2010 Local Homes Sales Hit Lowest Level in 8 Years

Despite a moderate gain in median sales price, 2010 was a very difficult year for sellers in the metro area.

There were few positive indicators in the local housing market in 2010, when the number of homes sold in the 13-county Twin Cities metro area plummeted to its lowest level in eight years, according to data released Thursday by the Minneapolis Area Association of Realtors (MAAR) in conjunction with other local realtors groups.

A total of 37,608 homes were sold in 2010-representing a 16.8 percent decline from 2009 and the lowest figure in eight years. Only 82,127 new homes were introduced to the market, down 1.4 percent from 2009 and also the lowest level seen in eight years.

Sales were driven early in the year by a tax credit, but they dropped dramatically following the credit's expiration.

“The year 2010 is summed up by a boom-and-bust tax credit, 55-year-low mortgage rates, record-high affordability levels, and a sluggish economic recovery,” the associations said in a news release.

Despite a steep decline in sales, the area's median sales price increased 2.3 percent to $169,900, a growth that experts attribute to strong demand early in the year and an increase in sales of “upper-bracket” homes.

Jennifer Snyder, president of the Saint Paul Area Association of Realtors, said in a statement that low mortgage rates and high supply created “one of the most favorable buying environments in generations,” and “foreclosures, short sales, and lower-priced homes continue to be key lures for buyers.”

In fact, October's housing affordability index reached its highest level on record, dating back at least several decades. The index of 220 indicates that the median family income was 220 percent of the income necessary to qualify for a purchase of a median-priced home.

In December, pending sales were down about 2 percent year-over-year, and new listings increased 3.1 percent to 4,039 new homes, according to monthly statistics from the MAAR. The median sales price dropped 1.5 percent to $159,500.

The MAAR also said that interests rates are “stealthily ticking upwards” and should continue to do so as the market recovers. “This recovery is hinged upon continued labor market growth coupled with supply-side and demand-side housing market improvements,” the association said. “These challenging times have been cold and unsettling, but a neon exit sign beckons from our periphery.”

Looking forward, the local real estate associations expect increased listings, as well as an uptick in sales-with a projected 40,000 units to be sold in 2011. Experts also forecast a moderate boost in median price this year to roughly $175,000.