Home sales holding

Another record seems certain, observers say

By Neal Gendler, Staff Writer

Published: November 14, 2003 in the Star Tribune
Edition: METRO
Section: BUSINESS
Page#: 1D

Autumn appears to have brought normal cooling to the Twin Cities-area real-estate market, giving Realtors no reason not to chill the champagne for another record year.

For the first 10 months, 48,360 sales have closed, and the presidents of the four metro-area Realtor associations releasing the data Wednesday said there are 4,761 sales awaiting closing, all but guaranteeing that last year's record of 51,212 will be eclipsed.

Activity tapered off as usual late in the year, but the median sale price bounced up to $204,900 - the second-highest this year - from $200,500 in September and 7.84 percent ahead of $190,000 in October 2002.

Last month, 5,405 sales closed, up 13.46 percent from October 2002.

``Sales pending,'' purchase agreements signed for sales not yet closed, were down by only 20 from September.

``This year will be consistent with other years - a strong finish,'' said Bob Clark, president of the St. Paul Area Association of Realtors. In his view, strong includes a normal decline in November and December.

``Winters have been so good, there isn't a `downtime' any more,'' said Todd Grill, president of the Minneapolis Area Association of Realtors. Grill, an agent with Re/Max Results in Plymouth, said the number of homes for sale and a strengthening economy mean that ``if interest rates stay stable, we'll . . . have a great year'' in 2004.

The value of all sales closed last month passed $1.3 billion, up 21.23 percent from October 2002. For the first 10 months, closed sales were worth $11.5 billion, a 20.87 percent increase from the 2002 period. Home value appreciation isn't so joyous for first-time buyers; typical entry-level prices for single-family homes are around $175,000 to $250,000.

But low interest rates are a ``huge, huge factor,'' said Clark, an agent with Lynskey Companies in Stillwater. He said low rates have enabled many people to buy first homes or move to larger ones. So have low down payment programs and ``the streamlining of the mortgage process, making things a lot easier for people to enter ownership.''

In addition, ``people can find out what they qualify [to buy] without calling someone and giving their name,'' which many don't like doing, said Mike Heinzerling, president of the Southern Twin Cities Association of Realtors. Also ``I'm seeing a lot of people asking sellers to pay closing costs.''

The apparent economic upswing also is helping. After being in the doldrums, suddenly ``my relocation business is as strong as it's ever been,'' said John Lockner, St. Paul association president-elect. ``Companies are putting employee moves back into their budgets.''

Heinzerling, an Edina Realty agent in Farmington, said people also are moving locally, taking advantage of the low interest rates to do so.

Clark said he's noticed two rising trends: investors buying homes for rental because they bring better returns than stocks and bonds, and retirees selling homes to buy two townhouses or condominiums - one in Minnesota, another in a snow-free climate.

Lockner, an agent with Re/Max Results in Woodbury, said the St. Paul area has three new senior-housing townhouse developments totaling nearly 400 units. He's taken five buyers to see them, and ``all had been in their houses 30 to 60 years.''

Aging works another way, too. Jerry Koch, North Metro Realtors Association president, said that at WHY USA Anthony Realty in Coon Rapids, ``I'm dealing with quite a few estates this year - more than any other year.''

At October's end, 26,608 homes were listed for sale, a 22.3 percent increase from October 2002 and 38.5 percent ahead of the month's average over the past five years.

In Grill's opinion, the inventory of homes for sale still hasn't made the entire area into a ``buyer's market.'' Most areas of the country have a six-month supply of houses for sale, while the Twin Cities market has only a three- to seven-month supply.

The National Association of Realtors (NAR) reported Wednesday that nationally, existing-home sales activity in the third quarter was the highest on record. Forty-eight states and the District of Columbia posted increases from a year ago, the first time in 20 years that all states reporting registered sales increases.

Neal Gendler is at ngendler@startribune.com.



"© Copyright Star Tribune. Republished with permission of Star Tribune, Minneapolis-St. Paul. No further republication or redistribution is permitted without the written consent of Star Tribune."

Twin Cities housing pulse

While the Twin Cities real estate market continued its seasonal slowdown in October, median sale prices rose to $204,900, up 2.2 percent from September and 7.8 percent from October 2002. Both new listings processed and closed sales declined in October from September, but are running 9.9 percent and 13.5 percent ahead of last October, respectively.