On April 7, 2011, CorelLogic, a California based provider of consumer, financial and property data, reported that home prices in Minneapolis-St. Paul-Bloomington fell 6.7% in February compared to the same period last year. A recent Standard & Poor’s/Case-Shiller report noted that the home price dropped 3.1% for a 20-city composite in January over 2010.
Steepest Decline
The Minneapolis market, however, experienced a huge decline (7.6%) in its home price index. The decrease is more than double the composite rate. Obviously, these latest bleak figures represent a new low in the Minneapolis housing market.
Even the S&P chairman suggested that there is “no real hope in sight.” Minneapolis saw the worst decline in monthly home prices compared to other major metropolitan areas. The drop could be the beginning of a double-dip recession.
Between the end of 2010 and January 2011, Minneapolis posted a seasonally-adjusted decrease of 3.4% in its home price index. This drop was the latest in numerous month-over-month declines. As well, the decrease was triple the 20-city composite which posted a 1% decline between December and January.
Hint of Optimism
Despite the recent state of the Minneapolis market, local experts are optimistic about the spring season. This time of year is known traditionally as an active period for home sales. Brad Fisher, president of the Minneapolis Area Association of Realtors (MAAR), explains that home prices are affected by the high percentage of distressed property sales. During 2011, more than half of all Twin Cities’ area home purchases were foreclosures or short sales.
Yearly Comparisons
The Twin Cities median home price dropped 5.1% in the first month of this year. In February, prices fell another 10.4% in year-over-year comparisons. From January-April 2011, home sales are going up against comparisons from last year. During 2010, a federal tax incentive program resulted in an increase of home sales activity.
Although the federal program has expired, the Minneapolis market has seen strong home sales. Inventory has declined 12%, however, from this time last year. Levels are now at a point not seen since 2006. This situation should provide more support for a move forward in prices.
As well, many traditional buyers are in the market decreasing the discounts of low prices from distressed home sales. An industry leader has expressed fears about a possible double-dip recession in the national housing market. Yet we must consider that the market is just emerging from the usual down cycle of winter.
Rebounding Market
Could the Minneapolis market rebound in spring 2011? A spokesman for MAAR suggested that Minneapolis “may see some noteworthy year-over-year improvement that could very well carry through summer and into fall.” June, the beginning of summer, could mark a new beginning for the housing market in the Minneapolis region. In addition, the realtors association found that the median sales price for regular homes (not short sales or foreclosures) has risen by almost 2% since 2010.
Are You Optimistic About The Minneapolis Market?
Browse Minneapolis homes for sale and get up to 2% commission rebate
Sources:
Finance-Commerce.com; Minneapolis home prices post steepest decline in U.S.; Scott Carlson; March 29, 2011
MyFoxTwinCities.com; Minneapolis Housing Market Hits New Low; Jody Ambroz; March 29, 2011
Image courtesy of minneapolis-st-paul-twin-cities-