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Minnesota’s Twin Cities metro area is facing a simultaneous wave of good and bad news, according to new housing data.
First, the good news: The two major real estate trade groups serving this market–the Minneapolis Area Association of Realtors (MAAR) and the St. Paul Area Association of Realtors–reported that 2015 ended with 56,390 closed sales, a 13.7 percent increase from 2014 and the best sales level in 10 years. The market’s median sales price last year was $220,000, up seven percent from the previous year, while distressed sales made up 10.6 percent of all closed sales, a staggering 26.7 percent year-over-year drop.
“Last year really showcased the durability of our economic and housing recovery, despite a few obstacles. Attractive rates, rising rents, job growth, wage increases and the lowest unemployment rate of any major metro area will continue to be positive factors for real estate,” said Judy Shields, president of MAAR.
But, now, the bad news: Local housing inventory dropped to a 10-year low last month, according to a study by the Shenehon Center for Real Estate at the University of St. Thomas’ Opus College of Business. Last month, the Twin Cities metro area had only 10,301 homes for sale. During 2015, residential properties costing less than $200,000 represented 30 percent of all homes on the market, but 42 percent of the sales.
“The bottom line is that there is way more demand than supply of homes that are priced at less than $400,000,” said Herb Tousley, director of real estate programs at the university. “The continuing shortage of homes for sale coupled with increased demand for houses in that price range will continue to keep an upward pressure on prices but will likely be a drag on the number of closed sales. This is great if you are a seller but is much more challenging if you are a buyer.”