Housing market recovery accelerating
Recent reports show mounting improvements in the Twin Cities' housing market.
A closely watched home price index report released Tuesday morning showed healthy price gains in February. And residential construction activity is taking off, says a local builders' association.
In January, Karlyn Coleman and her husband were reluctant to put their home up for sale. They were nervous about how long it would take to sell their place in southwest Minneapolis. And they hadn't found another house they liked well enough to buy.
Now, all that has changed, Karlyn Coleman said.
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"We did find the ideal house and we also saw that things are selling quickly," she said.
The Colemans think the rapid pace of sales will play to their advantage, and they set an asking price that they hope can draw lots of buyers.
"We're listing ours at $290 (thousand) in hopes that there's a bidding war so we can get more than what we asked for," she said. "That's not something we were thinking would happen, just because the market's been so bad before."
Buyers are waging bidding wars as they compete for scarce resources. The supply of homes for sale is at a 10-year low, and that is helping to push home prices up. Over the year ending in February, Twin Cities prices leapt 12 percent, according to the Case-Shiller Home Price Index.
"What the most recent numbers from Case-Shiller illustrate for us is something we've been feeling happen over the past year. There's been a very clear shift in the marketplace," said Alex Stenback, a loan officer with Alerus Mortgage in Minnetonka.
He said the Twin Cities housing market has hit the bottom and is now climbing back up. Many clients looking to move up into a bigger home are feeling more confident, he said.
"It's safe to go out and buy something now and you don't have to worry about losing 10, 20 or 30 percent of the value," Stenback said.
However, some sellers still owe more on their mortgages than their homes are worth. Their reluctance to list their homes is contributing to the tight supply.
Long-beleaguered homebuilders who suffered through a glut of new homes are stepping in to try to fill that void. New home construction activity is spiking, according to the Builders Association of the Twin Cities. Builders pulled about 372 permits for new projects in April, up 27 percent from the same month last year.
The trade group's president, Pam Belz, welcomes that news, but she suggests that recovery for the new home construction industry still has a way to go.
"Builders sold things at a discount for so many years, so we're kind of catching up to real pricing," Belz said.
Traffic was robust at the recent parade of homes event, Belz said, and builders are optimistic about sales.