While it’s not a term often used to describe the housing market, a University of St. Thomas real estate faculty member observed that “the market for single-family homes priced under $140,000 has become quite active. They are flying off the shelves right now,” said Herb Tousley, director of real estate programs at the university.
The finding was one of several signs of a healthier housing market that were outlined in the Residential Real Estate Price Report Index, a monthly analysis of the 13-county Twin Cities area prepared by the Shenehon Center for Real Estate at St. Thomas’ Opus College of Business.
Tousley said that new listings for the lower-priced homes are coming onto the market at a rate of about 1,100 per month and they are being sold at a rate of about 900 t0 1,000 per month.
“The number of homes on the market in this price range has steadily been declining since the beginning of the year,” he said. “Although many of these homes are foreclosures and short sales, there are several types of buyers, including first-time homeowners and investors, who are purchasing these properties at a fast clip.”
Because of the active market, there is just a 3.1-month supply of the less-expensive properties compared to a 4.7-month supply for the market as a whole.
Here are other signs that point to the beginning of a healthier housing market in the Twin Cities:
- The median price for traditional-home sales (not foreclosures or short sales, which are homes sold for a price less than the outstanding mortgage balance) continued to rise in April after recording a strong gain in March. The March-to-April increase was 1.8 percent, with the median price moving from $196,000 to $199,500.
- The number of homes for sale in the Twin Cities continues to remain low by historical standards. In April, as in March, homes were being sold at a rate nearly as great as the rate they came on the market. It the trend continues, the inventory will remain low and that will help boost sales prices.
- The percentage of distressed sales (foreclosures and short sales) remained below 50 percent for the second-consecutive month. In April, 42.8 percent of all homes sold in the Twin Cities market were distressed, the lowest percentage in 17 months.
- St. Thomas’ composite index uses nine data elements to track the health of the traditional, foreclosure and short-sale markets. For April, the traditional-sale index gained 1.9 percent over March, the short-sale index rebounded 2.4 percent, and the foreclosure index increased 4.6 percent.
April’s data indicates that foreclosures appear to be finding a bottom. Tousley said, however, “that does not mean the foreclosure crisis is behind us. There are still many properties that need to be sold and the relatively high rate of distressed-property sales is going to be with us for several years.”
“The bottom line is that most of the median-sale price increase that occurred in April was driven by the sale of traditional, single-family homes. This is a healthy development because both the median sale price and the number of traditional, single-family homes on the market increased significantly in April,” Tousley said.
And while April’s data is “one more step in the right direction,” Tousley cautioned that “median prices and sales volumes will have to continue to exceed the previous year’s levels for the balance of 2012 before we can say that the housing market truly is on the road to recovery.”
More details can be found on the Shenehon Center’s website.
Research for the monthly reports is conducted by Tousley and Dr. Thomas Hamilton, associate professor of real estate at the university. The index is available free via email from Tousley at firstname.lastname@example.org.