Positive signs of the long awaited housing recovery may be on the horizon according to the May Minnesota Housing Report released by the MNAR. Many experts and those involved in the industry were optimistic about the numbers, especially the Pending Sales figure, which was up 26.2% when compared to transactions in May 2010.
“Pending Sales – contracts written but not closed – for Minnesota were up significantly in May,” said Russ Portele, MNAR President. “However, many of the other indicators still show the effects from last year’s Homebuyer Tax Credit and lower consumer confidence.”
For transactions entered into before April 30, 2010, a first-time purchaser could receive an $8,000 credit and many existing homeowners qualified for a $6,500 tax credit. Because of this incentive, transaction numbers have been difficult to compare as home purchasers rushed to take advantage of the credit in the spring of 2010. May is the first month of ‘tax credit free’ comparable transactions.
Many Minnesota homeowners are concerned about the value of their property and in May, the year-to-date comparable numbers still looked dismal. Statewide, median Sales prices were down 9.2% compared to values in 2010. In May, the median home price was $139,000.
Lower home values do mean positive things for housing affordability. Minnesota’s Housing Affordability Index (HAI) increased in May as low interest rates and distressed properties made housing more affordable to consumers seeking residential property. The HAI measures the median income of a Minnesota family compared to median home price. When the index measures 100, the median family has 100% of the income necessary to qualify and purchase a median priced home. Statewide, the HAI is at 132, which means the median family income is 132% of the level required to purchase a median priced home. Historically low interest rates have helped keep housing affordable to a majority of Minnesota families.
Go to www.mnrealtor.com/HousingReport/May2011 to view the May 2011 Statewide Housing Report.