Twin Cities Real Estate
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
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 17,690Read 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…
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 4.6Read 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!
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 US Department of Commerce, Census Bureau updated the building permits for December 2011 for the Twin Cities area. Robert Shiller’s description of a Catfish recovery seems appropriate, we are still bouncing along the bottom.
There are indicators such as the low inventory levels and builders confidence that suggests we will likely see an uptick in the building permits this spring. I believe we will see that as well, but there is a long way to go to get us back to “normal” range of new homes being built.
October 2011 there were 603 permits for total housing units, dropping in November to 462 then back up to 658 for December.
Every month the Minneapolis Area Association of Realtors does their “Monthly Skinny” video on the Twin Cities market update.
This month was well done! Normally I watch these and they are kind milk-toast with no real substance. This one had some substance to it… Don’t get too excited, if you have been following the Weekly Market Updates here and other posts, you know this already – it is just put together nicely.
Technically, we are in a Seller’s Market…
Image by niallkennedy via Flickr
2011 may have marked the bottom of the real estate market in the Twin Cities, or at least we hope so. The Minneapolis Area Association of Realtors 2011 year-end report is out and this is the report on the Distressed Sales for 2011.
An astonishing 50% of the properties sold in 2011 were Distressed, meaning Short Sales or Foreclosures. It is little wonder why the Median Sales Price seemed to plummet in the Twin Cities in 2011.
The top area for distressed market share were primarily the “exurbs”. A couple of theories for this might be, those areas may have a lot of the Trades people there – carpenters, HVAC, roofers, drywallers etc. The housing industry was hit hard, and so were the Trades people’s income as a result. The price of gasoline soaring also might have played a role in this making the commute less desirable. I don’t believe those areas were subject to any different loans than the other areas, but I could be wrong.
Below shows us a better picture of the Median Sales Price plummet we kept reading about from Case Shiller and other home price indexes. A brutal -33.3% drop in median sales price over the last 4 years. If you break this apart by sale type like MAAR did here, it makes a little more sense. Traditional Sales median prices are down -14.1% over the same 4 year period while Short Sales are down -29.3% and Foreclosures median prices down -32.5%.
This reflective of Condition of the Home as well as the bargaining position of the buyers. I don’t expect 2012 will be nearly as bad, as I expect we will work off more foreclosures and begin to see prices stabilize. There are areas in the Twin Cities that may begin to see prices increase this year.
Charts of the day. Twin Cities Historical MLS data from Minneapolis Area Association of Realtors.
Average Sales Prices and Total Sale Volume. The real estate bubble becomes quite obvious when you look at the “bubble” on the graph. Given the recent inventory reports and pending sales, those suggests that we have hit bottom. Do you think these indicate the same thing?
Image via Wikipedia
The data has been compiled by the Minneapolis Area Association of Realtors for 2011. This is their year end report. To keep things simple, I am going to post this in a series of posts rather than trying to explain the entire report at once.
The “Quick Facts” are that New Listings have been trending down since 2007 while Pending Sales are not showing much of a trend, they are up from Last Year however.
I don’t think the “Top 5″ really tell us anything – let’s look at Excelsior for example:
Excelsior had a 15.6% Increase in New Listings and a 141.7% Increase in Pending Sales. What does that really mean? With only the percentages, it tells us really nothing to draw any conclusions from – except to give us the ‘heads up’ to take a closer look at those areas.
Below shows the Closed Sales increased by 8.2% in 2011 and Inventory dropped substantially by 28.7%. This is a nice steady decline of inventory over time.
We had experienced the news throughout 2011 on the median and average price drops including how the Twin Cities lead in some of the largest price drops in the nation. I still believe this is part of the market correction, and we are actually getting to the bottom of the market quicker and will therefore recover quicker. The Home Buyer Tax credit just prolonged the market correction, now that it was removed – 2011 allowed us to finish the correction. 2012 may be the year we begin to see the prices increase, other say it may not be until 2014 – 2015. Right now it looks like with inventory levels that prices should stabilize this year, possibly seeing price increase in certain areas within the Twin Cities.
Below shows us the Days on Market and % of List Price Received. 2011 was a year of Distressed Sales, 50% of the market to be exact up 13% from 2010. Obviously, distressed sales brought in lower sale prices…
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.
