The Minneapolis Area Association of Realtors published this week’s latest report last night and the trend that we’ve been seeing over the past several weeks is continuing.

It’s my personal opinion that we are in the process of bottoming out here in the Twin Cities provided there are no additional shocks to the U.S. economy.  For example, if gas were to go to $6 per gallon, all bets are off, but if we stay at $4 per gallon and start to see some relief at the pump, we’ll continue to clean out the housing supply.

I also believe there is no imminent turn for the real estate market here.  It’s still very difficult for sellers.  Homes need to be priced extremely well and must be absolutely “best in class” in order to sell.  That’s achieved by a combination of either being in outstanding condition or must be absolutely priced the best compared to anything else in the market.  The ideal is to have both those attributes.

While listing inventory continues to decline and pending activity continues to improve, I believe that price improvements are still likely at least 6 months away.   This doesn’t mean you shouldn’t be buying a home today.  No one can time the bottom perfectly.  Purchase a home, but go in with your eyes open and make sure you’re buying it at a price that you’re okay with if it continues to drop in value over the next 6-12 months.

The fact is, we haven’t seen a buying opportunity like this in many, many years in the Twin Cities.

Below is the note from the association regarding this week’s numbers:

Weekly Market Activity Report:

Home sales are continuing along a relatively smooth course so far this summer, with newly signed purchase agreements (pending sales) increasing by 3.8 percent over last year for the week ending June 14. Over the last six weeks, pending sales are behind the same time period in 2007 by only 30 sales, or 0.6 percent. When you compare that to the consistent 15–20 percent declines of the last few years, this is welcome news.

Simply matching last year’s numbers does not allow home sellers to celebrate recovering buyer interest in their properties. Plus, we need to keep some perspective on what types of sales are comprising this new stabilization of activity. A hearty 27.9 percent of purchase agreements from the last six weeks were made on lender-mediated foreclosures or short sales. Buyer activity is being propped up by the increased market share of these types of properties.

Traditional sales over the same six-week period are down 21.0 percent from last year, while lender-mediated sales are up 284.5 percent from 406 sales last year to 1,561 this year. So the traditional seller still faces some challenges—and some new and very different competition.

All told, heavy buyer interest in lender-mediated properties is viewed as a positive sign. We need the prevalent lender-mediated inventory to be absorbed before our market can return to some semblance of order. The sooner these properties are worked through the market cycle, the sooner that the mist of uncertainty they bring to negotiation, appraisal and home value will lift.