The Twin Cities housing market showed small signs of improvement last month, according to figures released today Friday by area realtors. But, market watchers say there's still no reason for celebration.
The Twin Cities real estate market saw a 20 percent increase in home sales last month, compared to the same time last year. And, sales of troubled properties continued to decline as a portion of total sales.
So-called "lender-mediated properties" are cases in which the banks either foreclosed on the homes or agreed to sell them for less than what was owed. These troubled homes made up 60 percent of total sales at the beginning of the year. Last month, foreclosures and short sales made up a smaller 41 percent of housing sales.
"At first glance, there are encouraging signs in the housing market. But these are not super-encouraging signs," Minnesota state economist Tom Stinson said. "You've got to remember that we're in a very difficult housing market. Just because June is a little bit better than in the past few months, doesn't mean that it's good."
Although home sales jumped compared to last year, the numbers are less encouraging on a month-to-month basis. When total home sales are adjusted for seasonal variations, June saw about 2 percent fewer sales than May.
“At first glance, there are encouraging signs in the housing market. But these are not super-encouraging signs.”Tom Stinson, state economist
Stinson wonders if there's still another shoe to drop. An agreement among major lenders to essentially freeze foreclosures expired in March, and Stinson expects more troubled sales to come down the pipeline as a result. That would drag median sale prices down.
And, with thousands of homeowners struggling with unemployment, the state economist said it's likely that prime borrowers are the next wave of homeowners to lose their houses.
Still, real-estate experts like George Karvel at the University of St. Thomas are grateful, if still cautious, that things don't seem to be getting worse.
"When we have a decline in housing and economic activity, the first thing that occurs before recovery is that we have to reach a bottom," Karvel said. "It would appear that the bottom has been reached at this time."
But even if this is the bottom, Karvel said there's a long road of economic recovery ahead of us.
"First we're scared, [and] then we're not so scared," he said. "Then eventually, we might actually feel positive about things again."
Karvel said people will become less frightened about buying a house when they feel more confident about keeping their jobs.