Twin Cities home sales set record through November

Neal Gendler, Star Tribune Staff Writer

Published December 11, 2003 REAL11 in the Star Tribune

Twin Cities home sales have set a third consecutive annual record -- and it's not even the end of the year.

Through November, 52,390 home sales were closed in the 13-county metropolitan area, surpassing the 51,231 homes sold in all of last year and the 50,298 homes sold in 2001, the first year sales reached 50,000.

The figures were released Wednesday by the four metro-area Realtor associations that own the Regional Multiple Listing Service. This year's record sales were fueled by continued low interest rates, a demand for new homes and the area's stable economy, association officials said.

"When I heard that interest rates shouldn't vary that much this year, I knew it would be a good year," said Mike Heinzerling, president of the Southern Twin Cities Association of Realtors. He said the larger number of listings has meant greater choices across all price ranges.

"The low interest rates made people comfortable buying," said Todd Grill, president of the Minneapolis Area Association of Realtors. The benchmark 30-year loan rate hasn't hit 7 percent this year.

A boom in new construction also helped drive home sales this year, said Jerry Koch, president of the North Metro Realtors Association. Most of those new-home buyers have existing homes to sell, creating what Heinzerling called a domino effect, sometimes several homes long. The bottom domino is the first-time buyer, whose path into ownership has been eased by loan programs requiring little cash.

Realtors said they expect next year to be another strong year for home sales, but they acknowledged that it will be hard for the market to continue at the pace it has this year. That is also what realtors thought at the beginning of this year.

The Twin Cities real estate markets mirrors what has happened nationally this year. The National Association of Realtors said last week that it expects a national record of 6.07 million existing-home sales this year, 9.1 percent up from last year's record 5.57 million.

"If you would have asked me at the beginning of the year, I would have expected we'd be close to last year" in sales, said Bob Clark, president of the St. Paul Area Association of Realtors. "I didn't expect to exceed it, but neither did I expect that interest rates would stay so low for the rest of the year. I think interest rates definitely are a big factor in keeping purchasing power there for the consumer."

Sales also keep growing because the market is expanding, said John Lockner, president-elect of the St. Paul association. He said the population is growing, and waves of immigrants are buying their first houses and less-recent immigrants are getting the prosperity to buy their second. "A year or two ago, I almost never saw Hmong families buying homes in Washington County," he said. Now, they are, moving from homes they own in St. Paul.

The sales record was set despite a slackening in November. Sales normally taper off during the last two months of the year, but compared with November 2002, closed sales were down 1.23 percent, and pending sales -- those for which purchase agreements have been signed but have not yet closed -- were down 6.27 percent. New listings were also off slightly.

"The decreases so small they're really meaningless," said Decklynn Theisen, president-elect of the Southern Twin Cities Association of Realtors. Despite a slower market, properly priced houses in good condition still can sell quickly. "A lot of it depends on your price range," and lower-priced homes are selling quickly, Theisen said. "I just put on a listing at $224,900 in Burnsville and in four days it got six showings." A purchase offer was made Tuesday night.

Mark Allen, CEO of the Minneapolis association, said the distribution of homes for sale makes this a sellers' market below $200,000 and a buyers' market above $500,000. The median price of closed sales was $204,000, down $900 from October, but up 7.37 percent from $190,000 in November 2002. The peak was $207,500 in August.

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."