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Nation's hottest housing market? Twin Cities

Jim Gehrz, Star Tribune

The median Twin Cities home price was $175,000 in August, far below the peak. Prices are about where they were in August 2001.

Minneapolis-St. Paul area home prices rose 3.2 percent in August.It's the fourth straight month of improvement and second month in a row the Cities came out on top.

By KARA McGUIRE, Star Tribune

Last update: October 28, 2009 - 7:06 AM

The Twin Cities area was one of the nation's warmer housing markets this summer as home prices rose faster here than in other metro areas, according to a closely watched housing index released Tuesday.

But market observers still warn that economic uncertainty could cause prices to start sinking again in a "double dip" scenario.

Minneapolis-St. Paul area home prices rose 3.2 percent from July to August, according to the Standard & Poor's/Case-Shiller national home price index, compared with a 1.2 percent average increase for the 20 cities tracked by the index. Only Cleveland failed to show an improvement in prices.

This is the fourth straight month of improvement for Minneapolis-St. Paul and the nation. It is also the second month in a row that the Twin Cities came out on top of the index; prices here rose 4.6 percent from June to July.

Still, home prices have a long way to go before recovering what they've lost. In this market, median home prices are still 13.7 percent below August 2008 levels. That is slightly worse than the 11.3 percent that prices are down nationwide.

The Minneapolis Area Association of Realtors reported the August median home price for the metro area was $175,000. Case-Shiller data show August prices in the Twin Cities area are about where they were in August 2001.

David Blitzer, chairman of the Index Committee at Standard & Poor's, said the Twin Cities may be on the top of the index for the second month in a row because the area's prices peaked and bottomed earlier than the other areas tracked.

The median price peaked in September 2006 at $229,000 and bottomed in April at $153,000.

"Plus, the run-up was not as wild as some places, so the recovery is probably easier," he explained in an e-mail.

Buying before winter

Chris Galler, chief operating officer for the Minnesota Association of Realtors, said he thinks area prices have risen faster because of the area's many cold months.

Steve Loraus
Realtor
Twin Cities Real Estate Group
612-387-1326
www.mnrates.com
www.stevesmnhomes.com
www.shortsalesmn.com