MetroStudy reports positive economics for Twin Cities housing market

MetroStudy reports the overall Twin Cities economy is in better shape than the national average.

Okay – I know, you have been following these metrics closely – but it is still a good source…   There are also a few interesting points they make such as below:

The Twin Cities area started 1,199 homes, up +62% compared to 1Q12. “For the first time in almost three years the Twin Cities housing market surpassed 1,000 new home starts for the quarter,” said Jones.

…There are currently 26,291 vacant developed lots throughout the Twin Cities, representing a decline of 8% compared to last year. (13,290 vacant developed lots throughout the metro seven counties, a decline of 11.5% compared to last year).

Read Full MetroStudy Article

Once these cheap lots are gone, prices are going right back up.  These lots are being sold well below replacement costs, some even at or below raw land prices.

 

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Housing Recovery sputtering out already? (Existing Home Sales Decline)

Foreclosure
Foreclosure (Photo credit: zane.hollingsworth)

There were a few articles posted around the web questioning if the housing market is sputtering out after the National Association of Realtors posted the June Existing Home Sales Report on Thursday.  “June sales are down because of lack of inventory”.

These are great headlines but the truth is a little more evasive.   The market is in transition and that does not come without some pains and ups and downs.  One of the major market shifts is that the inexpensive foreclosed inventory of homes is dwindling, which is bringing the median sales price higher.   This is a good thing, even though it may slow sales down with lack of inventory – this inventory was a huge drag on the housing market.

 NAR chief economist, said the bigger story is lower inventory and the recovery in home prices. “Despite

the frictions related to obtaining mortgages, buyer interest remains solid. But inventory continues to shrink and that is limiting buying opportunities. This, in turn, is pushing up home prices in many markets,” he said. “The price improvement also results from fewer distressed homes in the sales mix.”

Read NAR’s July 19th Housing Report

So what does the Twin Cities Inventory and Sales look like?

For homes sold, it really appears like we had hit bottom last year.  The chart below show a surge in Traditional sales closed up 38.2% to 3,328 units while Foreclosure closings dropped -12.3% to 1,248 units and Short Sales nudging slightly up to 487 units for June 2012.

It appears from this in the Twin Cities that if the buyer is not finding what they want in the Foreclosure inventory they are finding it in the Traditional Inventory.

 

How long will the buyers continue to find what they want in traditional inventory?  Well, if this trend continues we will have a serious shortage of homes for sale…  HOWEVER – I believe there are enough people willing to make a move to sell their home if they weren’t upside down on their mortgage, having prices increase will help the negative equity situation and open up the market again.

So I see this as a short lived growing pain to get through – inventory shortage to bring prices back up which will then open up the market.

Median Sales Price for Twin Cities area, as you can see median prices are beginning to nudge up.  This is a great thing, this will help pull people out of the negative equity situation and allow them to then sell their homes.  Having the “foreclosure” inventory and “short sale” inventory dwindle is a great thing – everyone will benefit from this.

There will be lots of headlines and “news” about every little change in the housing market, but overall we are still slugging out the path to the housing market recovery.

The real headwinds in the housing market now is the Employment situation and the appraisal and mortgage regulations in Dodd-Frank.

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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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Monthly Skinny: January 2012

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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2011 Twin Cities year end Distressed Sales snapshot

Foreclosure auction signs
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.

Read Full Report from MAAR

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