Recovery? Rosemount Home Prices Surge

The ‘Great Real Estate Downturn’ may be nearing an end. And the Rosemount market may be the exclamation point.

Area Realtors reported Wednesday that residential real estate prices across the Twin Cities region are on the rebound; the median price of homes sold in March was up 6.4 percent from the same month last year—the first such year-over-year increase since October 2010.

Rosemount 'booming'

The news was even better in , where the median price was up more than 27 percent over March 2011, according to a report from the Minneapolis Area Association of Realtors (MAAR).

“That’s a booming area right now,” said Steve Hollencamp, a real estate agent with Re/Max Professionals who has been servicing the area for 18 years. “The market has really turned around in that area.”

Hollencamp says buyers can get incredible values on newer construction homes left over from the boom bust as reasons for the turnaround.

“The value is there, the bang for the buck is there,” said Hollencamp. “Homes in that area are likely to see multiple offers come in. That’s how hot that market is right now.”

Indeed, surrounding communities saw a mixed bag of results where home prices were concerned. 

Inver Grove Heights saw more than a 30 percent decline year-over-year for March according to the MAAR numbers. Likewise, Farmington (-9.5 percent) and Lakeville (-1.3 percent) also saw declines.

Apple Valley (+5.8), Eagan (+15.9) and Hastings (+16.1) all saw gains, but none approaching the meteoric rise in Rosemount median home prices.

Regional signs

Regionally, Realtors reported several signs of an overall improving market. In addition to the median price boost:

• The price-per-square-foot measurement of home value increased for the first time since June 2010.
• Pending home sales were up 20.4 percent in March and are already higher than any month in 2007, 2008 or 2011.
• The months supply of inventory, the amount of time it would take to sell every home on the market, fell nearly 40.percent to 4.6 months. That’s the lowest reading for any month since January 2006.
• Compared to the year prior, sellers are getting a greater share of their asking price from buyers.

Andy Fazendin, MAAR’s president-elect, was reluctant to declare the downturn in housing prices at an official end. But he added that, “It’s looking increasingly likely the worst is behind us. We continue to see encouraging signals from the market that allow for an improving view on residential real estate in 2012.”

The improved median price is, in large part, a reflection of the changing market. “Distressed” properties sold through foreclosures and short sales, which tend to bring much lower prices than homes sold the traditional way, made up only 34.6 percent of all new listings in March, the smallest share since July 2008.

Meanwhile, Realtors say an unusually warm March helped boost buyer activity, and the market received additional boosts from low interest rates, affordable prices and a sense of urgency caused by tightened inventories. The number of homes for sale continued to drop, down 27.5 percent from last year to 17,081 active listings, the lowest inventory reading for any month since January 2004.

Full-on recovery?

Rosemount’s inventory dropped nearly 46 percent from last year’s total, but that’s partially due to more home sales. Year-to-date, Rosemount has seen a 15 percent increase in closed sales while seeing a decline of 15.7 percent in home listings.

That makes Rosemount a seller’s market, but one in which buyers want to purchase.

So, locally, is this a short-term spike? Or is it a sign of a long-term recovery?

Hollencamp believes there is little standing in the way of a full recovery, at least for the Rosemount market.

“Rosemount is one of the hottest markets out there,” he said. “In my opinion, the only thing that’s going to slow down that area is if interest rates suddenly spike. But I don’t see that happening. I think it’s going to be a very busy market for the next couple of years.”