Monday, March 30th, 2015

For Week Ending March 21, 2015

An increase in new home sales are in the spotlight, thanks to some recent figures by the Commerce Department, but one should be careful not to speculate too much about sales outpacing predicted numbers from the beginning of the year. Small sample sizes, seasonal adjustments and poor geographic weighting can have undesirable consequences on the reliability of national figures. This is why locally grown MLS data is often the best source for quality market-informed nourishment.

In the Twin Cities region, for the week ending March 21:

  • New Listings increased 22.1% to 1,821
  • Pending Sales increased 27.1% to 1,252
  • Inventory increased 1.7% to 13,869

For the month of February:

  • Median Sales Price increased 9.3% to $200,000
  • Days on Market increased 7.1% to 106
  • Percent of Original List Price Received increased 0.7% to 94.2%
  • Months Supply of Inventory increased 3.3% to 3.1

All comparisons are to 2014

Click here for the full Weekly Market Activity Report. From The Skinny Blog.

Posted in Weekly Report |
Monday, March 23rd, 2015

For Week Ending March 14, 2015

Have rents gone up enough to get renters to lean toward homeownership again? That’s the question of the moment. With mortgage rates remaining low, the time may be ripe for renters to invest in something beyond a 12-month lease as rental affordability is beginning to border on unaffordability.

In the Twin Cities region, for the week ending March 14:

  • New Listings increased 20.6% to 1,765
  • Pending Sales increased 14.3% to 1,040
  • Inventory increased 1.4% to 13,523

For the month of February:

  • Median Sales Price increased 9.3% to $200,000
  • Days on Market increased 7.1% to 106
  • Percent of Original List Price Received increased 0.7% to 94.2%
  • Months Supply of Inventory increased 3.3% to 3.1

All comparisons are to 2014

Click here for the full Weekly Market Activity Report. From The Skinny Blog.

Posted in Weekly Report |
Monday, March 23rd, 2015
By David Arbit on Friday, March 20th, 2015

As many have noted, one of the biggest changes to the Twin Cities and national housing markets was the sudden influx and subsequent absorption of distressed properties. “Distressed” simply refers to any new listing, active listing or closed sale where the lender either owns the property (foreclosure) or the property was sold for less than the outstanding amount owed on the mortgage (short sale).

As both the public and private sectors began laying off workers in conjunction with other cost-cutting efforts around 2008 and 2009, many households begrudgingly became single-wage households or worse. That generated a notable increase in mortgage delinquencies, which led to banks repossessing homes and selling them short.

As financial institutions began listing these distressed homes for sale, buyers began taking advantage of the great deals. Many of those buyers were—and, to a lesser extent, are—investors, though some were ordinary families and individuals taking advantage of a historic opportunity.

2015-03-20-14_51_47-Greenshot-310x238Due to a variety of factors ranging from rising home prices to the longest stretch of private job growth in decades, the share of market activity that can be categorized as either foreclosure or short sale is easing. In 2011, foreclosures and short sales together made up exactly 50.0% of all closed sales in the 13-county metropolitan area even though they comprised less than 42.0% of all new listings. This means they made up a larger share of the sales pie than the listing pie, signaling robust demand for these bargain properties.

Fast forward to 2014. Last year, only 12.2% of all new listings were in distress while the figure was 16.4% for closed sales. Those numbers mark a dramatic decrease in the prevalence of distressed listing and sales activity in the Twin Cities region. Most of the active listings (inventory) in this segment has been absorbed off the market and institutions are listing fewer and fewer of them.

So why should you care about any of this? Fair question. After all, foreclosure market share doesn’t exactly make for exciting backyard barbeque conversations, unless you’re a housing researcher (I swear I have friends that aren’t computers). But who doesn’t love talking about home prices? There never seems to be a shortage of speculation regarding where home prices might be heading next. Some think we’re in another bubble, others think we’re returning to historically typical levels of stable price appreciation.

Since prices seem to be the preferred market barometer of choice for most consumers (anyone heard of an absorption rate or even price per square foot?), it stands to reason that many consumers and real estate professionals alike would have a vested interest in better understanding what’s affecting home prices.

2015-03-20-14_50_07-Greenshot-310x215By far the biggest factor affecting home prices is the percentage of all sales that are distressed—i.e. the distressed sales rate. Coincidentally, that is exactly what’s shown in the blue trendline to the left. Also plotted here is the median sales price for the metro. This chart shows the nature and strength of the relationship between the distressed market share and home prices.

2015-03-20-14_37_11-Greenshot-702x589The nature of the relationship is an inverse one and the magnitude is quite strong. In other words, when distressed market share increases, home prices tend to fall and vice versa. And you can just about bet the farm on that one. For those who are wondering, the R-square between these two variables is 0.9425 and the relationship is statistically significant. This means that about 94.25% of the variation in home prices can be attributed to variability in distressed market share. If you had a 94.25% chance of success in betting big on a single stock or a poker hand or your favorite Canterbury horse, wouldn’t you?

Gazing into the proverbial crystal ball, expect distressed market activity to fall below 10.0% for closed sales and likely below 8.0% for new listings. But those are just prognostications. Ultimately, if you’re wondering where home prices are heading next, simply follow the percentage of all closed sales that are either foreclosures or short sales.

Wasn’t that fun? Until next time!

From The Skinny Blog.

Posted in The Skinny |
Thursday, March 19th, 2015

Where has the Twin Cities real estate market been and where is it heading? This monthly summary provides an overview of current trends and projections for future activity.

Posted in Monthly Skinny Video |
Monday, March 16th, 2015

For Week Ending March 7, 2015

Many residential real estate markets across the country and locally are in a fairly stable state of balance, causing most stories about housing to be conservative in nature with not much change to report. As the weather continues to warm up across the country, more sales are expected.

In the Twin Cities region, for the week ending March 7:

  • New Listings increased 31.7% to 1,915
  • Pending Sales increased 34.1% to 1,098
  • Inventory increased 0.3% to 13,018

For the month of February:

  • Median Sales Price increased 9.3% to $200,000
  • Days on Market increased 7.1% to 106
  • Percent of Original List Price Received increased 0.7% to 94.2%
  • Months Supply of Inventory increased 3.3% to 3.1

All comparisons are to 2014

Click here for the full Weekly Market Activity Report. From The Skinny Blog.

Posted in Weekly Report |

User Registration

Forgot Password?
Back To Login

Enter E-mail: