The nation’s economic recovery is still unfolding in slow motion, but the Twin Cities housing market appears to be making a faster rebound.
Closed sales in the 13-county Twin Cities region rose by 17.4 percent during the first half of 2012, according to a market report (PDF) released last week by the Minneapolis Area Association of Realtors.
Home sale prices are increasing, and the supply of homes on the market is shrinking — both factors that will create optimism for people who were afraid to put their homes up for sale during the depths of the recession.
For the first half of 2012, the median sale price went up 6.7 percent to $160,000. The numbers are even better for the month of June, when the median sales price jumped 10.7 percent to $179,500. That compares with $162,100 in June of 2011.
There is still considerable pain among many Twin Cities residents.
Foreclosures continue to roll through the Twin Cities, though they were a smaller segment of the market last month.
Distressed sales, defined as foreclosures and short sales, amounted to 34.6 percent of closed sales during June. That’s a major improvement. A majority of home sales were in the distressed category during several months since 2009.
Traditional homes — those not subject to foreclosures or short sales — made up almost two-thirds of closed sales in June. The median home price for traditional homes increased 3.4 percent in June to $215,000.
The inventory of homes for sale has dropped 31 percent from June of last year, so now the supply is just more than 17,000. The smaller inventory means that home sellers in the Twin Cities area should be able to close deals on their homes in less time.
High unemployment and a weak housing market have provided a continual drag on the U.S. economy. The fact that Twin Cities home sales have been picking up could produce the added benefit of more local consumer spending on products to furnish and renovate homes.
Minnesota’s Management & Budget agency indicated last week that the state’s economy has done better than the U.S. economy since the start of the Great Recession. But Minnesota’s economy is still heavily intertwined with the demand for goods and services on a global basis.
The state’s economic consultant, IHS-Global Insight Inc., has lowered its projections (PDF) for gross domestic product (GDP) growth rates. It now anticipates that the U.S. economy will only grow at the rate of 2 percent annually for the rest of this year and through 2013.
Regardless of the outcome of the 2012 presidential race, it appears that the U.S. will face persistently slow economic growth.
In its update, Minnesota Management & Budget wrote: “While lower energy prices and some apparent strengthening in the auto and housing sectors provide reasons for optimism, Europe is in recession, growth rates in China, India and much of the rest of Asia are slowing, and the Eurozone’s on-going sovereign credit problems remain unsolved.”
Minnesotans, like their fellow Americans, have become accustomed to hearing forecasts about slow growth and economic problems abroad.
People in the Twin Cities who’ve hung on to their jobs may be adjusting to a “new normal” that’s characterized by tepid economic growth and a partisan political standoff in Washington, D.C.
Nobody knows how long it will take for the U.S. economy to recover with greater gusto. But Twin Cities residents who are employed — ranging from 20-somethings to baby boomers — appear to be taking advantage of the stronger housing market. The low-interest rates are enticing people to make home purchases now.
Many people who are buying and selling houses in the Twin Cities aren’t waiting for a robust recovery in the U.S. economy. People are making housing deals now, because they don’t want to put their lives on hold indefinitely.
Fedor can be reached at lfedor (at) minnpost (dot) com.