By Jennier Bjorhus

September 13, 2007

Pending sales and closing in the metro area both dropped about 18 percent in August from levels a year ago as the nation’s worst housing slump in 16 years plays out locally.

The Twin Cities housing quagmire deepened last month as buyers hung back and sellers competed in a market choked with offerings.

Some Realtor groups blamed fragile consumer confidence for stunting home sales; some pointed the finger at tougher lending rules and other fallout from the collapse of the subprime mortgage market.  Still others said too many homeowners are clinging to the golden boom days, reluctant to cut prices to match the market’s new reality. 

Whatever the precise cause, pending sales and closings in the metro area both dropped about 18 percent in August from levels a year ago as the  nation’s worst housing slump in 16 years plays out locally.  That’s the lowest level of closed sales for any August since 1996, and the lowest amount of pending sales for any August since 1994, according to the Minneapolis Area Association of Realtors.

With for-sale inventories continuing to set records, there are now 10.39 homes on the market for every buyer as real estate heads into slower fall months.  That’s up from 8.32 homes per buyer in September a year ago, and 4.76 in September 2005. 

“Only the best-priced homes in the best condition are selling right now.  The others aren’t,” said Matt Barker, a Remax Results agent in St. Paul’s Highland Park.

The correction spells a major buyers market, of course, although buyers reportedly are taking their sweet time.  One Burnsville Realtor said he took one client to 65 different homes before finding a match.  They just have so many to choose from, the Realtor said.

They also have more muscle to negotiate pricing, said MAAR President Deb Greene.  Sellers in the Twin Cities got about 94.7 percent of their asking price in August, down from 95.3 percent in July, according to her group’s data.  That means buyers are bargaining down, getting a $300,000 list price down to $284,100 for instance.

“They’re missing out on fabulous buying opportunities,” Greene said of buyers.  “There seems to be a lot of malaise in consumer confidence lately.”

Swelling inventories press down on prices.  The median sale price for the 13-county metro area slid to $230,000 in August, down 2.1 percent from a year ago.  That’s the 11th straight month of a year-over-year median price drop.

But sale prices aren’t dropping everywhere.  True to the old industry adage that all real estate is local, the housing slump isn’t treating all Twin Cities neighborhoods equally.  A map of how median sale prices performed n August compared with a year ago, by municipality, offers on snapshot of how differently sale prices are behaving across the Twin Cities.  Sellers in Chaska, for instance, appear to have a much stronger hand than sellers in Farmington.

In Albertville, the median sale price rose 34 percent last month from a year ago to $264,950.  Stillwater saw the median sale price rise 30 percent to $300,893.  In St. Paul, the median held flat at $200,000.  In Eagan it dipped about 4 percent to $236,375.