Community Corner

Rosemount Housing Inventory Plummets, Closed Sales Increase

Realtors advise that the last piece of the housing market recovery will be an increase in sales price because of low inventory.

Overall, the Twin Cities real estate forecast is still chilly, but there are at least a few rays of sunshine poking through the clouds.

In 2011, the median sales price of homes in the 13-county Twin Cities region fell to $150,000, down 11.7 percent from the already depressed levels of 2010. (The area’s median sales price peaked at $230,000 in 2006.)

Rosemount's median home sales price was a little bit above the Twin Cities average for the year at $170,000, according to new statistics from the Minneapolis Area Association of Realtors, but got there after an 11 percent price decrease.

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However, December's median sales price in Rosemount was closer to the Twin Cities average, at $154,000 among 29 closed sales. 

Inventory, however, fell a dramatic 28.7 percent from 2010, and is now at the lowest level in eight years. The time it would take to sell off all active properties in the region—a standard measure of real estate inventory—has dropped 36.5 percent to 4.5 months.

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December's inventory was short of the 2010 numbers in Rosemount by 51.2 percent, with 84 homes for sale versus 2010's 172 homes for sale during the month. Year-end statistics for Rosemount were not yet available.

Ordinarily, a big drop in inventory would lead almost immediately to rising home prices. But the region’s median price is still being held down by the flood of properties being sold through the foreclosure process or through short sales, said Richard Tucker, vice president of Coldwell Banker Burnet in Burnsville.

Positive news for Rosemount was in closed sales, which were up by 52.6 percent this December in comparison to Dec. 2010. In addition, year-to-date, the number rallied through most of the fourth quarter of 2011, finishing the year with 12.4 percent more closed sales than in 2010—344 to 306.

Exactly half of all closed sales in 2011 were either foreclosures or short sales, and such “distressed properties” typically go for about 60 cents on the dollar compared to traditional homes.

The real estate market has witnessed a unique situation in the “past four or five years,” Tucker said. At the beginning of the downturn, “we were at very high inventory levels. … the economic crisis forced all that to go down.

“The last piece of (the) recovery will be (an improvement in the) average sales price,” triggered by a scarcity of supply, Tucker said. “That’s the direction we’re heading.”

Tucker noted that the National Association of Home Builders this month included the Twin Cities to its list of 76 “improving housing markets,” which measures housing permits, employment and housing prices for at least six months. 

Among other “optimistic indicators” he cited: The region’s relatively low 5.4 percent unemployment rate, historically low interest rates and the fact that rental-vacancy rates in the region are at record lows.


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