Local Housing Market Continues to Move at Sluggish Pace

Minneapolis, Minnesota (October 11, 2010) –With the current round of figures, be mindful of the fact that we're entering a period of apples-to-oranges comparisons. Market activity was comparatively strong last year due to the approaching deadline for the 2009 tax credit. Combine that with a slowing sales season and buyers driven to enter contracts by April 30, 2010, and it becomes apparent that September 2010's numbers should be taken with a grain of proverbial salt.

"We won't have apples-to-apples comparisons again until summer of 2011," said Brad Fisher, President of the Minneapolis Area Association of REALTORS®. "The housing market is still moving sluggishly as we continue to wait for recovery beyond the buyer tax credit."

Pending sales in the 13-county Twin Cities metro area were down 37.8 percent compared to last September, and closed sales were down 33.5 percent. The decreases are not so drastic when looking at year-to-date 2010 versus 2008, which shows just a 1.4 percent decline in closed sales.

Inventory grew to 28,129, an increase of 13.9 percent. While the first seven months of 2010 enjoyed year-over-year price gains, the $166,000 median sales price was a 2.4 percent decrease from last year and the second consecutive month of price declines.

Digging deeper, traditional sellers (nonforeclosure and non-short sale) enjoyed a 7.6 percent price increase to $215,250, foreclosure prices dropped 3.3 percent to $114,950 and short sales decreased 4.7 percent to $143,000.

All market segments showed a decrease in pending sales activity—40.1 percent for traditional sellers, 24.9 percent for foreclosures and 12.0 percent for short sales.

Listing activity declined 10.7 percent for the entire market since September 2009. Traditional sellers put 11.2 percent fewer homes on the market, banks put 5.8 percent more foreclosures on the market and there were 11.5 percent fewer short sales added to the market.

There are 8.6 months of inventory for the entire Twin Cities market—up 30.3 percent from the 6.6 months of supply last year at this time. Negotiations also slid back toward buyers for the third consecutive month. The percent of original list price received at sale declined 3.2 percent to 90.9 percent. The last time this metric was this low was April of 2009.

The Housing Affordability Index has soared to 220, which means the median family income is 220 percent of the income needed to qualify for the median priced home using a 20 percent down, 30-year fixed mortgage. That is the highest level it has been since we started recording it in 2001. Hey, look at that, there are nuggets of good news out there.