Lakeville Home Prices Plummet in Rough 2011 Real Estate Year

Overall, Lakeville's real estate news for 2011 is cloudy, but there are at least a few rays of sunshine poking through fog.

According to the Minneapolis Area Association of Realtors the median price for homes sold in fell 8.9 percent in 2011, to $205,000. That's a dip of more than than $20,000 on average.

And while this may not come as a major surprise given all the bad news the real estate market has been besieged with in recent years, the numbers are a stark contrast to 2010, when prices actually rose slightly from the previous year.

But some rather good news accompanied the dismal sales numbers: inventory is down 16.4 percent in Lakeville. The 1,212 homes listed in 2011 was the lowest level in eight years, according to the MAAR. Closed sales were also up in 2011, jumping nearly 4 percent, from 734 in 2010 to 761 in 2011.

Ordinarily, a big drop in inventory would lead almost immediately to rising home prices. But Lakeville, and the Twin Cities 13-county region’s average sales prices are still being held down by the flood of properties being sold through the foreclosure process or through short sales, Richard Tucker, vice president of Coldwell Banker Burnet in Burnsville, said.

Across the Twin Cities, half of all closed sales in 2011 were either foreclosures or short sales, and such “distressed properties” typically go for about 60 cents on the dollar compared to traditional homes, he said.

The real estate market has witnessed a unique situation in the “past four or five years,” Tucker said.  At the beginning of the downturn, “we were at very high inventory levels … the economic crisis forced all that to go down.

“The last piece of (the) recovery will be (an improvement in the) average sales price,” triggered by a scarcity of supply, Tucker said. “That’s the direction we’re heading.”

Tucker noted that the National Association of Home Builders this month included the Twin Cities to its list of 76 “improving housing markets,” which measures housing permits, employment and housing prices for at least six months. 

Among other “optimistic indicators” he cited: The region’s relatively low 5.4 percent unemployment rate, historically low interest rates and the fact that rental-vacancy rates in the region are at record lows.

Overall, the median sales price of homes in the 13-county Twin Cities region fell at a similar percentage to Lakeville's, dropping 11.7 percent to $150,000. For comparison, the Twin Cities median sales price peaked at $230,000 in 2006—which is 35 percent less than today.

Lakeville's housing market also topped out in 2006, with the median price for a home sold peaking at $320,504, 36 percent less than it is today.

Tucker said that the time it would take to sell off all active properties in the region—a standard measure of real estate inventory—has dropped 36.5 percent to 4.5 months.