Twin Cities home prices reached an all-time high last month, precisely a decade after they last peaked.
The median price of all closings was $242,000 in June, the Minneapolis Area Association of Realtors said Tuesday. That's 5.3 percent higher than last June and nearly 2 percent more than the previous all-time high of $238,000 in June 2006.
"We're back to where we were, or probably better," said Herb Tousley, director of the Shenehon Center for Real Estate at the University of St. Thomas. He added, "I think this thing has a little bit more gas in it."
While the latest peak is a milestone, it's a déjà vu moment for those who watched their home equity evaporate when prices plummeted in 2008 and 2009.
No such drop is on the horizon today. For one thing, the association's data isn't adjusted for inflation. A $238,000 house 10 years ago would be worth about $285,000 in today's dollars. Based on the current rate of increase, it would take about three years for Twin Cities home values to hit that inflation-adjusted peak.
As well, market fundamentals are radically different from a decade ago, when predatory lending, lax underwriting standards and rampant speculation fueled sales and appreciation. Homebuilders were also flooding the market with new houses, causing inventory to increase at about the same pace as prices.
"We've had good household formation and good job creation," Tousley said. "I don't see anything that's going to slow it down."
During June there was a 0.5 percent increase in new listings, and closings were on par with last year, rising 0.2 percent — the most since June 2004 and a 12-year high.