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Case-Shiller Index – Twin Cities Declines 16.3% Compared to One Year Ago

January 27, 2009 By Leave a Comment

The Case-Shiller Index was published this morning and it shows that the Twin Cities home prices declined by 16.3% compared to one year ago.  Click here for today’s press release.  This was the same decline we saw last month.  (Click on any of the graphs to enlarge in a new window)
Case-Shiller Index Composite Graph November 2008 Data

Here’s the data table for the index:

Case-Shiller Index Composite Data Table November 2008 Data

Here is a graphical display of the 20 cities covered in the index:

Case-Shiller Index November 2008 Data

Twin Cities vs. the 20 City Composite.  The Twin Cities was down 16.3% in November 2008 while the 20 City composite was down 18.2%.
Case-Shiller Index Twin Cities vs 20 City Composite Index Nov 2008 Data

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Twin Cities Real Estate Market Update – Week of January 26, 2009 – Listings Down, Pending Sales Up

January 26, 2009 By Leave a Comment

The Minneapolis Area Association of Realtors just published this week’s report.  The trend is continuing with overall listings remaining lower by about 10% and pending sales continuing to outperform the same period one year ago.

Weekly Market Activity Report:

Now is the winter of our discontent here in the Twin Cities. With temperatures remaining stubbornly arctic, there is a very real possibility that we’ll stay below freezing for the entirety of January. After a steady rise for the first two weeks of 2009, the Twin Cities housing market is reflecting the cold, with new listings down by 18 percent when comparing the week ending January 17 to the same week last year. If new listings continue to taper off, the market’s supply balance can handle it, as we are still tilted generously in favor of the buyer.

For the same time period comparison, pending sales are up 13.2 percent over last year, and January 2009 has steadily outperformed January 2008. Total active listings trail last year, down by at least 10.5 percent. An ideal situation would be for listings overall to hold steady and for pending sales to keep rising…hopefully bringing temperatures up as well.

Weekly Market Activity Report

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U.S. Housing Starts at All time Low

January 22, 2009 By Leave a Comment

The builders or the Commerce Department have been keeping records on new home construction since 1959.  The data has never been worse than what was reported today for new housing starts.

Calculated Risk has an excellent chart of the recent data.

I’m pleased to see this as the more this plunges and stays low, the increased likelihood we’re closer to the bottom.  It would be nice to see U.S. housing starts stay under 500,000 for several months.  There is too much existing and new construction inventory that must be absorbed first.

Given the banks are leading the way in activity and pricing with their REO properties that they must sell, the builders have been trying to compete with the banks which is not good for their pricing.  Then of course, you have 70% of the rest of the market which consists of traditional home sellers.  They are having a very difficult time competing with both these forces.

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More Government Regulation of Appraisals

January 19, 2009 By 1 Comment

The government just issued new guidelines for appraisers and mortgage brokers.  I don’t see this being so much an issue with purchases as I do with refi’s.  Nonetheless, I have seen appraisers getting increasingly conservative on their numbers.  Even if you end up stealing a home and you know there’s a ton of equity in the property, the initial appraisal for that loan is likely to come back very skinny…i.e. very close to your purchase price.

For more information on the new regulations, check out this CNN Money article.  The best part of the article is this quote:

The guidelines prohibit lenders from coercing, extorting, colluding with, intimidating or bribing appraisers into making inaccurate appraisals.

I’m amazed we’ll be able to get anything sold without the constant coercing, extorting, colluding, intimidating and bribing.  So much for honest work!

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Plymouth, MN Home Sales 2008: Tax Values Are 2.5% Higher Than Sold Price

January 19, 2009 By Leave a Comment

I ran this report about a month ago and didn’t get around to publishing it.  I was curious to see if the Hennepin County market values were inline with where properties were selling these days.  During the boom, the counties were always behind the curve in trying to keep up with market values.  Now that the market is in decline, we see again that the county’s values are not quite in alignment with the market.

I pulled tax data from the city of Plymouth, MN for all sales in 2008 up through December 15, 2008 when I ran my search.  I eliminated all those sales of new homes and townhomes where they might show an estimated market value of $60,000 (lot value) but the home sold for $260,000.   I came up with 686 sales that I could compare the sold price to the Hennepin County Estimated Market Value for 2008.  It turns out, on average, that the Hennepin County Estimated Market Value was 2.5% higher than the actual sold price.

Every property is going to be different, but on the aggregate, the county tax values were too high in 2008 compared to actual market value.  Below is a graph depicting the numbers.  (Click on it to enlarge it in a new window.).

Plymouth MN Tax Values versus Sold Prices 2008

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Merrill Lynch on the Economy and Housing

January 18, 2009 By Leave a Comment

I found this posting of a Merrill Lynch economic analysis that had many excellent data points and insights.  It’s still a grim outlook for housing across the country.  One of the points he makes is that there are still too many new homes for sale by builders.  I would agree.  While they have slowed down their production, their sales have fallen faster than their production cuts.

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Foreclosures Increased by 81% in 2008 According to RealtyTrac

January 15, 2009 By Leave a Comment

RealtyTrac just came out with its 2008 totals for foreclosures across the country and they show the number of foreclosures are up 81% vs. 2007.  For Minnesota, we were up only 75% to a very reasonable number of about 20,000 properties.  Here’s the press release.  Scroll through it as there’s a very interest table with state by state information on foreclosures.  it’s very helpful and will provide some insights.  At least we’re not Ohio!

Foreclosure

Bank Owned

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Twin Cities Metro Home Sales Driven by Foreclosures – Star Tribune

January 15, 2009 By Leave a Comment

The Star Tribune had this front page story in the paper today as it discussed the latest results published by the boards of Realtors in the metro concerning the housing stats for 2008.

I have said for some time that there is a lot of interest in foreclosures and distressed sales in general.  That continues to drive the marketplace.

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Plymouth, MN 2008 Distressed Sales Up 164%

January 15, 2009 By Leave a Comment

The Minneapolis Area Association of Realtors just finished up the statistics for 2008.  Lender mediated sales, or distressed sales, increased 164% in 2008 over 2007.   In 2008, there were 790 overall sales and 95 of them were lender mediated.  To view the Plymouth statistics and all Twin Cities communities, the Star Tribune published that data here today.

The four boards of Realtors released this press release concerned the state of the Twin Cities housing market as they reflect back on 2008.

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Foreclosures, Short Sales and Bankruptcy…How They Affect Your Credit

January 14, 2009 By Leave a Comment

Many people ask me how foreclosures, short sales and bankruptcy affect their credit.  Obviously, none of these are pleasant situations but they do differ in their impact.

There’s not a lot of hard data, but from talking to various people in the industry, it looks like any one of these situations will cause you to lose 200-300 points immediately on your credit score.  So if your score is 720 all of a sudden it’s in the mid 400′s.   Getting credit will be very expensive.

One of the biggest differences between these three situations is the way Fannie Mae deals with them on their underwriting guidelines.  From what I’ve been able to research, Fannie Mae revised its guidelines a few months ago to make it a little more appealing for people to do short sales rather than let their properties go all the way through the foreclosure process and get turned over to the bank as an REO property (real estate owned).

Here are the guidelines as I understand them today.   The years noted are the number of years someone must wait before they would be able to get a mortgage again that conformed to Fannie Mae’s underwriting guidelines.  (Of course, this is subject to change for the better or the worse.  Given the government’s massive role in the housing market, this does seem likely to change again in the future).

  • Short Sales: 2 years
  • Deed in-lieu of foreclosure: 4 years
  • Foreclosure: 5 years
  • Bankruptcy: 4-7+ years

Ross Hair has an excellent breakdown of the new guidelines.

CNBC columnist, Diana Olick, published this article recently entitled, “What is worse – personal bankruptcy or foreclosure.”  If you are dealing with any of the issues above, you’ll want to read Ms. Olick’s article.  It’s very informative.

Before considering any of these options you may want to consult with an attorney.  Of course realize if you’re consulting with a bankruptcy attorney they may well recommend that you file bankruptcy.

Information presented in this blog posting are for information purposes only.  I cannot provide legal advice as I am not a licensed attorney.

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