Zillow Is Now a Billion Dollar Company

Zillow just reached quite a milestone…they just reached $1 billion in market valuation.

 

 

 

 

Best Parade of Homes in 5 Years – Builders Association of the Twin Cities

Parade of Homes LogoNo doubt this was a phenomenal Parade of Homes for the Twin Cities new construction market.  According to the Builder Association of the Twin Cities, this was the best Parade since 2007.  It probably helps that the number of builders who were presenting their homes is down substantially since 2007, but the foot traffic really was excellent and the sales were well beyond expectations.  I recall at the top of the housing market that there were 1,100 to 1,200 homes that were being shown in the Parade of Homes.  If I’m not mistaken, I think this year the number was less than 400.  Those who have stuck it out are doing well!

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Case-Shiller Index: Minneapolis Shows Signs of Improvement But Home Prices Still Down

The latest Case-Shiller Home Price Index was released today and it seems to be a bit of a mixed bag of results for many cities.  However, in Minneapolis, home prices declined by 1.8% year over year.  Data was reported for the month of January 2012.  I have been saying for some time that as we started to move in to 2012 that the Minneapolis area would start to print much better numbers in the Case-Shiller Index.  It wasn’t that long ago and we were leading the nation for several months with the largest percentage of year over year declines.  That now appears to be behind us.

Overall for the 10 and 20 city composites, home prices declined year over year by 3.9% and 3.8% respectively.  Most housing analysts and the economists I read have generally been predicting that we’d see about another 5-6% decline in home prices this year.  Based upon activity I’m seeing in some markets, we may do better than that.

Atlanta now has the distinct honor of being the worst performing market in the county with home prices down by 14.8% year over year according to this report.

Detroit gets the honor of being the best performing market with home prices up…yes, up, 1.7% year over year.  I know that doesn’t sound like a lot, but that’s great news for the Detroit area which has extremely difficult the past several years.

Below is a table showing the scores for the 20 cities studied by the Case-Shiller Index.

(Click on Image to Enlarge)

Case-Shiller Jan 2012 Data Table Year Over Year Home Prices

 

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More and More Homes for Sale are HUD Homes – FHA Foreclosures – The Next Wave Starts Now

HUD logoHUD Homes…what comes to mind when you think about HUD homes?  I suspect HUD has been preparing for this for some time as it was about a year and a half ago that they updated and changed their web site to a store – it’s now called HUD Home Store.  Perhaps it’s not unlike a large scale retailer where they need a web store.  As far as I know, the back end is not run by Amazon however.  You know this is going to be huge if HUD starts showing up with portable kiosks or small retail outlets in every mall in the country :)

If you’ve been in the business a while or if you are an investor, HUD homes often are some of the worst, least desirable properties in the marketplace.  But they are often dirt cheap.  Well get ready for the next wave of foreclosures as these former FHA homes come to market as HUD homes.  Now it’s possible that the federal government will come up with some program where these don’t all hit the market…perhaps they sell them off in bulk to investors who will agree to turn these in to rentals.  The truth is, many of these HUD homes will be turned in to rentals anyway.

I do not have any insider information on this.  All I am doing is reading the tea leaves and when the vast majority of purchase mortgages (and an increasing number of refinancings) have been FHA mortgages, and with near 10% of FHA loans in serious delinquency…well the number of potential HUD homes starts to get rather large.

HUD Home Mold Warning Sign

HUD Home Mold Warning Sign

At this point I am unable to find the statistics that show how many mortgages were underwritten last year.  However, I found this very cool FHA infographic that is a must see!  The source on this is HUD:

  • 1,271,211 total number of FHA mortgages underwritten in 2011
  • 61.2% were purchases
  • 33.1% were refinancing
  • 75% were first time home buyers
    • 61% non-minority home buyers
    • 32% were minority home buyers
  • Average credit score: 698

In our market in the Twin Cities, if a home in being purchased that is under $300,000 to $325,000 it’s my experience that 2 out of 3 times that is going to be an FHA loan.  FHA only requires a 3.5% down payment so there’s not much of an equity cushion if indeed prices continue to slip.  The fact is that there have been a few million FHA mortgages written in the past four years while at the same time, home prices have continued to slide in nearly every market in America.  They are all underwater.

Will this be as big as the tsunami that started to hit in 2008…no, but it will be noticeable and if you’re an investor, the timing of these wave is going to be fantastic!  Recall even BusinessWeek could see this coming when they published the article “FHA-Backed Laons: The New Subprime” and that was back in 2008!

I will soon publish more information about how to buy a HUD home and what you need to do and what you need to be aware of as both an owner occupant and an investor.  If you would like to try to buy a HUD home, I am registered and can help you with that process…and it is a process.

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Case-Shiller Index: Minneapolis Home Prices Decline by 4.9% Year over Year through December 2011

While the headline number does not appear great being that the Minneapolis area again printed a negative home price average in the latest Case-Shiller Index, this is showing signs of continual monthly improvement over the past 6-8 months.  If you are a regular reader, then you know that for a while in 2011, Minneapolis was consistently one of the worst performing markets in the country as we were down 9-12% year over year.  However, those kinds of year over year negative prints are likely history.

Case-Shiller published its latest findings today on home prices.  Across America, home prices overall declined again by about 4% year over year.  The data was published for the month of December.  Minneapolis continues to perform slightly worse than the overall indices.

Below are some charts to provide a visual to the data released today.  All the charts are from S&P/Case-Shiller and McGraw-Hill Financial.

(Click on chart to enlarge the image)

Case-Shiller Dec 2012 2-28-12 Home Price Chart back to 2002

 

 

 

 

 

 

 

 

Case-Shiller Dec 2011 Annual Returns Chart

 

 

 

 

 

 

 

 

Case-Shiller Dec 2011 Home Price Table 2-28-12

 

 

 

 

 

 

 

 

For additional commentary on the latest Case-Shiller Home Price Index you may want to read the post at Calculated Risk.

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Warren Buffett and Donald Trump Pound The Table – IT’s TIME TO BUY HOUSES!

Warren Buffett speaking to a group of students...

Yes, home prices are continuing to fall according to the latest Case-Shiller Home Price Index which was released today, but if you listen to a couple of billionaire investors, you might want to step up and purchase a home.

Both Warren Buffett and Donald Trump are pounding the table saying now is the time to buy.  Buffett would like to own several hundred thousand rental homes across America and he may get his chance with some of the proposals that are rumbling around Washington right now.  Word is that Fannie Mae and Freddie Mac are preparing to do massive bulk sales of their REO investors to investors who will rent out the homes.  I’m sure Mr. Buffett will figure out a way how to participate in this.

Prices are falling but don’t be fooled in to thinking you will just wait to pick the bottom and then buy a home.  Inventory might be kind of slim when we get to that point.

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Minneapolis Convicted Sex Offender Released – Apparently Will Reside in Golden Valley

It’s been big news the past two weeks in the Minneapolis area concerning the release of a convicted child sex offender.  According to KSTP:

A man who molested 29 boys, using soda and snacks to lure some to his home, will soon become the first sex offender to walk out of Minnesota’s civil commitment program in more than a decade, a milestone for a program that has been criticized as a life sentence disguised as treatment.

Clarence Opheim’s upcoming move to a halfway house is raising concerns in a state where the handling of sex offenders has long been a politically charged issue. But with the program facing constitutional challenges, some say it’s time to begin releasing people who have made progress in treatment. “It would be simpler for the administration, for us, for society to just lock people up forever,” Gov. Mark Dayton said in an interview with The Associated Press earlier this month. “But it’s not legal, and I don’t even think it’s moral.”

Damascus Way Group Home in Golden Valley, MN is apparently where Clarence Opheim will be living now that he is a free man.  Note this may always be subject to change.

The reason I am publishing this story is that every time I go through the Agency Disclosure form with prospective buyers, sellers and renters, one of the areas that must be acknowledged on the form is the following:

State of Minnesota Agency Disclosure Sexual Predator Acknowledgement

 

The bottom of page two of the Agency Disclosure statement is seen below.  The initials above are to acknowledge that you have reviewed the item below.

State of Minnesota Agency Disclosure Page 2 Predatory Information

 

This information is being published because as an agent, I can’t tell you whether or not there is a sexual predatory in the area.  It is your responsibility to do your homework on this and the State of Minnesota requires that you acknowledge your role in researching this topic.  The State of Minnesota recommends that you visit the Department of Corrections web site for more information about the location and whereabouts of known sexual predators.

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More Help for Housing as Wells Fargo to Expand GSE-free Mortgage Lending

We are starting to see some early signs of the commercial banking sector finally start to move away from the Federal Government’s role in the mortgage market.  We have a very long way to go before we can say that the market is weened off of Fannie Mae and Freddie Mac.  At this point, Fannie, Freddie and FHA are the market.

Wells Fargo is the largest mortgage originator in the country so it’s a big deal that they are taking this step at establishing a business that provides GSE-free mortgages.  This move also appears to show that there may be a return to risk appetite from investors who are once again willing to invest in mortgage backed securities.  Although Wells Fargo hasn’t stated for sure if these GSE-free mortgages will be securitized and sold to investors, it may be something they look at down the road again.

Last week there was a story about Wall Street investors starting to step in to buy mortgage backed securities (MBS) again.

Many people ask if we are at the bottom of the housing market yet.  Who knows, but stories like Wells Fargo looking at providing GSE-free mortgages and Wall Street starting to invest in MBS again is different this time than it has been every spring since the housing market turned down 6 years ago.

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Existing Home Sales Jump to 1 1/2 Year High

The existing home sales report just came out from the National Association of Realtors for January 2012.  It shows that homes sales continue to pick up and the supply of homes for sale continues to decline.

National Survey Reveals New Normal – Consumer Expectations on Homeownership

American FamilyThis is an excellent detailed analysis of the state of the housing consumer when it comes to real estate and homeownership issues.  For those who like to study this kind of material, this is well worth your read.  For those of you who are investors, or thinking about becoming an investor, it certainly appears that there will be plenty of supply of tenants for the foreseeable future.  It’s been my belief since we housing crash which began in 2007 and then soon followed by the financial crash in 2008 that those events were so massive that they may have permanently changed the psyche of the country when it comes to home ownership.  That said, do I think we are headed to a 50% ownership society and 50% rentals?  No.  But we won’t ever see the 70% ownership numbers again in my lifetime and I would expect we’ll just continue to drift closer to 60/40.  While those numbers don’t look huge, they are indeed transformational for the industry, American society and culture.

New Custom HomeBig Builder is the industry news source for large national home builders.  The study is called, “Housing 360: Insights into Homeownership” where they surveyed 3,000 people and conducted six focus groups. They need to stay on top of the multi-billion dollar new home business and it’s very interesting to read their analysis and insight regarding today’s home consumer and what they are thinking. Apparently many are in the same boat as one gentleman was quoted as saying, “If I could get a full-time job with a decent salary, I’d buy a house.”

Some key highlights of the Housing 360 report:

  • 7 out of 10 think now is a good time to buy a home
  • Many who bought homes during the boom wish they hadn’t – (perhaps a little buyer’s remorse?)
  • 25% of survey respondents are underwater on their homes
  • 72% still believe it’s important to own their own home
  • 67% say that their current home is fine – general across the board apathy among potential home buyers
  • 47% are concerned that if they did sell in order to go buy a new home, would they get a fair price for their current home?
  • Of those surveyed who are renters, only 25% said their current home is fine, however, 45% of the renters said there is no urgency to move
  • Concerns are high about down payment expectations and whether or not they will even qualify for a mortgage

This is by far the most informative article I have read about the current state of potential home buyers and sellers.  The National Association of REALTORS publishes a report each year, but all too often that just seems to come off as too self serving.  This, on the other hand, is very insightful.  I highly recommend you read the article and for those who want the actual research report, please see Hanley Wood Housing 360: Insights into Homeownership.

On a more local note, while this report details what the home builders must do to attract new construction home buyers, clearly the home builders operating in Plymouth, Maple Grove, and Medina Minnesota are doing an outstanding job given the recent explosion in construction and sales activity. To stay on top of what’s happening locally in the northwestern suburbs of Minneapolis, be sure to check out Northwest Plymouth where I continue to chronicle the rebirth of the Twin Cities home construction market.

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