Pending home sales initiated in June within the Twin Cities area were among the highest in nearly five years. Buyers may be taking advantage of low prices and near-record low mortgage interest rates before they start to climb.
The Minneapolis Area Association of Realtors reports that though there are some good signs occurring in the local Twin Cities residential real estate market, there's still a ways to go. Though pending sales rose in June, closed sales fell 11.4% compared with a year ago. The median sale prices fell 9.3% from a year ago to $165,000. That is still better than March's low of $140,000.
It's unclear whether the latest uptick in buying activity is a blip or a sign of a sustained recovery, given an economy still struggling to gain traction and the extent of the foreclosure crisis still unknown. Stable employment, strong rent prices and relatively low foreclosure rates suggest that the market has seen the worst, said Herb Tousley, director of the Shenehon Center for Real Estate at the University of Minnesota.
"I believe there is reason for optimism," he said.
The biggest barrier to a recovery is foreclosures. At its worst, nearly 60% of all residential real estate sales in the Twin Cities metro were distressed sales, but it has fallen to 38% last month - the lowest level since June 2010! Additionally, fewer foreclosures are entering the market, with the 29% of new listings in the Twin Cities during June that were either foreclosures or short sales being one of the lowest monthly totals in three years.
Still, the foreclosure problem isn't going to go away soon, giving buyers some time to get their down payments together before Twin Cities real estate prices begin a faster climb.