Weekly Twin Cities Real Estate Market Activity Report

OK I lied...This is the last one of the year.

Savvy buyers actively looking for a home to buy are in the driver's seat in the Twin Cities housing market. The supply of homes for sale continues to set records, with new listings for the week ending December 22 rising above the same week last year by 17.2 percent. Approximately 51 percent of these properties are re-lists that have already been on the market in 2007—a common ratio during the holiday season. Pending sales declined by 9.3 percent for the same time comparison. This is an improvement over the lackluster numbers seen last week.

HAPPY
NEW
YEAR!

"Champagne for my real friends...real pain for my sham friends."
-Tom Waits

Weekly Market Activity Report

Here's the Last One of the Year:

As the year winds to a close, the supply of homes for sale remains plentiful, with 28,651 homes on the market in the region—an increase of 14.5 percent over this time last year. For the week ending December 15, there were 1,213 new listings added to the market, approximately half of which are re-lists that have already been placed on the market at least once in 2007. This is an increase of 8.0 percent in new listing activity compared to the same week last year; newly signed purchase agreements (pending sales) were 27.0 percent behind.

Reasons for Hope?

It's been a challenging year for everyone in the Real Estate profession, Buyers, Sellers, Mortgage Brokers, Title Closers, Inspectors and on and on. I have seen a lot of my associates and friends really struggle to get by, myself included, in this changing marketplace. I have to believe that things will turn around, eventually. There are signs of hope: lower interest rates, reduction in inventory, better pricing. 2008 is unlikely to be a year of total rebound but I do think we will continue to see signs of a recovery. In the meantime, like you, I am thankful for my family and friends, who are always there in times of crisis. This year, more than ever, I wish them, and you, a very

HAPPY HOLIDAYS!

Weekly Twin Cities Real Estate Market Activity Report

Gather 'Round the Festivus Pole!

The Twin Cities housing market has entered its annual winter holiday pause. New listings have been minimal, yet total inventory of homes for sale remains at record levels and the number of sellers continues to far outweigh the number of buyers. Conservative lending standards and decreased consumer confidence seem to be keeping home buyers away despite low mortgage rates, motivated sellers, improved housing affordability and great housing stock.

Over the last three months, newly signed purchase agreements have declined by 20.0 percent from the same period in 2006 and 34.3 percent since 2005. Meanwhile, new listings have declined by only 1.8 percent. The number of homes for sale has dropped 5,000 units in the last 12 weeks but remains 12.9 percent higher than this time last year.

The forecast calls for improved buyer activity, but it may take a year or two of gradual increases before comparisons to today's buying market are quantifiable.

CLICK HERE for the entire report.

December Market Update

Visions of Sugar Plums Dance in Buyer's Heads...

Activity in real estate tends to remain slower during the busy holiday season as families focus on spending time together and plans are made for travel and holiday traditions. In preparation for the upcoming year, many people will use this time to begin thinking about home remodels, updates and getting their home ready for sale. Homes priced from $250,000 - $500,000 are currently moving better than any other price points in the market, and properties priced in the upper bracket continue to remain on the market longer. However, it’s important to note that homes continue to sell when they’re staged well and priced below the competing inventory.

We expect inventory levels to continue correcting to the number of buyers available in 2008 and we anticipate an ongoing slow change in the market throughout next year and into 2009. While credit standards are tighter, the market will continue to present great opportunities for buyers.

Always remember that real estate is local. Just like we don’t access national weather forecasts when we’re dressing for the day, we shouldn’t rely on national real estate reports to give us accurate information about our local markets. While national trends are important for economists to assess the economy, they are not all that useful in determining the metrics of a local market. A REALTOR® will always take into consideration many things when determining the value of a home, including the local competing inventory, location and nearby amenities.


Here's a few more interesting bits of info:

• According to the National Association of REALTORs® (NAR), 2007 is on target to be the fifth best year on record for existing home sales (units).
  

• Our market’s average home selling price is $266,000, down slightly (-.6 percent) compared to last year. We expect more price adjustments of 2 – 3 percent in 2008.

• Builders are pricing inventory at or below existing residential, which is anywhere between a 10 – 20 percent drop in pricing. New construction inventory has declined nearly 20 percent this year. This is good news for thinning out the number of homes for sale, which, combined with the average selling price coming down, indicates that we’re poised for a slow, steady market comeback.
  

• Homes priced from $250,000 - $500,000 are currently moving better than any other price points in the market.

• Upper-bracket properties continue to remain on the market longer.

Improving Affordability in Minneapolis Real Estate?

A bunch of new info regarding the November Housing Stats was released by MAAR today. Here's the highlights:

With home prices in seasonal decline and mortgage rates dropping, the buying environment is as good as it’s been since February 2005, according to the Minneapolis Area Association of REALTORS® (MAAR) based on data from the RegionalMultiple Listing Service of Minnesota, Inc.

The MAAR Housing Affordability Index (HAI) increased to 141, the healthiest December HAI figure since 2003. The median sales price in November of $216,500 was 5.1 percent behind November of 2006, the largest such year-over-year decline in 2007. Since decreased affordability has been one of the leading causes of the current market malaise, these improvements bode well for the future.

Despite abundant inventory, motivated sellers and improving affordability, home buyers remain inactive. Newly signed purchase agreements (pending sales) posted 2,615 units in November, 21.0 percent behind November 2006. Similarly, closed sales declined by 19.3 percent for the same time period comparison.

The number of homes for sale has fallen by 4,000 units in the last two months. Despite the seasonal drop, inventory set a new November month-end record with 30,126 homes for sale and 13.44 homes for each buyer expected during the upcoming month.

• Declining home prices are often viewed as a negative phenomenon. In reality, lower prices bring attractive buying opportunities to the market and lay the foundation for a bright future.

• Right now, buyers are like awkward kids at a junior high dance—anxious and waiting for their favorite song. Meanwhile, the kids who recognize a good thing are already on the floor having fun.

• A revival in FHA loans, which had lost substantial market share to the risky subprime market, will provide funding for low-to-moderate income households at attractive rates.

• All of the conditions in our market are ideal for buying a home. Buyers who are waiting on the sidelines should seriously consider acting now. Otherwise, they might look back at this as a time of missed opportunity.

• Positive changes are still taking place. Affordability is improving, the lending environment is returning to solid fundamentals, interest rates are still historically low, and buyers now have a golden opportunity to purchase a home.

• Real estate is a cyclical business and fall is historically a slower time in our housing market.

• Sellers face a challenging market right now. But if you’re a first-time home buyer or a second-home buyer with no home to sell of your own, the market has been with opportunities.

• Downward pressure on home prices will continue into early next year as record inventory competes for a declining buyer pool.

• A quick and easy rebound in sales is not in the cards—our market’s recovery will be slow to start and gradual in its effect.

Weekly Twin Cities Real Estate Market Activity Report

I'll take what's behind curtain number 3, Monte!

Sellers Continue to Say: "Let's Make a Deal!"

Home sales perked up for the week ending December 1, as buyers returned following their annual football-and-turkey Thanksgiving holiday. While the number of newly signed purchase agreements (pending sales) grew to 533, it was still behind the same week last year by 10.6 percent. The total inventory of homes for sale continues its seasonal drop, with 4,000 fewer units on the market now compared to eight weeks ago.

This week's edition of the MAAR Weekly Market Activity Report features updated figures for several key metrics:

• Average Days on Market Until Sale increased slightly to 148, a growth of 12.4 percent from one year ago. This figure should continue to grow through December before dropping in the first part of 2008 as more buyers return to the market.
• The Percent of Original List Price Received at Sale dipped to 92.4 percent, indicating that seller willingness to negotiate continues to grow.
• Mortgage Rates for the Twin Cities region fell slightly again to 6.2, which is having dramatic and positive effects on affordability.
• The Housing Affordability Index (HAI) increased to 141 due to falling mortgage rates and home prices. This is the highest HAI mark since February 2005 and, if sustained, bodes well for the long-term health of our market.
• Months Supply of Inventory decreased to 9.3 months, as seasonal declines in the number of homes for sale temporarily restrict inventory choice during the holiday season.

CLICK HERE for the complete report from MAAR.

Minneapolis Trends 3rd Quarter Report

What's Happening Minneapolis?

For those curious about what the "pulse" of the city is during this housing downturn, a recent e-mail I got from the city, shows some very interesting developments. To wit:

Although the number of employed residents rose, the unemployment rate rose from 4.2% to 4.6%.

What industry has the highest average weekly wage?

Finance and Insurance at $2,803/week.

The lowest?

Accommodation and Food Trade at $350/week.

It was no surprise that the number of new construction residential permits decline sharply.

Housing sales were 13% slower than a year ago but prices were stable at $223,000.

Foreclosures and Boarded up buildings double in the last year but remain a small percentage of the over-all housing stock.

Nothing earth shattering but some good information nonetheless.

Here's a cool chart of Current Minneapolis Projects in Development.

Here's a link to the complete Minneapolis Trends Report.

Mortgage Rate Freeze?

This is potentially very big news for anyone who signed onto a sub-prime loan in the past two years. Apparently the Bush Administration is brokering a 5 year freeze on the resets-the time when these loans are set to adjust.

Here's a part of the story:

The Bush administration has hammered out an agreement to freeze interest rates for certain subprime mortgages for five years to combat a soaring tide of foreclosures, congressional aides said Wednesday.

The aides, who spoke on condition of anonymity because the details have not yet been released, said the five-year moratorium represented a compromise between desires by banking regulators for a longer time frame of up to seven years and mortgage industry arguments that the freeze should last only one or two years.

Another person familiar with the matter said the rate-freeze plan would apply to borrowers with loans made at the start of 2005 through July 30 of this year with rates that are scheduled to rise between Jan. 1, 2008, and July 31, 2010.

I don't think I am being too cynical when I say I will believe it when I see it. That is a HUGE pile of money that Wall Street will be asked to leave on the table and I can't believe they would accept this willingly.

Stay tuned...

Attack of the Killer Monster Houses!

Edina puts the Kabosh on the Kabooming of Houses

This article in the Strib is one of a series on this topic (they do sort of like to beat some subjects to pulp, see the mortgage/real estate "crisis" for more examples.)

I'm not sure how I feel about the idea of stopping this kind of development. As a good neighbor and architectural "purist" I am often put off by the look of some homes, usually new homes, are built in older neighborhoods. They seem to be out of place and out if scale.

On the other hand, there was a new house that is on my block that, although it is quite large, it is in a style that really seems to fit with the 1920's dominated styles on my street. It really looks like a lovely home and I might add, the place that was demoed to make way for it really needed to go. It was a tiny rambler, set way back on the lot like you see from time to time, that had been vacant for some time.

So there's the debate. Old vs. New. Tradition vs. Progress. It's an age-old dilemma and I think where you stand on it has more to do with your personal tastes than anything else. From a real estate standpoint, new construction is almost always a surefire way to raise the surrounding property values. I guess if your view of the lake or park is suddenly blocked by your new giant neighbor, that would be unfair, I know I would be angry...

So...perhaps rather than a moratorium the Cities should set up a committee of residents who could looks specifically at these projects on a case by case basis. I know there are already zoning committees but they are usually swamped with commercial issues. I don't know. Adding more hoops for people to jump through may be a bad idea.

Issues like this are sometimes easier to say: "Go ahead and build that....just not on my block!!!"

UPDATE: Edina remains home to "McMansions"

Weekly Twin Cities Real Estate Market Activity Report

The Song Remains the Same

As expected, we are continuing to see a decline in home sales in the Twin Cities housing market. For the week ending November 24, there were 329 newly signed purchase agreements (pending sales), a decline of 32.2 percent from the same week last year. The severity of this sudden decline is abnormal enough to imply a statistical fluke caused by a small sample size and the vagaries of a major holiday week. How the market performs next week will provide a good indicator of its true direction.

This week's edition of the MAAR Weekly Market Activity Report features an updated Supply-Demand Ratio (SDR) for 2007. The figure increased to 13.44, which means that there are 13.44 homes on the market for every buyer in the month of December, an increase of 34.1 percent from last December. The SDR rises each year in the final months due to the dramatic decline in holiday season home buyers.


Click here for this week's full report.