This question comes up all the time and for good reason. Buyers want to know if they are buying at the right time or if they should wait until the market bottoms out. This is a pretty difficult question for anyone to answer whether they are a celebrated economist or a member of the Psychic Friends Network. When? I don't think anyone can say for certain. Perhaps later this year? Perhaps next week.
However, I did attend a very interesting seminar given by noted economist John Tuccillo where he presented a very specific formula that won't predict when this will occur but will show when it has come to pass.
That's the rub in all of this. You really only know you've hit bottom once you are no longer there. I know it seems like a bunch of mambo-jumbo but this is economics, people! It comes with the territory.
Anyway, Tucillo's take is this. There are three Signs of Recovery that you can watch for that will show the market is no longer in decline.
1. A Decline in New Listings
2. A Decline in the Days on Market
3. The Ratio of Sales Price to List Price Begins to Rise
It's pretty simple really. A decline in New Listings produced less inventory, reducing downward pressure on prices.
A decline in Days on Market shows houses are selling faster and the faster they sell the more likely the will sell closer to their List Price or in a Multiple Offer situation where Buyers try to outbid each other.
When the Sales Price to List Price ratio rises we know that Buyers are on board with what the Sellers are selling.
Tucillo said that you need about 3 straight months of this pattern to know that you are there and you can compare this month to last month, or the market a year ago, as a frame of reference.
OK so where are we right now?
1. Decline in New Listings
Looking at the latest figures from the Minneapolis Area Association of Realtors New Listings are down 1% over the past three months from where they were a year ago. So we are 1/3rd of the way there!
2. Decline in Days on Market
MAAR figures show we are UP 4.6% from one year ago -up to a sobering 158 Days on Market, on average, until sale.
3. The Ratio of Sales Price to List Price Begins to Rise
Right now this ratio is also in decline with homes selling for an average of 91.2% of the list price and this downward trend has been occurring since May of 2007 when it was 95.9%.
OK so, we have a ways to go but after hearing Mr. Tucillo speak I am a lot more encouraged about where we are at locally. He said we could likely see a couple more quarters of decline here but the signs of recovery will likely start to appear in the 4th quarter. He also is pretty convinced our national economy is heading for a recession but that it will be short and mild.
We'll have to see what happens...in the meantime I will continue to track these numbers so we will be able to say with confidence that we have passed the bottom.
Did I really just write that last sentence? No wonder I skipped out on Econ 101 when I was at the U!
Wednesday, January 30, 2008
Monday, January 28, 2008
Weekly Twin Cities Real Estate Market Activity Report
The Dead of Winter...
With cold weather, high winds and relatively low consumer confidence, the Twin Cities housing market continues to experience low levels of buyer activity in January. Newly signed purchase agreements (pending sales) posted 485 units sold for the week ending January 19, a decline of 19.4 percent from this time last year. For the same time period comparison, new listings held relatively steady, posting 1,877 new units on the market. Roughly half of these are re-lists that have already been placed on the market at least once in the last 12 months.
Click here for this week's stats.
For a closer look at how our changing market is affecting your specific community, take a look at "The 100," our localized market research tool. It offers free monthly market updates for 125 unique locales within the Twin Cities market. Year-end 2007 numbers are now available for each of these areas.
With cold weather, high winds and relatively low consumer confidence, the Twin Cities housing market continues to experience low levels of buyer activity in January. Newly signed purchase agreements (pending sales) posted 485 units sold for the week ending January 19, a decline of 19.4 percent from this time last year. For the same time period comparison, new listings held relatively steady, posting 1,877 new units on the market. Roughly half of these are re-lists that have already been placed on the market at least once in the last 12 months.
Click here for this week's stats.
For a closer look at how our changing market is affecting your specific community, take a look at "The 100," our localized market research tool. It offers free monthly market updates for 125 unique locales within the Twin Cities market. Year-end 2007 numbers are now available for each of these areas.
Thursday, January 24, 2008
Interesting Discussion on MNSpeak
I always am interested in hearing different people's take on the current market and today over on MNspeak, a site I really enjoy there is a thread that is worth checking out.
In the coming weeks I hope to outline some tips and strategies I have seen as very effective for people interested in purchasing a second home for investment because the market is really becoming ripe for that kind of activity right now.
Stay tuned and stay warm!
In the coming weeks I hope to outline some tips and strategies I have seen as very effective for people interested in purchasing a second home for investment because the market is really becoming ripe for that kind of activity right now.
Stay tuned and stay warm!
Tuesday, January 22, 2008
Weekly Twin Cities Real Estate Market Activity Report
Here's the latest from those wacky kids at MAAR:
"Plus ça change, plus c'est la même chose." – Alphonse Karr, French novelist
With the arrival of 2008, the Twin Cities housing market remained in its 2007-end holding pattern. Purchase agreements were lower and new listings held steady. For the week ending January 12, there were 4.8 percent fewer new listings on the market compared to last year at this time, while pending sales declined by 24.0 percent for the same time period. The total number of homes for sale in the region is beginning it's annual new year ascent, with 27,931 housing units on the market—up 12.2 percent from the same time last year.
This week's edition of the MAAR Weekly Market Activity Report features an updated January 2008 figure for the Months Supply of Inventory. The figure declined sharply to 8.3 months, as it usually does at the beginning of the year following the holiday inventory drop. The figure is 42.4 percent above this time last year.
For a full, detailed look at how changing supply-demand dynamics are affecting various price ranges and property types in our regional housing market, take a look at our new January 2008 Housing Supply Outlook.
"Plus ça change, plus c'est la même chose." – Alphonse Karr, French novelist
With the arrival of 2008, the Twin Cities housing market remained in its 2007-end holding pattern. Purchase agreements were lower and new listings held steady. For the week ending January 12, there were 4.8 percent fewer new listings on the market compared to last year at this time, while pending sales declined by 24.0 percent for the same time period. The total number of homes for sale in the region is beginning it's annual new year ascent, with 27,931 housing units on the market—up 12.2 percent from the same time last year.
This week's edition of the MAAR Weekly Market Activity Report features an updated January 2008 figure for the Months Supply of Inventory. The figure declined sharply to 8.3 months, as it usually does at the beginning of the year following the holiday inventory drop. The figure is 42.4 percent above this time last year.
For a full, detailed look at how changing supply-demand dynamics are affecting various price ranges and property types in our regional housing market, take a look at our new January 2008 Housing Supply Outlook.
Fed Slashes Interest Rates
Here's the latest on today's rate cut which is sure to have big ramifications in the real estate market:
U.S. Treasury Secretary said this morning that an economic stimulus package is necessary and “as soon as possible”, as the global sell-off in stocks raises recessionary concerns here and abroad. Minutes before, Bank of America announced that its fourth quarter losses associated with sub-prime and CDO losses came in worse than expected at $5.28 billion, and commented firmly that credit risks remain highly elevated.
Separately, the Federal Reserve’s Open Market Committee this morning called for an emergency, inter-meeting rate cut of 75 basis points, reducing the rate from 4.25% to 3.50%, the largest cut by the FOMC since October of 1984, and the first inter-meeting rate cut since the Fed cut rates at the post-09/11 market re-open on September 17, 2001.
The Fed has now lowered rates by 1.75 points since September 18th of last year. The cut was not a complete surprise to the markets, and came just twelve days after U.S. Fed Chairman Ben Bernanke had stated that the Fed would remain “exceptionally alert and flexible.”
Banks have or will reduce the prime interest rate to 6.5% on this news, which will have a benefit impact to many credit facilities, including variable-rate home equity loans.
The Fed will meet as scheduled a week from today for a two-day meeting, and the market is still looking for additional easing by another 25 basis points, or more, as a downside risks to the economy and a recession are clearly an overarching concern.
A month ago, the market expected the Fed funds to reach 3.25 by year-end, and two weeks ago the market moved that year-end number even lower to 2.75%. Today, the futures market is looking for the Fed’s benchmark rate to be just above 2.0% by September.
The Dow at the open gapped down over 400 points, as expected, and has improved to minus 350 points just now. The ten year treasury stands at 3.54%, up 24/32s in price, and mortgage prices are up 11/32s in early trade. Obviously, mortgage rates will improve by 0.125% or more in a couple of hours when rates are updated.
Today’s rates may equal the lows set in June of 2003.
U.S. Treasury Secretary said this morning that an economic stimulus package is necessary and “as soon as possible”, as the global sell-off in stocks raises recessionary concerns here and abroad. Minutes before, Bank of America announced that its fourth quarter losses associated with sub-prime and CDO losses came in worse than expected at $5.28 billion, and commented firmly that credit risks remain highly elevated.
Separately, the Federal Reserve’s Open Market Committee this morning called for an emergency, inter-meeting rate cut of 75 basis points, reducing the rate from 4.25% to 3.50%, the largest cut by the FOMC since October of 1984, and the first inter-meeting rate cut since the Fed cut rates at the post-09/11 market re-open on September 17, 2001.
The Fed has now lowered rates by 1.75 points since September 18th of last year. The cut was not a complete surprise to the markets, and came just twelve days after U.S. Fed Chairman Ben Bernanke had stated that the Fed would remain “exceptionally alert and flexible.”
Banks have or will reduce the prime interest rate to 6.5% on this news, which will have a benefit impact to many credit facilities, including variable-rate home equity loans.
The Fed will meet as scheduled a week from today for a two-day meeting, and the market is still looking for additional easing by another 25 basis points, or more, as a downside risks to the economy and a recession are clearly an overarching concern.
A month ago, the market expected the Fed funds to reach 3.25 by year-end, and two weeks ago the market moved that year-end number even lower to 2.75%. Today, the futures market is looking for the Fed’s benchmark rate to be just above 2.0% by September.
The Dow at the open gapped down over 400 points, as expected, and has improved to minus 350 points just now. The ten year treasury stands at 3.54%, up 24/32s in price, and mortgage prices are up 11/32s in early trade. Obviously, mortgage rates will improve by 0.125% or more in a couple of hours when rates are updated.
Today’s rates may equal the lows set in June of 2003.
Friday, January 18, 2008
Toronto's Smallest House!!!
A client sent me this. I am not sure where it came from but I thought it was a riot and a pretty cute home actually!
TORONTO 'S SMALLEST HOUSE 
IS FOR SALE ! ! !
IS FOR SALE ! ! ! It's nothing short of a "Glorified Tent" .. or is it?
If ...
..... You live alone or with one other person (or an extremely small dog) .. or if
..... You don't have much stuff (barely more than a homeless person) . or if
..... You miss that cute little apartment you lived in while teaching English in Japan
THEN THIS IS THE PLACE FOR YOU ! !
This house, located near the intersection of Dufferin Street and Rogers
Road is believed to be Toronto's smallest house. Occupying what used
to be a driveway, i t's a one bedroom, one bathroom home that sits on a
parcel of land 7.25 feet (2.2 metres) wide and 113.67 feet (34.6 metres)
long and has an interior area of just under 300 square feet (under 28
square metres).
Here's the living room, looking towards the back ...
Here's the kitchen. Note that despite the small space,
they've managed to fit a washer and dryer into the place.
Here's the bedroom. It comes with a Murphy be d,
which is a necessity in such a space. This is what it
looks like with the Murphy Bed down
And here the bedroom with the Murphy Bed retracted:
You also get some patio space out back.
Here it is, looking towards the front of the house:
And here's the patio looking towards the back:
Here are the home's "Listed Features":
* Completely re-done top-to-bottom, front-to-back!
* Tumbled stone entrance walk
* Renovated Bath
* Renovated Kitchen with newer stove, new cabinets and new stacked washer/dryer
* Bedroom with Murphy Bedd + "Built-Ins" ... (doubles as a den)!
* Walk-out to fenced patio
* 100 Amp service
* 2 Satellite Dishes and Receiver
* Window Air Conditioner Available
THE PRICE ? ? ?
You get all this for
$179,900.00!
You get all this for
$179,900.00!
Foreclosures Push Down Rents
There's been a lot of talk how the market is becoming less friendly to renters. However, recent studies have shown just the opposite - and why not in the contrary, Topsy-Turvy market!
According to the National Association of Realtors, due to home owners trying to rent homes they can’t sell, rentals are abundant and prices are at bargain levels in areas hit hard by foreclosures.
Some home owners forced out by foreclosure are finding rental deals that are at "discounts of 50 percent to 70 percent off what they were paying on their mortgages," says Brenda F. Gerdes, who owns Management Specialists Inc. in Port St. Lucie, Fla.
There are 760,000 vacant condos and homes for sale nationwide beyond what the market could normally carry, in addition to a surplus of 350,000 vacant rental properties, according to Ron Witten, a Dallas-based housing analyst.
Declining employment and other signs of a possible recession don't bode well for landlords, since people who lose their jobs will resist paying higher rents or will move in with friends or family. Many displaced home owners forced out by foreclosures also are doubling up, says Mark Obrinsky, chief economist at the National Multi-Housing Council.
"Shadow inventory is coming out and competing against us for rentals," says Richard Campo, chief executive of Camden Property Trust, a Houston-based real-estate company that owns 70,000 apartments. That is weakening landlords' pricing power, he says, because home owners are less concerned about getting full market value.
Meanwhile, I have seen clients closing on the sale of their new homes with interest rates at 5.5%! Bottom line: there might never be a better time to buy than right now.
According to the National Association of Realtors, due to home owners trying to rent homes they can’t sell, rentals are abundant and prices are at bargain levels in areas hit hard by foreclosures.
Some home owners forced out by foreclosure are finding rental deals that are at "discounts of 50 percent to 70 percent off what they were paying on their mortgages," says Brenda F. Gerdes, who owns Management Specialists Inc. in Port St. Lucie, Fla.
There are 760,000 vacant condos and homes for sale nationwide beyond what the market could normally carry, in addition to a surplus of 350,000 vacant rental properties, according to Ron Witten, a Dallas-based housing analyst.
Declining employment and other signs of a possible recession don't bode well for landlords, since people who lose their jobs will resist paying higher rents or will move in with friends or family. Many displaced home owners forced out by foreclosures also are doubling up, says Mark Obrinsky, chief economist at the National Multi-Housing Council.
"Shadow inventory is coming out and competing against us for rentals," says Richard Campo, chief executive of Camden Property Trust, a Houston-based real-estate company that owns 70,000 apartments. That is weakening landlords' pricing power, he says, because home owners are less concerned about getting full market value.
Meanwhile, I have seen clients closing on the sale of their new homes with interest rates at 5.5%! Bottom line: there might never be a better time to buy than right now.
Tuesday, January 15, 2008
Weekly Twin Cities Real Estate Market Activity Report
Holiday Hangover?
For the second straight week, the distractions of a holiday placed the Twin Cities housing market in a holding pattern. While new listings jumped from their holiday-reduced nadir the week before, they remain 25.8 percent behind the same week last year. Newly signed purchase agreements (pending sales) increased as well, but to a slighter degree than listings. Once again, the vagaries of the holiday mean these numbers have little meaning relative to the underlying market conditions.
Here's this week's numbers.
For the second straight week, the distractions of a holiday placed the Twin Cities housing market in a holding pattern. While new listings jumped from their holiday-reduced nadir the week before, they remain 25.8 percent behind the same week last year. Newly signed purchase agreements (pending sales) increased as well, but to a slighter degree than listings. Once again, the vagaries of the holiday mean these numbers have little meaning relative to the underlying market conditions.
Here's this week's numbers.
Monday, January 07, 2008
Weekly Twin Cities Real Estate Market Activity Report
Weeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee!
Activity in the Twin Cities housing market saw a Valley Fair-esque drop for the week ending December 29, compared to the week before. Blame Santa Claus. New listings, pending sales and total inventory all fell at least several hundred units as Twin Citizens focused on celebrating the holiday season during the 12th snowiest December on record. Due to the unique weather and the vagaries of the Christmas holiday, little meaningful context can be gleaned from the decreased numbers.
However, we can utilize some updated figures for several key market measurements in this week's edition of the MAAR Weekly Market Activity Report. The Days on Market Before Sale increased to 158. Although this is higher than December 2006 by 4.6 percent, the figure will likely start to decrease as 2008 begins and the holiday season ends. The Percent of Original List Price Received at Sale fell slightly to 91.2 as buyers exerted their seasonal power during the slow December sales month. And our Supply-Demand Ratio for January fell to 10.46, which means there will be roughly 10.46 houses for every buyer in January.
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