This information was provided by The Greater Lakes Association of REALTORS

Positive Signs Continue in Housing Recovery

Unsure about how expiration of the Home Buyer Tax Credit would impact Minnesota real estate markets, June figures are more positive than negative for homeowners. In a statewide report of housing activity, the Minnesota Association of REALTORS® released a number of leading indicators that show more promise than many expected.

“Minnesota’s residential real estate market is showing some very promising signs a few months after expiration of the Federal Home Buyer Tax Credit,” said Michael Hoffman, president of the 20,000 member professional association. “June closed sales were up 11 percent compared to last year, median home prices were up slightly to $155,000 and the inventory supply was down9 percent.”

Greater Lakes Area REALTORS® report that activity is a bit slower than the statewide figures. Closed transactions were up 4.2 percent in June when compared to 2009. On the positive side, median home prices are up 6.5 percent through the first six months of 2010.

“We’re cautiously optimistic that the worst is behind us,” said Kevin Goedker, President of the Greater Lakes Area Association of REALTORS®. “Home prices are showing consistent positivegrowth through the first half of the year.”

One negative figure was in the area of pending sales, which are home sales were contracts have been drafted but have not closed. This figure was down 33 percent compared to the same time last year, a figure the industry expected as a number of home purchasers moved up their buying decision in order to take advantage of the tax credit.

“Through the first half of 2010 we’re seeing residential real estate rebound in most parts of the state,” said Hoffman. “In the state’s 13 Economic Regions, median prices have increased in 8 with the Upper Minnesota Valley leading the way at +16.8 percent. Other notable areas are Southwest Region +10.7%, Central Region + 4.1% and the 7 County Twin Cities +6.2%.”

Unemployment in some economic regions is a major cause for localized price difficulties. As an example, in the East Central Region – Chisago, Isanti, Mille Lacs, Kanabec and Pine Counties – the unemployment rate is 8.8 percent. For June the median home price fell -6.4 percent compared to the median a year earlier. Conversely, in the Southwest Region – Lincoln, Lyon, Redwood, Pipestone, Murray, Cottonwood, Rock, Nobles and Jackson Counties – where the unemployment rate is 4.7 percent, home values increased 55.9 percent in June 2010 when compared with June 2009 and are up 10.7 percent through the first 6 months of 2010.

“Both Marshall and Worthington are strong economies in the Southwest Region,” Hoffman stated. Marshall’s unemployment rate is 4.7 percent and Worthington’s is at 4.4 percent, the lowest of the Micro Statistical Areas in the state. “Housing values and purchasing activity is closely linked to employment figures.” He added.

Lower inventory levels are also helping boost home values, Hoffman said about the rebounding marketplace. Minnesota’s inventory levels are still a bit higher than normal at 10.6 months; however this is a 9.4 percent decline from the same time last year when the inventory was at 11.7 months.

Foreclosures and short sales are significant factors in many areas, especially in the Metro, St Cloud, Rochester and Duluth market areas. These distressed sales compete directly with owner-occupied sellers and have a tendency to sell for less than traditional homes, thus damping the area median price temporarily.

Housing Affordability is another good sign for the rebounding residential market. Historically low interest rates and slower appreciation has combined to make home ownership a terrific option for households thinking about investing in their future. Minnesota’s Housing Affordability Index (HAI) is at 113. An HAI of 113 means the median family income has 113% of the necessary income required to purchase a median priced home using traditional qualifying ratios and 30-year fixed-rate financing.

“Greater Lakes is one of the most affordable housing markets in the state,” said Kevin

Goedker. “The June HAI for the Greater Lakes Area was 157 which creates wonderful

opportunities for people who thought owning a home was out of their reach.”

Click Here To View the Full June Real Estate Review

Please feel free to contact me with any questions

Dan Pflugshaupt

REALTOR, GRI, e-PRO

218-839-7700

Dan@GalleryofHomesMN.com

Specializing in North Central Minnesota Lakeshore & Recreational Property