Report: Richfield, Twin Cities Housing Sales Go Up While Foreclosures Go Down

The Twin Cities metro area saw an increase in pending sales in May 2011, compared to a year ago when sales plummeted after the 2010 first-time buyer’s tax credit expired. In Richfield 35 properties went from active (on the market) to pending (waiting to close) during May 2011, compared to 25 homes during May 2010. 

These 35 homes ranged from a senior, one-bedroom condo selling for $30,000 to a $285,00 single family home. Of May 2011's pending Richfield properties, four were short sales and 10 were bank owned, whereas there were two short sales and six bank owned pending sales in May 210.

Those Looking for a Bargain Can Still Find One, But Maybe Not For Long

For investors and other buyers looking for bargains, there are still distressed-sale properties coming on the market, but real estate economists prognosticate that things may be changing in the Twin Cities housing market as the economy improves.

Housing inventory levels dropped 11.8 percent and sales rose 13.2 percent in the metro area last month compared to the same time in 2010, which could be a signal that the market is improving for sellers.

The drop in supply should also be a signal to buyers that now is the time to purchase a home. However, the perception among many buyers is that the past trend of low prices and an increasing number of listings will continue keeping competition high and housing prices going down, but this is not necessarily the case.

Jobless rates in Minnesota remain well below national averages, which should mean with low mortgage interest rates available, buyers should be taking advantage of a unique buying opportunity. But buying a home is as much an emotional investment as a financial one. Many otherwise qualified buyers are waiting–for prices to drop, for the job market to improve,  for the stock market to stabilize–so they can feel more confident about a home purchase.

Currently there are 49 potential short sale properties and 18 bank owned homes on the market in Richfield out of 194 homes for sale.

The average price for a home on the market in Richfield is $136,979. Prices for homes sold in May 2010 averaged $2,856 dollars below list price, which is not unexpected since sales prices that are lower than list price are standard for a buyer’s market.

However, it is important to not that these figures include bank owned properties, which often sell well below the asking price. In addition, it does not include seller-paid closing costs, often around three percent of the sale price.

The Rise of the Traditional Sale

While sales are increasing in Richfield and metro-wide, traditional priced sales are up as well, rising 1.4 percent from a year ago. Twin Cities's homes are selling for an average $200,700. Of course, while averages can give an overview of any real estate market in any community, each community and each sale is unique. Statistics can be a guide but should not solely determine any home buying of selling decision.   

Metro wide in May 2010, only 29.8 percent of homes on the market were short sales. While historically high, this is the lowest level seen since April 2010 and is leaving some real estate professionals optimistic.

Some housing experts say that fewer distressed homes in the $100,000 to $200,000 range will come on the market in the near future, allowing Richfield homes to list for higher as the inventory of distressed sales in the lower price ranges fall and traditionally listed homes rise.

“Both the foreclosure rate and the distressed rate hit 7-month lows in May [2010],” said Brad Fisher, president of the Minneapolis Area Association of Realtors [MAAR], in a release. “It’s reassuring to have more traditional product entering the market relative to other segments, as today’s new listings are tomorrow’s closings."

Number of "Days on Market" Dropping

The number of days a home is on the market is also falling. In the five-county area, the months supply of inventory is at 8.5 months, down from a 12-month supply during the worst point in Summer 2008.

Right now, it takes an average of 148 days to sell a home in the metro area. In Richfield, of homes that closed during May 2011, in Richfield the majority of homes sold in 60 or fewer days.

While the housing market still has a long way to go to a full recovery, Cari Linn, MAAR's president-elect, said in a release that for the first time in years the local housing market is changing without government incentives.

She said, “Our housing market continues to show subtle yet sure signs of healing, despite concerns over the national debt ceiling, slow job growth and food and energy prices eating in personal budgets."