Monthly Skinny: January 2012

January 23, 2012 By

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…


 

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Twin Cities historical MLS sales prices and volume

January 19, 2012 By

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?

 

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2011 Annual Real Estate Report, part 1

January 18, 2012 By
Minneapolis – Saint Paul

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…

 

 

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Twin Cities Weekly Real Estate Market Update for week ending Jan 7, 2012

January 17, 2012 By

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.

  • New Listings decreased 14.6% to 1,266
  • Pending Sales increased 13.8% to 561
  • Inventory decreased 24.5% to 17,302

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.

Read Full Report from MAAR

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Twin Cities Weekly Real Estate Market Update week ending Dec 17 2011

December 27, 2011 By

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

Read Full Report from MAAR

 

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A few posts worth reviewing.

December 26, 2011 By

We are in the final stretch of 2011 and what a rollercoaster ride it has been for the economy, unemployment and the housing market.

You may have extra time today as you are unwinding from the Holiday weekend.  Here are some posts worth reviewing as we begin to reflect upon the year and prepare for 2012.

Case Shiller Index, Minneapolis / St Paul market overcorrecting?

A Short Guide to Investing in Rental Properties

 

Farmland prices soar in the Midwest

 

The Demographic Impact of the Housing Crisis

Minneapolis/St Paul ranks as healthiest real estate market in the nation, 8% home price increase in 2012

S&P Interview with Karl Case and Robert Shiller on the Housing Market

Rents going up in 2012 as Vacancy Rate continues to drop

 

Save heating costs with this new Smart Thermostat by the creators of ipod

 

Hennepin County Foreclosure Risk Scores by City and Zip, how does your zip code rank?

 

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Twin Cities December Real Estate Market “Monthly Skinny”

December 19, 2011 By

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.

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Twin Cities Real Estate Market Update, week ending Dec 3 2011 and month of Nov 2011

December 12, 2011 By

I have anxiously awaited this report, and I am pleased to see the results.  We are about to break the 20,000 mark for inventory as our inventory is now at 20,030 listings!  So Close!   20,000 is an arbitrary number I picked, it is a nice round number and we have not been below that mark since late 2004 and early 2005.

November’s Median Sales Price decreased 9.9% to $149,500, I am not overly concerned with that for a couple reasons:

A lot of the sales taking place are in the lower price brackets as investors are purchasing distressed properties which brings that number lower, once the distressed  inventory dissipates the median price should level back to historical perspectives.   (this has everyone guessing because of the “Shadow Inventory” which no one can seem to quantify..)

The other reason I am not overly concerned is that our inventory is way down, we are now at a 5.7 month supply of homes at our current rate of sales.  That places us in a Balanced Market by most people’s definition.  A Balanced Market will stabilize pricing.  We are beginning to see that in the Days on Market, which decreased 1.8% to 135.  Although if I were writing for a newspaper or TV news show, I would harp on the drop in median price figure to draw lots of attention to sell advertising…

In the Twin Cities region, for the week ending December 3:

• New Listings decreased 9.3% to 1,006
• Pending Sales increased 36.4% to 885
• Inventory decreased 22.9% to 20,031

For the month of November:

• Median Sales Price decreased 9.9% to $149,500
• Days on Market decreased 1.8% to 135
• Percent of Original List Price Received increased 1.0% to 90.9%
• Months Supply of Inventory decreased 30.5% to 5.7

Read Full Report from Minneapolis Area Association of Realtors

Here is the current Inventory, we are slightly above the 20,000 mark for inventory, by only 30 listings.  With Pending Sales up, and new listing most likely not coming on the market for the rest of the year – I think it is safe to say we will likely start 2012 below 20,000 houses on the market.

 

The Housing Affordability Index is at record highs.  For the Twin Cities, the median household income is 256% of what is necessary to qualify for the median-priced home – under prevailing interest rates…    This is a good thing, this is part of the market correction.

 

 

 

 

 

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Housing Affordability at all time highs

December 9, 2011 By

According to the St Louis Federal Reserve Bank’s data from the National Association of Realtors the Housing Affordability Index is at an all time high.   The index tracks the “affordability” of housing by degree a typical family can afford the monthly mortgage payment of a typical home.

Title:               Housing Affordability Index (Fixed)
Series ID:           FIXHAI
Source:              National Association of Realtors
Release:             Monthly Housing Affordability Index
Seasonal Adjustment: Not Seasonally Adjusted
Frequency:           Monthly
Units:               Index
Date Range:          1981-01-01 to 2011-10-01
Last Updated:        2011-12-06 9:01 AM CST
Notes:               Measures the degree to which a typical family can afford the monthly
                     mortgage payments on a typical home. 

                     Value of 100 means that a family with the median income has exactly
                     enough income to qualify for a mortgage on a median-priced home. An
                     index above 100 signifies that family earning the median income has
                     more than enough income to qualify for a mortgage loan on a
                     median-priced home, assuming a 20 percent down payment.

The above chart is the national stats, below is our local market Housing Affordability Index.  This is as of Nov 1, 2011 – we should be getting an update of November’s Affordability Index in a few days.  These charts do show us that from an “affordability” stand point, there hasn’t been any better time to buy a home.  (to clarify: the data above only goes back to 1980 – so maybe I should say there hasn’t been in a better time in the last 30 years to buy a home.)

 

 

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Twin Cities Weekly Real Estate Market Update December 05, 2011

December 5, 2011 By

The Minneapolis Area Association of Realtors released this weeks Market Update for week ending November 26, 2011.  We are continuing to see great progress in the inventory levels as we are approaching the 20,000 level not seen since 2004.  Last we week the inventory dropped by 545 listings to 20,318.  A few weeks ago I was hoping we would get below 20,000 by the end of the year, at this rate we should be able to see that with no problem.  There is nothing magical about under 20,000 listings, it is just a benchmark we haven’t been below since 2004 and very early 2005.  This should help set us in a good place beginning the 2012 season.

  • New Listings decreased 9.1% to 601

  • Pending Sales increased 46.8% to 574

  • Inventory decreased 22.8% to 20,318

Read Full Weekly Market Report from Minneapolis Area Association of Realtors.

 

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The views expressed on this blog are my own and do not necessarily reflect the views, opinions, or positions of my Broker.