MANKATO — The combo platter of record-low interest rates and the unshackling of pent-up demand from first-time buyers made for robust single-family sales in the greater Mankato market in 2012.
“There was a huge strength in that market the past year,” Mankato Realtor Jeff Kaul said of $140,000-and-less homes purchased by first-time homeowners.
The outgoing president of the Realtor Association of Southern Minnesota said the combination of listing prices hovering at 2006-2007 levels, a 3.25 percent interest rate and a shortage of rental units gave first-timers the incentive to pull the trigger.
Association figures for single-family sales in Mankato/North Mankato and within a 20-mile radius show that 1,081 homes were sold in 2012, compared to 1,006 in 2011.
Also in 2012, home sellers received 90-95 percent of their listed prices, compared with 89 percent the previous year, and homes were on the market an average of 161 days last year, compared with 175 days in 2011.
On average, homes in the greater Mankato area sold for $156,320 in 2012, a 3.2 percent increase over the previous year.
That increase put the local area among the nation’s percentage leaders in house price increases in 2012.
Kaul said the upshot to 2012’s market surge is that inventories are now low on houses costing $150,000 and less. “Those are like little pots of gold.”
While home sales thrived for first-time buyers in 2012, Kaul said there was a a pronounced lack in the “move-up” market — homeowners buying their second homes.
“In the $250,000-and-up market there’s more than enough inventory. The higher you go, the harder it is to sell.”
Kaul said he also saw a proliferation of short sales last year. Those involve owners who owe more on a house than what it would be sold for.
For a short sale to occur, an owner must be in financial hardship and demonstrate an inability to keep up with payments.
If the lending agency agrees, a broker opines a price and puts the house on the market. If someone makes an offer lower than the asking price, the lender decides whether to accept it — in effect deciding how much loss they’re willing to absorb.
Kaul said he and other Realtors are optimistic about single-family sales in 2013, based on the market’s vitality in 2012. He said prices are right and interest rates continue to be enticing.
“In my 35 years in the business, this is the best time I’ve seen for buyers.”
The Realtor Association of Southern Minnesota includes 10 counties. Regionwide, total sales volume in 2012 was nearly $244.9 million , a $24 million increase over 2011.
The average home price in the region was $140,000, a 10 percent increase over the year before.