ST. PAUL, Minn. - Twin Cities real estate leaders have optimism about the housing market for 2012. Richard Tucker, president of the Saint Paul Area Association of Realtors, and Cari Linn, president of the Minneapolis Area Association of Realtors, held a joint news conference Wednesday and said it is a matter of "supply and demand."
"Inventory is going down. We are eating up the foreclosure inventory," said Linn. "As the foreclosure inventory gets taken out of the marketplace, the other traditional sales, those prices will start to increase."
"I think the simple economics of scarcity of supply, if you look at inventory as supply, as that gets reduced and we start to have people compete for that, that ultimately is going to lead to price increases," commented Tucker.
Tucker credited what he perceived as improved moving of "distressed" properties as aiding the predicted recovery.
"Both the banks and the realtors, I think, have systems that are better than they were when they started and so we are processing short sales a little bit faster and certainly both the first time homebuyers and investors are seeing the opportunities with the lower priced properties and distressed properties and so, we are seeing those move through our system as well," said Tucker.
Tucker and Linn did not side-step the 11-point-7 percent drop in median sales prices, which currently stands at $150,000 for a home.
"One of the concerns that I have is that people look at that and they look at maybe earlier numbers of $230,000 (in 2006) and see that decline, that that would give an indication that my $230,000 home is now worth $150,000. And that is really not accurate," explained Tucker.
"You have to remember the definition of median sales price and so what we are looking at is that half of the homes are selling under $150,000 which is an indication that people are buying distressed properties and moving them through the marketplace. I think that is the positive side of that."
Both Tucker and Linn called the reduction in (housing) inventory the "most significant trend" in the troubled housing market.
"It is the basic law of supply and demand which, at the end of the day, is really what real estate is all about and as we reduce our inventory, I think you are going to see demand be an increase and ultimately we will start to see prices rise as a result of that," said Tucker.
As for (low) interest rates, Tucker does not see them as a "stimulus" now, but admits that it would hurt recovery if rates were to rise. He does not expect that to happen.
(Copyright 2012 by KARE. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)