Regional Spotlight: Corrections Continue in Twin Cities

RISMEDIA, Jan. 21, 2008-On the heels of several uninterrupted years of frenzied growth, the Twin Cities housing market finished its second full year of corrective declines in 2007, according to new analysis from the four Twin Cities area Realtor® associations.

Despite abundant inventory, motivated sellers, low interest rates and dramatically improved affordability, buyer activity declined, and the year ended with 40,055 closed sales, a decline of 16.4% from 2006.

Newly signed purchase agreements-pending sales-showed a similar decline of 15.5%, posting 43,560 units.

While home sales cooled, so did listing activity. The number of new listings on the market during 2007 decreased by 2.8% compared to last year. Despite the decline in listings, lowered demand meant that buyers remained firmly in the driver’s seat through the year, and this dynamic showed in home values. The 2007 median sales price was $225,000, a decline of 2.2% compared to 2006.

“Given the run-up in home values we saw in the early part of this decade, it’s not surprising that some of that value would be taken back by market corrections,” said Kay McDonough, 2008 president of the Southern Twin Cities Association of Realtors. “While this year-over-year decline is rare, the drawn out price increases we saw previously are even more uncommon.”

“One of the key ingredients to our eventual rebound will be improving the affordability of our region’s homes, which had become problematic,” said Rod Schimmel, 2008 president of the North Metro Realtors Association. “It was a great year for affordability, which created new opportunities for first-time home buyers.”

“No doubt about it, we still face some tough times ahead,” said Kevin Knudsen, 2008 president for the Minneapolis Area Association of Realtors. “Anyone who tells you that the rebound will be quick and painless just isn’t paying attention.”

“The eventual return of home buyers will be gradual and take time,” said Greg Bauman, 2008 president of the Saint Paul Area Association of Realtors. “But it’s important to recognize that positive changes are taking place in the local market and they are setting the stage for a healthy future.”

The 2007 Twin Cities Housing Statistics were released at the Residential Real Estate Summit on January 16, 2008-a joint event from the four Twin Cities Realtor associations held at the Earle Brown Heritage Center in Brooklyn Park, MN. This first-ever gathering of influential real estate players also featured a keynote address from Martha McMurry from the Minnesota Demographer’s Office and panels on such wide-ranging subjects as lending laws, market projections, the new real estate consumer, generational marketing, emerging markets, foreclosures, and new construction.

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