John Murphy Reports

I have been seeing more and more reports about the government working behind the scenes to figure out what to do about the burgeoning foreclosure problem in the U.S.  This story running on HousingWire.com gives a picture of some of the internal debates going on.

Other reports that I have read state that Sheila Bair, head of the FDIC, is proposing to use $40-$50 billion of the $700 Billion approved in the bank bailout to buy up or somehow support 2-3 million delinquent or soon to be delinquent homeowners.

I will be commenting on this often as the momentum gathers steam to do something for individual homeowners.  The one thing that is puzzling to me is that the market really is finally starting to work.  We’re seeing it in California, and we’re certainly seeing it here in the Twin Cities.  Yes, prices are down, but that’s exactly what  had to happen to get the buyers back in to the market.  That said, there are a lot smarter people than me who are trying to get this figured out.

The Minneapolis Area Association of Realtors published its latest report yesterday, and as I had noted this weekend when evaluating transactions in Hennepin County for September and October, we continue to see strength in the market despite the really awful economic news.

Below are Jeff Allen’s notes for the week:

Weekly Market Activity Report

The big letdown in home sales that many of us have expected following the recent drops in consumer confidence has yet to materialize in the Twin Cities housing market. For the week ending October 25, there were 602 pending sales, up 17.1 percent over the same week last year. Despite the uncertainties swirling in the general economy, home sales continue to post year-over-year increases every week. Lender-mediated sales continue to grow market share, as 51.1 percent of pending sales for the most recent reporting week were foreclosures or short sales, which should mean continued declines in median sales prices.

New listings for the same week were down 2.0 percent from the same week in 2007, and the total number of active homes for sale is down by 9.2 percent year-over-year.

This week’s edition of the MAAR Weekly Market Activity Report features an updated Supply-Demand Ratio for November of 10.72, which means that there will be approximately 10.72 houses for every buyer during the month of November. This is down 13.9 percent from November 2007′s figure of 12.45.

We have changed the format of pages 5 through 9 for our Weekly Market Activity Report. These changes are intended to make this report more focused and easier to use for trend-spotting. Please feel free to share your thoughts on these changes with us by emailing jeffa@mplsrealtor.com.

I do like the new format for pages 5-9.  It is easier to see the trending.

The housing correction started 2.5-3 years ago.   It was way ahead of the stock market.  Will the housing market eventually lead us to recovery?  Many pundits are saying that 2009 will continue to be another tough year for the housing market overall, but there are signs that the Twin Cities may well have seen the worst of the downturn already.

Pending sales remain healthy.  Inventory continues to fall.  The pace of the home price decline has slowed.

I will continue to monitor this information and post any relevant data points to help you in your own purchase and sale decisions.

Jim Buchta of the Star Tribune published this story about buyers taking advantage of the incredible market opportunity for some homes in the upper bracket.  He interviewed clients of mine who purchased a $1.7 million home near Gray’s Bay for $725,000.   To see additional details about that situation beyond what Jim Buchta reports, please read my blog entry from several weeks ago.

The upper bracket has many opportunities, but they are not quite as prevalent as we see in other areas of the market.  Right now, over $800,000, there are about 5% of the properties in distress – i.e. bank foreclosure, short sale, corporate owned, as-is, etc.

For anyone seeking to potentially purchase a luxury distress sale, I can set up a customized search for you.   Feel free to sign up at:

www.TCDistressLuxuryHomes.com

Hennepin County wants to build a massive wind turbine on land it owns in Medina.  The Medina City Council is set to vote on it tomorrow, Wednesday, November 5, 2008.

It seems virtually no one knew about this until late last week when an active citizen mailed out letters to alert Medina residents.  Laure Blake of the Star Tribune picked up the story today.  Click here to read the article.

The owner of the Mobil gas station at County Road 116 and Highway 55 has this large 4′x8′ sign that can be seen by thousands each day as they drive by on Highway 55.

I have received a few e-mails from people trying to organize a resistence to this project.  It’s unclear how the city council will vote but they are expected to take it up tomorrow night – after the elections on Tuesday, of course.