Housing Market Slowdown Blamed On Extreme Cold
Although a study released by the University of St. Thomas tracked a slowdown in Twin Cities real estate activity in January, the weakness was blamed on extremely cold weather.
The monthly analysis, which is conducted by the Sheldon Center for Real Estate at the university’s Opus College of Business in Minneapolis, measures nine housing-market data metrics across the 13-county metro area.
The most prominent factors affected by the recent “polar vortex” were sales volume, new listings, and pending sales, according to Herb Tousley, director of real estate programs at St. Thomas.
According to a report from the Minneapolis Area Association of Realtors, there were 2,536 Twin Cities home sales in January, down nearly 13 percent from last year. Additionally, new listings were down 11.5 percent and pending sales were down 16 percent.
“The January data and the likelihood of subdued results in February should not be interpreted as an indicator of a long-term weakness in the Twin Cities housing market,” Tousley said in a statement. “The underlying fundamentals of the local economy and the arrival of the spring and summer selling season will show the true long-term strength of the market.”
Tousley predicts that 2014 will be a year of solid gains for the Twin Cities residential real estate market.
As evidence, St. Thomas cited the fact that the median sale price of all categories of homes—traditional, foreclosure, and short sale (when a home is sold for less than the outstanding mortgage balance)—is above last year’s levels.
The median sale price of a traditional home in the metro in January was $212,500, up from $199,000 a year ago, the university said.
The university also said the low inventory of homes on the market continues to be an issue. There were 11,843 homes for sale this January, compared to 13,070 last year.
New-home construction, however, is improving this year. Tousley said the number of building permits issued for single-family homes increased by 15 percent in January and that the “dollar value” was 22 percent higher than last year.
“Look for a flurry of housing starts as the weather improves and builders, whose production was delayed by snow and cold weather, scramble to build homes in time for the spring and summer selling season,” he said.