Ten years after the peak of the real estate boom last decade, home prices in the Twin Cities have peaked exactly 10 years later. 2006 was generally the peak year in the real estate boom for most Twin Cities communities and the overall median sales price for 2006 was around $232,000. This past month the median sales price hit a new high at $238,000; indicating the housing market has finally fully recovered. Due to the lack of supply in the marketplace today, the Mullins Group projects continued appreciation given low interest rates and lack of turn-key product for-sale today.
Twin Cities home prices reach all-time high, a decade after they last did
By Jim Buchta (http://www.startribune.com/jim-buchta/10644536/) Star Tribune
JULY 19, 2016 — 9:24PM
Twin Cities home prices reached an all-time high last month, precisely a decade after they last
peaked.
The median price of all closings was $242,000 in June, the Minneapolis Area Association of Realtors
said Tuesday. That’s 5.3 percent higher than last June and nearly 2 percent more than the previous
all-time high of $238,000 in June 2006.
“We’re back to where we were, or probably better,” said Herb Tousley, director of the Shenehon
Center for Real Estate at the University of St. Thomas. He added, “I think this thing has a little
bit more gas in it.”
While the latest peak is a milestone, it’s a déjà vu moment for those who watched their home equity
evaporate when prices plummeted in 2008 and 2009.
No such drop is on the horizon today. For one thing, the association’s data isn’t adjusted for
inflation. A $238,000 house 10 years ago would be worth about $285,000 in today’s dollars. Based on
the current rate of increase, it would take about three years for Twin Cities home values to hit
that inflation-adjusted peak.
Twin Cities median home sale price during the month of June, 2003-2016
June typically sees the highest median sale price, but this figure reached a record in 2016,
surpassing a 2006 high. Adjusting for inflation, however, paints a slightly different picture.
Source: Minneapolis Area Association of Realtors // By CJ Sinner, Star Tribune Get the data
As well, market fundamentals are radically different from a decade ago, when predatory lending, lax
underwriting standards and rampant speculation fueled sales and appreciation. Homebuilders were
also flooding the market with new houses, causing inventory to increase at about the same pace as
prices.
“We’ve had good household formation and good job creation,” Tousley said. “I don’t see anything
that’s going to slow it down.”
During June there was a 0.5 percent increase in new listings, and closings were on par
with last year, rising 0.2 percent — the most since June 2004 and a 12-year high.
