St. Cloud, Minn., Housing Market Adjusts to Downturn

The Minnesota housing market slowdown brought the good, the bad and the promising to the St. Cloud area.

The good: It is taking less time to sell homes, as Minnesota home prices are falling.
The bad: Home sales continue to decline, leaving inventory high.
The promising: The slump may be nearing its end.

Last year around this time, area real estate agents, builders and mortgage brokers knew a housing slowdown was on its way.

Area home builders began to roll out more and more incentives, home staging became more important and agents expected a reversal of the real estate appreciation trend.

A year later, the St. Cloud area is weathering its part of a national housing slowdown caused by an inflated market and overdue adjustment.

Despite continued low Minnesota mortgage costs, St. Cloud-area home sales fell 12 percent in the first quarter from the same period a year ago, to 248 units — an improvement from the 19 percent drop in the fourth quarter, according to the St. Cloud Area Association of Realtors Multiple Listing Service.

The area finished the quarter with almost 13 months of home inventory in March, compared with about eight months a year ago - in other words, far more properties than mortgage applicants to buy them.

Mark Herron, a real estate agent with Edina Realty in Waite Park, hung a sign that reads “Priced reduced” on a home for sale in St. Cloud to motivate buyers.

“It generates more interest from drive-by traffic,” Herron said.

Some real estate agents — particularly the most active — are continuing to do well, posting increased sales and showings from a year ago, according to Scott Reinert, president of the St. Cloud association and an owner of Showcase Properties in St. Cloud.

Showings through Showcase Properties rose 30 percent last quarter from the same period in 2006, and sales transactions increased 20 percent.

Competitive pricing remains the key. Minnesota real estate agents have finally had to recognize the importance of pricing right the first time and not wasting time listing clients not prepared to price according to the market.

Homes less than $175,000 that are priced right have sold quickly, Realtors have said. His company received multiple offers on a number of homes in that range last quarter.

Economists say the housing slump may be over, despite the growing problems with the subprime mortgage sector - the roots of which some observers believe lie right here in Minnesota.

The index for pending home sales of existing properties increased in February at a seasonally adjusted annual rate of 0.7 percent, according to data released last week by the National Association of Realtors.

SOURCE: St. Cloud Times