A 43 percent increase in pending home sales over last month sounds pretty good while the economy seems to dance closer to a double-dip recession, right?
The Minneapolis Area Association of Realtors recently announced that increase in Southwest Minneapolis home sales, but local Realtor Jerry Foss sniffed at the announcement.
"The real estate market is not a monthly or a month-by-month thing, Foss said. "You have to write about trends that happen over a long period of time."
Foss covers Southwest Minneapolis and other areas of the west metro for Edina Realty.
While the report noted there was a 16 percent reduction in this year's tally of new listings in Southwest compared to last year, Foss said the market is showing positive signs.
"The reality is that sales are up and ordinary people are starting to buy properties," Foss said. "It's more than just the bottom-feeders who are going for short sales and foreclosures."
Still, Foss said, many of these people are first-time buyers, and many are former renters or are relocating from other parts of the country. Because many families' homes lost value, he explained, they are not moving up to larger houses.
Furthermore, Foss said, bank foreclosures are hanging around the market's neck like a millstone.
"It looks like the banks are willing to destroy the market by giving houses away," he said. "They get a property that’s in poor condition, they discount the price, instead of putting $1,000 or more into it to fix it up, they sell it at a discount."
The poor quality of the properties, Foss said, means that most ordinary homebuyers aren't interested, and anyone who does offer to buy is able to demand steep discounts in prices. This, he said, drives down prices across the market.