Twin Cities Real Estate
I did a post here concerning NAR’s housing report that they were concerned the shortage of inventory would hurt the housing market. I touched on some the reasons I disagreed.
Then Aaron Dickenson smashes this post out of the ballpark…
Well worth the read….
(Great post Aaron – wish I could have been as articulate and concise!)
With the market continuing to erode the inventory of homes for sale, we are beginning to see signs of housing shortages. With low inventory comes higher prices.
I am beginning to notice this topic come up more and more and thought I would share a couple articles.
There are some pretty big wild cards in the “housing market” deck yet including the shadow inventory, Europe Debt Crisis, and unknown impacts of new regulations, so who knows. Assuming the market continues on its current path then I do agree we will see pricing increase, and 10% is not out of the question.
Fox News:
The National Association of Realtors’ official forecast says home prices will rise about 3% to 5% this year and next year. But based on recent trends, NAR’s chief economist, Lawrence Yun, says rising prices could surprise many in coming months.
“I would not be surprised if prices went up 10%,” he says.
Read more: http://www.foxbusiness.com/personal-finance/2012/07/16/five-mortgage-and-housing-trends-in-summer-2012/#ixzz220ojKPtg
Builder Magazine:
More evidence that a shortage in available housing is looming was found in the Census Bureau’s release on Friday of its quarterly estimates for residential vacancies and homeownership.
Minneapolis Area Association of Realtors Weekly report shows continued improvement. I am watching the inventory levels closely because this determines if their is need for more housing units to be added to the supply.
As we move through the summer months, historically fewer new listings will hit the market. If that happens, we could be looking at a serious shortage of housing units. It is hard to believe…
In the Twin Cities region, for the week ending June 16:
• New Listings decreased 3.7% to 1,476
• Pending Sales increased 19.8% to 1,173
• Inventory decreased 31.0% to 17,517
Have you dreamed about building your dream home? Now might be the time you should do it. The home inventory is way down, and what is available on the market is lacking for the most part. There is a surplus of buildable lots on the market at huge discounts still, and mortgage rates at historic lows.
Once the supply of these bank owned lots is gone, that is it… Any new supply of lots will be at much higher prices to cover the costs of subdividing and improving the lots. This inventory is priced way below replacement value.
Contact me if you are interested in seeing this supply of bank owned lots.
If you have built before or if you have dreamed about building, you will like this short clip from Mr. Blandings Builds His Dream Home. Classics are classics for a reason! …some things never change!
The Minneapolis Area Association of Realtors reports continued good news in their weekly market report. The pending sales are 29% higher than a year ago this time and inventory is down to 17,822 homes for sale.
Inventory will be increasing as we gear up for the Spring Market, which is a healthy and normal. If pending sales can continue to keep pace with the new inventory then we will be in really great shape. So far things are looking good, pending sales up and inventory down year over year.
In the Twin Cities region, for the week ending January 21:
• New Listings decreased 8.2% to 1,092
• Pending Sales increased 29.0% to 730
• Inventory decreased 23.2% to 17,822
The Minneapolis Area Association of Realtor’s Weekly Market Update is out for week ending Jan 7, 2012. The trend continues… New Listings are decreasing and pending sales are increasing year over year, giving us low inventory levels.
The New Listings are starting to come to the market as the Spring Market begins it’s ramp up. The inventory is growing a slower pace than this time last year, 14.6% less. Check out the trend line from 2006, there is a definite trend of few new listings. The buyers are coming out and from all signs of activity, looks like we are going to have an early and a good Spring Market.
With this trend of fewer New Listings, and the newer trend of increased Pending Sales – we are seeing outstanding inventory levels. 17,302 Active Listings. As if this number wasn’t great all by itself, we should take note that there are approx 4,000 of those “Active Listings” that are actually Pending. The short sales that offers that have been accepted by the owner (under contract), but yet waiting for final bank approval are not marked Pending. So this means if you are a Buyer, you are really in a market that has approx 13,302 Active Listings.
To add to the buyers problem of choice is that a lot of these homes are in tough shape, the inventory that is there is in need of work. We are seeing more and more Multiple Offer situations as a result. This will stabilize pricing, I am not going to go as far to say that we are going to see big price increases just yet – at least not until this reality is becomes apparent to the buyers and sellers out there. Generally speaking the perception is still that the housing market is bad – and to certain degree it is, however we are now seeing this dynamic change.
Assuming the economy doesn’t go into a double dip from the collapse of Europe, and we don’t get pounded by a wave of new inventory from the “shadow inventory” - we appear to be on the mend and it has the potential to turn into a Seller’s Market..
I remain CAUTIOUSLY Optimistic. I believe we are going to have a great Spring Market, so if you want to sell – NOW is the time. I have concerns over the fallout from Europe and the Shadow Inventory that could change the entire landscape quickly.
The Twin Cities real estate market wrapped up 2011 quite nicely despite some rough spots along the way, ending 2011 with a 4.6 month Supply of Homes! It was not the year of the recovery as some had predicted, but we are certainly in an improved state.
For week ending December 31, 2011
• New Listings decreased 11.6% to 593
• Pending Sales increased 41.7% to 564
• Inventory decreased 24.9% to 18,341
For the month of December:
• Median Sales Price decreased 5.6% to $145,000
• Days on Market decreased 2.4% to 140
• Percent of Original List Price Received increased 1.8% to 90.6%
• Months Supply of Inventory decreased 36.2% to 4.6
Read Full Report from the Minneapolis Area Association of Realtors
I quote myself from last weeks report:
I suspect we may be close to dropping below a 5 month supply of homes, next weeks report will tell us more…
This puts the Twin Cities WELL WITHIN A BALANCED MARKET and approaching a Buyers market believe it or not. I say that with caution, we still have strong headwinds against the housing market including; Economy, Jobs, Shadow Inventory, and Regulations.
So Builders – don’t start building TOO many spec homes.. However – you should probably start pushing dirt and get your basements in for the spring market. (check the local community market stats or contact me for a detailed market study). Be cautious, the inventory will seasonally increase, so this window may not last long…
If you are sitting on the fence waiting for homes to become Affordable, I think you might miss out – check the current Housing Affordability Index.
The year ended better than I had hoped for. Not only did we break the 20,000 mark for listing inventory, we dropped substantially below that mark to 18,666 Listings.
The final figures are not in yet for December and 2011 yet. We should those figures released next week. I am anxiously awaiting the official Absorption Rates for December – I suspect we may be close to dropping below a 5 month supply of homes, next weeks report will tell us more…
We may continue to lose inventory for another couple of weeks, but then we will begin to add inventory as the Spring Market begins to gear up. The question will be is if Pending Sales continue to increase to meet the new supply in inventory.
We still are facing strong headwinds from the economy, employment as well as 2 potential game changers. 1) Shadow Inventory (how big is it, and how quickly will it hit us..) 2) Dodd-Frank Regulations take effect in 2012. I have no idea what kind of impact we can expect from that, I haven’t been able to keep track of all the new regulations. On the right sidebar there is an RSS Feed of the new regulations they keep pushing out – you will have to scroll way down to get to the Dodd-Frank RSS feed. (If someone knows about these, please comment – it would be nice if we could get a clearer understanding of what is happening here.)
Here is our current inventory chart, enjoy this – I don’t know how it will look in a couple of months… This is exciting to see these low inventory levels.
Minneapolis Area Association of Realtors’ weekly market update was released this afternoon. For week ending December 17, 2011 we continued to see a strong increase in Pending Sales combined with lower numbers of New Listings year over year bringing us to an unbelievable 19,066 listings.
For inventory numbers, we are looking like 2004 and very early 2005. It will be interesting to see what the absorption rate is for December when MAAR releases Decembers figure in early January. I suspect we may be getting close to dropping below a 5 month supply of homes. (this is completely speculative right now..)
• New Listings decreased 16.9% to 799
• Pending Sales increased 50.1% to 749
• Inventory decreased 23.6% to 19,066
The Minneapolis Area Association of Realtors published the December “Monthly Skinny” video today. It is a nice short recap of what we discuss here, no great revelations but a nice recap.
November’s inventory puts us into a balanced market, pending sales increasing while new listings dropping off. They touch on the importance of jobs to the housing market but kind of skim over the figures and only look at the unemployment rate. It would be pretty difficult for them to get into any depth in a short 2 minute video.
