The Minneapolis Area Association of Realtors just published data showing the lowest level of foreclosures and short sales in the Twin Cities since 2007. This is certainly good news for home sellers as the pricing pressure has been relieved. In some ways it’s good for buyers too although they will be paying higher prices. Why might it be good for buyers? While buyers might always be worried about losing money, with an improving marketing and lower inventory of short sales and foreclosures, that worry is not as big as it once was not that many years ago.
If you have not discovered this tool yet offered by the Minneapolis Area Association of Realtors and powered by 10K Research, it’s a must if you want to stay on top of the statistics for your particular city. The reports are generated every month usually around the 10th or so of each month.
The Minneapolis Area Local Market Updates for over 200 communities. You’ll find:
- Median home sales prices
- Average home sales prices
- New listings
- Number of closed sales
- Days on market until sale
- Final sales price as a percentage of original list price
Where are home prices headed? Fiserv Case-Shiller has come out with a housing market forecast for the next two year for 20 major metropolitan areas in the U.S. The forecast period is for March 2011-March 2012 and then March 2011 – March 2013. Some markets are still expecting big drops in home prices such as Miami, but other are forecasted to see significant price appreciation including San Francisco +8.7%, Las Vegas +8.10% and Portland +8.8%.
Locally, the Minneapolis market is forecasted to remain flat with a -.7% price depreciation.Home prices in 20 major cities. Some cities are expected to bounce back faster than others. Here’s how home prices are faring in some of the nation’s major markets — and where Fiserve Case-Shiller expects them to head in the upcoming year.
Table below is from CNN Money. The source for the data is Fiserv Case-Shiller.
|City ▾||Prices March, 2011 – March, 2012||Forecast March, 2012 – March, 2014|
|Index of 20 cities||-0.80%||1.70%|
In the Twin Cities we have been seeing signs of dwindling housing inventory for a year now. In most micro markets, inventory is down 20-30%. As that continues, it will inevitably put pressure on pricing. I don’t think anyone’s expecting a sharp rise in home prices, but it certainly will help the situation as it should minimize the price declines that we have gotten used to over the past 5-6 years.
Craig Kamman has a very good synopsis of some recent reports on inventory and home prices. There does seem to be some hope that prices might be up by 5-10% over the next 24 months. Every market is different of course.
This isn’t a pretty way to start out a Saturday morning, but I had to do some analysis on St. Louis Park, MN and I thought I’d share the very graphic destruction in home price values in “The Park.”
Median home prices peaked at around $235,000 in St. Louis Park during the top of the market and they are now around $182,500. That’s a decline of 22.3% in home values during the past 4-5 years.
- Orono, MN Median Home Prices Decline From $800,000 to $525,000 (johnmurphyreports.com)
- Understanding Agency (Who Represents Whom in a Real Estate Transaction) it’s Important, Overlooked and Misunderstood (iloanminnesota.com)
- The New Agency Laws in Real Estate – Understanding Dual Agency as a Home Buyer or Home Seller (johnmurphyreports.com)
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)
For additional commentary on the latest Case-Shiller Home Price Index you may want to read the post at Calculated Risk.
- Case Shiller: What Housing Bottom? (ritholtz.com)
- Local Home Prices Outpaced by Inflation since 2000 (seattlebubble.com)
- Home prices fell in December in most US cities (tarpon.wordpress.com)
Wall Street investors are betting that the worst is either behind us in the U.S. housing market or the downsize risk is at least accounted for and discounted with the cheap price of MBS today according to the New York Times.
If you recall Mortgage Backed Securities were all the rage in the investment community leading up to the housing crash. They were then shed like the plagued and the Federal Reserve has been one of the only significant buyers of MBS in the past couple of years. Now prices are up 15% and appear like they will continue to rise. I suspect they’ll continue to climb for the next couple of years as the housing market goes in to full recovery mode and the Federal Reserve can start to unload the approximate $1-$2 Trillion it holds in MBS.
The money interests are now betting that we’ve seen a turn in the housing market. Please don’t be confused with higher home prices. I think we’ll continue to see overall home price declines in 2012. It’s been my sense that we’ll start to see a consistent rise in home prices by the spring of 2013 but by then investments in housing will be significantly higher once the printed numbers show house price appreciation.
- Economists: Job Growth Won’t Deter Fed From Another Massive Stimulus (huffingtonpost.com)
- US MORTGAGE MEMO: Fed Buys $6.25B Agency MBS In Week Feb. 8 (forexlive.com)
- Fed Officials Push For More Aggressively Helping Housing Market (huffingtonpost.com)
- Home-Price Scorecard Shows a Falling Market (blogs.wsj.com)
- Daily Reads: Operation Twist Is Twisted, Gross A Treasury Bull? (learnbonds.com)
Orono, MN Median home prices have fallen from approximately $800,000 in 2005 to $525,000 so far in 2012. Orono is home to many incredible homes and estates as you might imagine with a median home price of $800,000 at the peak. It has not been easy to sell homes lately in Orono.
Recently I was reviewing many different listings and it was incredible to see that many homes sold for 50-60% of their initial list price and that often took anywhere from 1-2 years to sell. Average market times to get a home under contract in Orono are about 275 right now.
(Click image to enlarge)
Chart: NorthstarMLS and 10K Research
During 2008, I recall the collapse in home prices. I could actually feel it on the street. Buyers were backing away and sellers started to drop their prices. Many did not move quickly enough with their price reductions and suffered even great losses because of their unwillingness to reduce quickly and significantly. I was trying to sell someone’s home in Orono during the drop and it was incredibly difficult. I was relieve of my duties as their Realtor and they hired a “superstar” Realtor who couldn’t get the job done and then they hired another big name Realtor who was also unable to get the job done…but price doesn’t matter, does it.
If you look closely at the chart above, the median home price for January 2012 is higher than January 2011. Perhaps that slight adjustment is the start of a true bottoming in home prices.
- Housing Inventory Down 22% Nationwide; Median Home Price Up 5% (bringyouhome.wordpress.com)
- Home Price Over Longer Time Periods (toddballenger.typepad.com)
- Plymouth MN – Median Incomes Rose by 6% and Home Prices Jumped 72% from 2000 to 2009 (johnmurphyreports.com)
Minneapolis Posts 5% Year over Year Decline in Home Prices – Case-Shiller Index Through November 2011
This past week the monthly Case-Shiller Home Price Index was released and the headlines are negative. 19 of the 20 metropolitan areas studied continued to decline through the month of November. Minneapolis has shown signs of improvement as I have expected for the past few months. While the price declines continue – down 5% year over year through November 2011, this pace of the declines have been slowing markedly since early in 2011 when we were posting 10-11% year over year declines.
It remains my expectation that in the Minneapolis area the Case-Shiller Index will start to show price increases for the Minneapolis area. At this pace, that might not occur until we see the data from the second half of 2012.
Below is a table with all the cities studied in the Case-Shiller Index.
(Click on images to enlarge)
Table: S&P Indices: Case-Shiller
Chart: Calculated Risk Blog
The Case-Shiller Index used to get a lot of attention but I’m getting the sense the public is a little weary of more bad housing news. Perhaps everyone is finally desensitized to the news. I also think that these reports have been bad for years so people just come to expect it. It will be interesting to keep an eye on this to see if it does finally turn within the next 12-24 months.
- Case Shiller Index: Minneapolis / St Paul vs. Composite 20 – Jan 31st 2012 (craigkamman.com)
- Case-Shiller: Home Prices Drop by 3.4% Year over Year – Minneapolis Down 8.4% (johnmurphyreports.com)
- Case-Shiller Index: Minneapolis Housing Market Improves – Home Prices Declined by 7.4% Year Over Year (johnmurphyreports.com)
- Case-Shiller Index Says Detroit And Washington DC Lead The Market (clewismortgage.wordpress.com)
Another month has come and gone and the news remains about the same…home prices continue to decline on a year over year basis as the Case-Shiller 10 City and 20 City composites showed declines of 3.1% and 3.4% respectively year over year through October. Minneapolis continues to print an ugly number down 8.4% year over year. The good news, in my opinion only, is given the rather significant decline we’ve seen in Minneapolis over the past year in this index, by the spring and summer of 2012, we should start to see some more positive growth numbers.
The graphs below are from S&P/Case-Shiller release that was published on Tuesday this week.
Year over year home price percentage increase or decrease graphed by month.
(Click on images to enlarge)
Case-Shiller home price index by year:
20-City Composite broken down by individual cities. Atlanta and Las Vegas lead the declines with Minneapolis coming in a close third place.
Despite the continuing negative news on home prices there are signs that the Minneapolis area is turning the corner. We continue to see very strong pending home sales activity, up 10%. New construction, while way down, is also improving and the number of homes for sale is now at a multi-year low with housing inventory down over 25%. View the latest Housing Supply Overview report from the Minneapolis Association of Realtors.
- Survey: Mpls home prices among nation’s biggest monthly declines (ctebockhorst.wordpress.com)
- A Look at Case-Shiller by Metro Area (blogs.wsj.com)
- Case Shiller Index, Minneapolis / St Paul market overcorrecting? (craigkamman.com)