Buyer demand led to more sales, more sales led to rising prices, and that rise may lead more people to put their homes on the market. That's the picture of the Twin Cities' housing market in recovery, as pent-up activity that had been stifled by foreclosures and dropping home values starts to loosen up. The Twin Cities' real estate market showed ongoing signs of recovery last year, and Realtors believe that 2013 will see rising prices as more sellers and buyers get off the sidelines. Buyer demand rebounded last year, with closed sales up 16.9 percent, even as the inventory of homes for sale sunk to levels not seen in a decade. "Competition for homes was just more intense," said Kate Beckman, president of the St. Paul Area Association of Realtors. The average number of days that a house was on the market declined steadily throughout 2012, she said, and at 117 days was down 21 percent from 2011. Another trend that bodes well is that sellers were receiving an average 94 percent of their list price at closing last year, with the average amount received up 3.7 percent from 2011, the first such increase since 2009. The statistics were contained in data released jointly Friday, Jan. 11, by the Realtors associations for Minneapolis and St. Paul. For 2013, the Realtors project that closed sales will between 4 percent and 8 percent, inventory will be flat or down a bit, and sale prices will rise between 8 percent and 12 percent. While some housing segments
and neighborhoods have been competitive - and multiple offers on a home have been common - it's still not considered a seller's market, said Andy Fazendin, president of the Minneapolis Area Association of Realtors. Data shows that median sales prices have held steady in a range of $150,000 to $165,000 for four years now, and Realtors expect that as buyers continue to return to the market, prices could go up. The median sales price last year was $167,900, which is up 12 percent from 2011, but essentially flat compared with 2009 and 2010. St. Paul's real estate sales have shown signs of recovery since late 2011, Beckman said, and an increase in inventory likely would bring out more buyers, who have seen fewer choices recently. The inventory of 11,875 homes for sale is down 31.8 percent from the 17,416 that were listed in 2011. "There hasn't been a lot of seller confidence," Beckman said, and some owners who bought near the market peak may be concerned that they won't be at the break-even point if they plan to sell. Still, the number of "distressed" sales - which includes foreclosed homes and short sales - declined in 2012. There were 4,432 distressed home sales in December, compared to 7,733 in the same month of 2011 - a 43 percent decline. 2012 will be remembered as the year when residential inventory of homes for sale hit "unprecedented low levels. That was driven by homeowners' concerns about under-water mortgages and worries about economic uncertainty," said Herb Tousley, the director of real estate programs and St. Thomas University. In a report out earlier this week, Tousley said that looking ahead, interest rates that are expected to remain low, the shortage of homes for sale and a generally improving economy could drive up prices through the spring and summer. Last year did also record the single most expensive residential home sale in St. Paul's history, Beckman said. The historic Weyerhaeuser mansion in the Summit Hill neighborhood, built in 1908, was sold for $2.3 million in September. The 11,000-square-foot home sits on a 2-acre lot on Grand Hill.
John Welbes can be reached at 651-228-2175.