Housing Inventory: On the Rise?

There is some concern that the housing inventory is beginning to climb in some markets and that this may spread into other markets.

Bill McBride from Calculated Risk posted on this year over year increase.

We are starting to see more and more local areas report year-over-year increases in inventory. Housing economist Tom Lawler frequently sends out data on different areas across the country. In today’s note, Lawler wrote:
Read more at Calculated Risk

His post made me curious on what may be in store for our marketplace.   The Twin Cities housing market is still showing year over year decline in inventory.

09082013 Homes for Sale

New Listings are beginning to show something interesting.  +16.4% year over year increase in New Listings.  Currently the market can handle the added inventory, and arguably needs this inventory badly.  At this point I am not overly concerned, but there are a lot of dynamics at play and we have seen how quickly these markets can turn.

09072013 New Listings

Here are the year over year Pending Sales.  The Twin Cities is showing a +10.6% year over year increase in Pending Sales.   As long as this figure continues to improve, the market can handle a lot more inventory.  One thing is certain, the housing market is always in flux…

09082013 Pending Sales

 

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Minneapolis / St Paul Housing Starts July 2013

The Housing Starts for Minneapolis / St Paul MN are up by 548 units from June to July 2013 to 1398 units.  This includes Apartments and multifamily units.

Excluding apartments and multifamily units, the 1 Unit Structures are up 49 units from June to July 2013.

Given the current 3.7 month Absorption Rate in the Twin Cities, we should see the 1 Unit Structures permits begin to spike going into fall as new subdivisions are coming to the market.  Builders are busy trying to provide supply to the market.

Mpls/St Paul Housing Starts Authorized by Building Permit (1 Unit Structures)

2013-05-01    751
2013-06-01    697
2013-07-01    746

Mpls/St Paul Housing Starts Authorized by Building Permit

2013-05-01    1153
2013-06-01     850
2013-07-01    1398

As you can see from the historical chart below, there is a ways to go for full recovery of the Home Building sector.  We should see the 1 Units Structure Permits moving between the 800 to 1600 range.

08272013 Housing Start bld permit Minneapolis St Paul

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Unemployment Rate Up in Minneapolis / St Paul, MN

The Unemployment Rate for Minneapolis / St Paul, MN is up in June.   The rate moved up from 5.2% in May to 5.8% for June.  Hopefully this is not the start of a trend…   Even though 5.8% sounds pretty good, Minneapolis / St Paul, MN should be closer to a 4% unemployment rate as shown in the graph below…

2012-01-01   5.9
2012-02-01   6.2
2012-03-01   6.1
2012-04-01   5.1
2012-05-01   5.2
2012-06-01   5.8

 

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Twin Cities Weekly Real Estate Market Update, week ending Feb 11 2012

The Minneapolis Area Associations Weekly Market update report is out showing continued improvement.  Increased Pending Sales and fewer New Listings have brought our local market back in balance…

For week ending Feb 11, 2012:

• New Listings decreased 0.4% to 1,313
• Pending Sales increased 28.9% to 928
• Inventory decreased 23.5% to 17,690

Read Full Report from Minneapolis Area Association of Realtors

The Pending Sales are holding a wide spread of improvement over a year ago, this is promising – not a recovery yet, but positive improvement!

This is too early to call but it raised my eyebrow a bit.  The New Listing Inventory had been holding below year over year averages, but this week the spread was down to almost even with year over year.   A couple questions I am asking myself;  are we going to see a sharp increase in new listings?  Is this an early sign of the “pent up supply” of homes that held off selling because of market conditions?

We can certainly handle more inventory as long as the Pending Sales continue to improve…  There is a point of too much inventory, we aren’t there yet – we are closer to a Seller’s Market than a Buyer’s Market in terms of months supply of homes.   This is a metric we will need to keep an eye on in the coming weeks…

 

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Twin Cities Real Estate Market Update, Feb 13 2012

The January figures are in from Minneapolis Area Association of Realtors Weekly Real Estate Market Report for week ending February 4th 2012.  The Pending Home Sales are at the highest level since 2005.

The trend continues for the weekly report of decreased new listings and increased pending sales bring us the continued lowered inventory.

• New Listings decreased 6.7% to 1,236
• Pending Sales increased 35.8% to 888
• Inventory decreased 23.2% to 17,697

For the Month of January we are approaching some astounding inventory figures.  What strikes me from this report is the Month Supply of Inventory, we are down to 4.6 months supply of homes for sale.  We are approaching Seller’s Market territory.

There is a dynamic that Robert Shiller points out that real estate markets tend to stay in motion in one direction for long periods of time without ups and downs like the stock market.  We are seeing that here, these inventory levels would suggest we should be seeing price increases – but they have only slightly begun to materialize in the form of higher percentage of list price received.  If this persists we will likely see the trend reverse to price increases.  There are too many unknowns or “headwinds” yet to comfortably say this is the market recovery or just another bounce along the bottom.  Time will tell, but I will enjoy this good news for what it is:  we are going to have a great Spring Market.

For the month of January:
• Median Sales Price decreased 3.4% to $140,000
• Days on Market decreased 8.4% to 142
• Percent of Original List Price Received increased 3.4% to 91.2%
• Months Supply of Inventory decreased 35.2% to 4.6

Read Full Report from Minneapolis Area Association of Realtors

Above: Months Supply is at 4.6 month.  It hasn’t been this low since 2004-2006.  Under 4 month supply and we are in a Seller’s Market.

Above:  Look at the Percentage price increase on the right hand side – the trend is beginning to head upwards slowly – suggesting that the prices are stabilizing.  If you are a buyer you have probably been experiencing multiple offer situations in some areas of the Twin Cities and seeing  homes beginning to go over list price.  This is still spotty, but it is beginning to happen.   This will pose a problem going forward with Appraisals, Appraiser will have a difficult time coming up with Comps to establish values.  So a full reversal of the market trend will take time.

 

If you are a buyer: take a mental note of this chart.  The Affordability Index, if rates nudge up and prices begin to stabilize and increase, the housing affordability index will go down.  This may not last long…  So don’t wait too long!

 

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Twin Cities Weekly Real Estate Market Update, Jan 30 2012

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

Read Full Report from MAAR

 

 

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