 2000. The data, from the Regional Multiple Listing Service, were released Tuesday by the Minneapolis Area Association of Realtors.
"We're still seeing a very strong market, but there is more inventory on the market so there is a slight slowing," said association President Budd Batterson. "That
lengthening [sales period] may be in hours or days, not weeks and months that people may think of when we talk about a slowing market. The market is bringing a bit
more time for thought and reason to enter into the buying decision."
Last month, 7,074 new listings were processed, up 18.1 percent from 5,989 in May. Inventory typically increases in summer, better balancing the buyer-seller ratio. But
this year, "we don't have the rising interest rates that we had last year that accentuated the calming," Batterson said. He described this year's market as going from
"super overheated" to "hot."
Another indication of balance was the 20 percent rise in the number of listings for all types of residential property -- 16,118 at the end of May, compared with 13,437
in May 2000.
Sales closed -- which usually reflect purchase agreements signed 45 to 60 days earlier -- totaled 3,781 in May, up only 1.2 percent from May 2000. For the first five
months, they were up 6.7 percent.
Batterson said homes sales were running "full bore" this spring and last, and the law of supply and demand had the usual result of boosting prices. The value of sales
closed in the first five months of 2001 was $2.998 billion, up 19.8 percent from $2.502 billion in the 2000 period.
Agents report seeing some price reductions, which Batterson attributed to overly optimistic sellers "looking at how fast homes were selling and what they were selling
for, and putting a premium on top. ... Now the heat is turned down and we're not reaching those same peaks."
Price reductions are spotty, though, with demand still strong for certain types of homes in places few have been available -- for example, "traditional two-story
homes in Edina," Batterson said. Homes with price reductions are "more likely in the $400,000 to $500,000 range, not in the bottom range of $150,000 to $160,000."
That bottom range has come up considerably, even in areas of low valuation. For example, he said, "a couple of years ago, $75,000 to $80,000 would buy a lot of homes
in north Minneapolis. Now, there's very little under $100,000, and even at the $100,000 range, you're looking at homes that will need some work."
-- Neal Gendler is at ngendler@startribune.com .
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