As we have reported in our last two Minneapolis / St. Paul Residential Real Estate Index reports the median price for traditional home sales in the Twin Cities appears to be bottoming out. If that is the case we need to ask the question; Is this “bottom” for real? The reason is that we have been here before. In 2009 and early 2010 while the Federal Tax Credit for residential purchases was in place the median sale price started to increase. It was hoped that the tax credit would jump start the market and that that increases would continue after the program ended. When the program ended median prices fell right back down to previous levels. In early 2011 median sale prices started to increase again, only to retreat again during the uncertainty around the debt ceiling controversy, the Federal debt rating downgrade, and the continuing financial crises in Europe last summer. While two months of positive movement in median prices does not make a trend, let’s hope that barring any unforeseen shocks to the economy that this is the real beginning of a return to a healthier housing market.
Below is an interesting article by Esther Cho from DSnews.com that looks at this phenomenon from a national perspective.
For the first time since March 2010, data from Lender Processing Services (LPS) showed an increase in home prices, but still, the analytics company warned to embrace the positive news with some caution. Nationally, February 2012 seasonally-adjusted prices rose 0.2 percent, according to the LPS Home Price Index, which incorporated residential sales concluded during February. Not only is the increase a first in almost two years, but it’s also the third increase in five years.
“Reasons for caution are clear, as we’ve been here before. Non-seasonally adjusted prices increased for a few months in early 2009, 2010 and 2011 – trends that all ended by summer, after which all the gains – and then some – were lost,” said Raj Dosaj, VP of LPS Applied Analytics.
