Even though the weather has been cold and snowy, the home buyers are out in full force in the Twin Cities this year! According to the S&P/Case-Shiller study, Minneapolis-St. Paul was one of just 8 US cities with double digit price increases, up 12.1% in January 2013 from January 2012.
According to the Shenehon Center for Real Estate at the University of St. Thomas the median sale price in the Twin Cities in February was $205,500 which is a 14.2% increase over February 2012 and this number is just for traditional sales, not distressed properties. The last few months have shown that sales of traditional homes account for 50% or more of all sales which is a very positive sign.
The biggest market challenge is still the low inventory of homes for sale which is driving up prices. Hopefully with the sales prices on traditional homes increasing more home owners will have better equity positions and will be able to put their homes up for sale.
Builders are also reaping the benefits of low home inventory with more people looking to build. There were 360 building permits issued for single-family homes in the 13-county metro area in January, which is an 80 percent increase over the 200 permits issued in January 2012.
Inventory was a huge player in 2012, with the total U.S. for-sale inventory falling 45% since its peak in 2007 to 1.674 million units for sale. The median age of the inventory dropped as well, down by 11.4% since November 2011. These numbers indicate supply-and-demand playing a big role moving into 2013, at least for the first half of the year.
As the prices of homes start to increase more and more people will be underwater on their mortgages allowing more home owners to sell their current home and buy a different property.
As far as the fiscal cliff, Richard Green, director of USC Lusk Center for Real Estate, says it is overhyped. He feels it is more of a slope than a cliff and will not change the real estate market much at all. He also feels that real estate inventory will start to even out as 2013 progresses.