A monthly real estate housing report shows a decline in the median sale price for the first time this year, but the Twin Cities housing market is bouncing back.
According to the Residential Real Estate Price Report Index, a monthly analysis of the 13-county metro area prepared by the Shenehon Center for Real Estate at the University of St. Thomas' Opus College of Business, the decline in median sale price from June to July is nothing to worry about. The normal seasonal cycle dictates that as the leaves fall, the housing market picks up.
The volume of closed sales was flat, but the metro is still well ahead of last year's prices and sales levels, director of real estate programs at St. Thomas Herb Tousley.
Prior to this month, the median sale prices had been rising, which means there's more higher-priced homes being sold and fewer lower-priced properties being sold.
As a result, the proportion of foreclosures and short sales is declining. In July, 20 percent of closed sales were "distressed" -- the lowest since Jan. 2008.
The median price of a non-distressed home in July 2013 was $224,950; that's up 3.66 percent over July of 2012 and is only 6.2 percent less than the all-time high of $239,900 that was recorded in June 2006, prior the burst of the housing bubble.
"It appears that the inventory of homes for sale, while still historically low, is slowly improving. It bottomed out in January 2013, at 12, 919," Tousley said. "It has increased every month since then, ending in July at 15,768 homes for sale."
NEW CONDO DEVELOPMENT
New condominium development is also on the rise. The successful presale of a few early projects should set the stage for more potential buyers in that arena after five years of declining values, excess units and no new construction.
MORE SINGLE-FAMILY HOMES
Construction permits for new single-family homes in the metro are up 30 percent compared to last year. While permits are running far behind levels seen in 2005 and 2006, homebuilders are in the midst of a third year of steady growth.
ABOUT THE INDEX
The St. Thomas' real estate index uses nine data elements to measure the health of the market. In July it showed year-to-year increases for the three categories of sales. For traditional sales, the July index is up 7.98 percent over last year; for short sales, the index is up 11.31 percent; and for foreclosure sales, the index is up 14.02 percent.
US HOME PRICES ASCEND
U.S. home prices made a huge jump in June -- up 12.1 percent from last year, according to the Standard & Poor/Case Shiller home index report released Tuesday.
All 20 cities included in the measurement posted gains from May to June.
Las Vegas: 24.9%
San Francisco: 24.5%
Los Angeles: Nearly 20%
Phoenix: Nearly 20%
However, month-to-month gains slowed in 14 of the 20 cities in June compared to May, and higher mortgage rates may be to blame as rates have risen more than a full percentage point since May. Economists say the slowdown may be beneficial and could keep some homes from becoming unaffordable.
The Associated Press contributed to this report.