The St. Paul and Minneapolis Realtor’s associations recently reported that the local median sales price increased to $209,000 in October, which is 7.2 percent rise, year-on-year. Inventory, meanwhile, also increased 4.3 percent. The trend goes against traditional assumptions of supply and demand as the drop in prices as supply increases hasn’t happened yet in the Twin Cities real estate market.
The disappearance of distressed properties, short sales, and foreclosures, is attributed as one of the reasons for the continued increase of home prices along sales inventory increases. Distressed properties dominated the market in the past and they used to artificially depress home prices. With those properties out of the way, traditional sales are now inflating prices.
Home sales, however, were reported to have gone down slightly in October. While sales of traditional single family homes continued to increase in the Twin Cities, the amount was rated as insufficient to offset the decline in distressed property sales, according to the Minneapolis Area Association of Realtors.
Closed home sales dropped by 1.5 percent, which is the smallest decline for the year. The decrease in year-over-year closed sales has been recorded monthly, except for June when the sales slightly rose.
Overall, realtors see the developments as positive as traditional activity stays strong. The housing market remains healthy with greater inventory for buyers and good prices for traditional sellers.
Banker and real estate investor Steve Liefschultz is the owner of The Remada Company, a real estate development and management company in Minnesota. For more news and updates on Minnesota real estate, follow this Twitter account.