Signs of Price Recovery in 2010 Amidst Fragile Demand
By Greg Sax on Thursday, January 13th, 2011
Although 2010 included sales gains driven by a springtime tax credit, it also endured an extended decline after it expired. The year is summed up by a boom-and-bust tax credit, 55-year-low mortgage rates, record high affordability levels and a sluggish economic recovery.
2010 BY THE NUMBERS
• 82,127 new homes introduced to the marketplace, down 1.4 percent from 2009 and the lowest level in eight years.
• 37,608 homes sold, down 16.8 percent from 2009 levels and also the lowest level seen in eight years.
• $169,900 median sales price, up 2.3 percent from 2009.
The tax credit shifted the typical Twin Cities buying season to spring. There were year-over-year price gains for the first seven months followed by declines in four of the last five months.
The 2.3 percent gain in median sales price was likely the result of two primary factors: strong demand early in the year coupled with more upper-bracket homes selling. Improving oversupply issues also helped the market rebalance itself and stopped the price free-falls we saw in 2008 and 2009.
Unemployment is still higher than normal for our region, but it has come down lately because of fewer layoffs and an improving jobs picture. If we can avoid more job losses, which often result in more foreclosure inventory, we should see improvement as we progress through 2011.
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