The boom is back.
The real estate boom, that is; the median-priced Mendota Heights home sold for $365,000 last month, almost half again the $245,000 median price for homes in the city during September 2011.
In Lilydale, the median price is up an even more astounding 171 percent from the same month last year, rising from $137,000 to $371,500. (There were no closed sales in Mendota itself during the month.)
Mendota Heights and Lilydale have lots of company. The Twin Cities region as a whole is experiencing the closest thing it’s seen in a long while to a “boom market”—or it would be, at least, if more homeowners were willing to post a “For Sale” sign.
Andy Fazendin, president-elect of the Minneapolis Area Association of Realtors, said the median sales price across the 13-county area in September was $174,000, up 12.3 percent from the same month a year ago. In addition, homes spent an average of 101 days on the market, selling 28.7 percent faster than last year at this time. Sellers received, on average, 94.8 percent of their list price, 4.1 percent more than in September 2011.
“Interest rates in the Twin Cities are around 3.4 percent and buyers have a justified sense of urgency," Fazendin said. “Housing has gone from a laggard the past few years to leading the charge in 2012."
The only missing ingredient, he said, is a supply of sellers. With prices now just beginning to recover from the awful declines of recent years, many homeowners may be holding out in hopes that the surge will continue.
As a result, the number of homes for sale in the area has dropped for 20 consecutive months and is now below 16,000 for the first time since December 2003, during the last boom market. Months' supply of inventory—a common figure describing how long it would theoretically take to sell every available home on the market—fell 40.9 percent to four months.
Figures below four months’ supply indicate a sellers' market, Fazendin said. He added that in September, sellers brought 5,341 properties to the market, 4.1 percent fewer than last year.
Another advantage for sellers: They no longer have to compete with such a huge wave of cheap, “distressed” properties entering the market.
Short sales and foreclosures, which tend to sell for about 27 percent less than comparable “for sale” properties sold the traditional way, made up only 30.6 percent of new listings in September 2012, the lowest percentage since June 2008, with the result that “there's finally some room to breathe for traditional sellers," said Cari Linn, MAAR’s president.
In Mendota Heights, the per-square-foot sales price rose to $120 from $111 the year before. The average home spent 107 days on the market, down almost 40 percent from the 176 days it took to sell a home last year. The supply of homes for sale dropped 64 percent.
In Lilydale, the per-square-foot sales price rose to $193 from $93 the year before. The average home spent 114 days on the market, down 43 percent from the 198 days it took to sell a home last year. The supply of homes for sale dropped 47 percent.