Real Estate. Economics. Business
The Case Schiller Index showed the Twin Cities down 4.5% Y-O-Y. They have posted the pod cast of the 45 press conference they had earlier this week. In addition, the Powerpoint slides also were posted and they had some very interesting slides, including the two listed below.
What’s even more interesting is to see the dramatic rise in home prices over the past few years compared to the other items studied. The rise in prices can’t be justified because of the rise in construction costs.
Trulia has been mentioned here before. Here’s a look at their newest real estate guide for the City of Plymouth, MN. It’s pretty slick how it pulls together so much demographic information on one page along with housing information.
Sites like Trulia are far ahead of the real estate brokers such as Edina Realty, Coldwell Banker and Re/Max.
As the government scrambles to develop a temporary fix for the subprime problem, I’d like to put it in perspective as to how big this problem might be.
According to the National Association of Realtors, the median price for a home in the U.S. was $207,800 based upon October sales data.
I divided $1 Trillion by $207,800. One Trillion is $1,000,000,000,000. Based upon this calculation, the subprime problem is the equivalent of 4,812,319 homes. This is a massive problem.
Subprime isn’t the only challenge facing the real estate market. Alt-A and prime mortgages are also seeing deterioration in their credit quality.
Subprime represents 19% of the overall mortage market. If you add in Alt-A, that represents 28% of the market.
The BATC just published their latest Hot Sheet on the state of the Twin Cities housing market.
There are a couple of interesting items to note…on page 2 of the pdf, it shows the trend in median home prices. As of October 2007, the median price in the Twin Cities has fallen to $220,000 down from about $237,000 in June 2006. That’s a 7% drop from the peak.
As noted earlier, the Case Schiller Index was published this past Tuesday and it showed that the Twin Cities was down 4.5% year over year for Q3.
Additionally, the Hot Sheet reports that there are 42,524 finished lots in the Twin Cities. I have contacted the company that provided this data to see if they are using the 7 county or 13 county metro. I ran an MLS report for lots for sale in the 7 county metro and there are only 2,482 listed.
One of the challenges sellers and their real estate agents face is the massive shadow inventory of homes for sale due to all the finished lots. Those are all potential homes for sale but they are not showing up on official inventory counts in the MLS.
