The Minneapolis Area Association of Realtors has reviewed and published some the figures from the 2012 housing market in the Twin Cities. 2012 surprised most of us. Aaron Dickenson went out a limb and called the bottom of the housing market back in January 2011 on his blog, he turned out to be correct.
There has been modest job growth in the Twin Cities combined with record low mortgage rates fueled the housing market.
The 2012 figures are:
- 65,914 new listings (4.3% decrease from 2011 and 10 year low).
- 48,641 listings sold (16.9% increase from 2011, and the highest figures since 2006
- 2.9 Month Supply (42.2% drop)
- $167,900 Median Sales Price (11.9% increase)
- 117 Days Cumulative Days on Market on average (20.6% decrease)
- 34.6% of all New Listings were lender-mediated (either foreclosure-s or short sales) (41.9% decrease from 2011 and 42.6% decrease from 2010)
- 37.3% of all Inventory was lender-mediated (44.4% decrease from 2011 and 47.4% decrease from 2010)
- 39.7% of all Closed Sales were lender-mediated (50% decrease from 2011 and 47.9% decrease from 2010)
2013 is beginning to look positive for the Twin Cities housing market. The housing inventory is really low and demand is there, so I expect to see price increases in many areas and certain price ranges.
The headwinds still facing the housing market are Jobs, the market needs continued job growth to keep demand up for housing. In a few weeks Congress and the President will be contending with budget cuts and taxes on the Fiscal Ciff again, as they only kicked the can down the road. Will the mortgage interest deduction come back into question? Will the can get kicked down the road again?
Dodd Frank legislation is going to be a “gift the keeps on giving”. The regulations keep coming out of the committee and are beginning to be implemented. We haven’t seen the impact from this yet – while there are some some good regulations that have come from this, there are also some regulations that have the potential to shut down the lenders. For example, a lender can now be sued for lending to someone who is unable to repay the loan. At the same time, they can be sued for not lending in certain areas a.k.a. redlining. Add this to thousands of regulations in this Bill. (some light reading on Dodd Frank regulations)
The other concern I have going forward are the artificially low interest rates. Much of this housing market recovery has been fueled by these artificially low interest rates and not by real economic growth. Operation Twist, in the short term it is providing for a surge in demand and beneficial to the housing market – but at what price? What will interest rates eventually have to bounce back to? Is this just a 2nd Bubble spurred on by artificially low interest rates and not real economic growth? Time will tell…
As you can see, I am still Bearish on the housing market. If you do take advantage of these artificially low interest rates, which is a good idea, I recommend being conservative on your purchase. Rents are a good indication on a properties real value.