Although Showing Signs of Life, Local Real Estate Market Remains Sluggish

Mirroring a state-wide trend, the real estate market in communities surrounding Lake Minnetonka continues to struggle through the first quarter of 2011.

The news isn’t all bad, however, and a silver lining can be found laced into local data released this week by the Minneapolis Area Association of Realtors (MAAR).

Virginia Lord, a Wayzata-based real estate agent with Coldwell Banker, said she can already see noticeable signs of a turnaround and that the local real estate market is starting to pick up steam.

“I was just able to use a phrase I haven’t been able to use for a while: ‘multiple offers,’” Lord said. “I think there’s a lot of pent up buyers out there who are ready to make a move, and they are starting to do that.”

Industry numbers suggest both the local and regional real estate market has either hit bottom or is close to doing so, and Lord said she would encourage buyers to take advantage of a market eager to show them a deal.

Part of the reason numbers through the first quarter of 2011 have been so down is because a popular tax incentive for new home buyers expired at the end of last year, a factor the Minneapolis Area Association of Realtors says must be weighed appropriately when examining statistics through March.

“These are a comparison to last year, which was a tax-incentive year,” MAAR communications director Greg Sax said. “So the numbers are going to be down, no matter what. At the same time, we are seeing that lender-mediated properties are still dominating the market. We’d like to see fewer of those, but it is what it is.”

The broader Twin Cities region saw new listings drop by 25 percent year over year, with pending sales and median sale price down 11 and 12 percent, respectively.

Closer to home, 31 new properties in Wayzata hit the open market during the first quarter of 2011, down from 45 during the same period a year ago. Numbers released this week do give reason for optimism, however. Sales of homes jumped from six to 11 in the first quarter of 2011, and median sale prices continued a sharp upward swing. In addition, homes currently for sale in Wayzata are on the market for a considerably shorter time than they were through this point last year - 168 days compared to 330 in 2010. Wayzata properties are also selling for about 86 percent of their original asking price, up slightly year over year.

Similar positive momentum can be found in Orono. New listings in the city of about 7,500 residents are slightly up through March, while closings remain on par with last year’s pace and the average time a property spends on the market has dramatically decreased (329 days to 190 in the first quarter). The news isn’t all good, however. Much as they are throughout the state and Twin Cities region, median sale prices in Orono fell nearly 50 percent year over year, from $630,000 to $327,000, and average sale prices of the 16 properties sold dropped 28 percent to $450,000.

In the small city of Deephaven, where one or two sales can easily sway the broader numbers, median sale prices have fallen more than $100,000 since last year. Deephaven saw five closed sales in the first quarter of this year, up from four a year ago. Properties are selling for a robust 96 percent of their original asking price, although they are staying on the market an average of 305 days before selling.

In Excelsior, where both new listings and closings are up slightly so far this year, median sale price of the four properties sold through the first three months of 2011 was $243,750 - down more than 50 percent from 2010. Excelsior properties are selling for about 80 perent of their original asking prices and staying on the market for an average of 221 days—up noticeably from just 91 days a year ago.

Mound saw 30 fewer new listings in the first quarter of 2011 compared with the 113 same period last year. Median sale prices fell by 24 percent, from $175,000 to $133,000, with houses staying on the market an average of 190 days until they sold - up from 138 during the first quarter of 2010. Nine home sales were recorded in Mound through March, down from the 15 sold in the first three months of last year.