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.
There continues to be a dramatic decline in the number of short sales and foreclosures in the Twin Cities metro. For the most part listings, pending sales and closed sales are down anywhere from 25-45%. For the full detail, be sure to review the link at Short Sales and Foreclosures in the Twin Cities.
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
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.
No 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!
- Twin Cities Weekly Real Estate Market Update, week ending January 28 2012 (craigkamman.com)
- Las Vegas House sales up 12% YoY in January, Inventory off sharply (calculatedriskblog.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)
Check out the latest from the Minneapolis Area Association of Realtors with regard to Foreclosures and Short Sales in the Twin Cities. The big take aways are that inventory is falling in all segments – traditional sellers, foreclosures, and short sales.
- Twin Cities Weekly Real Estate Market Update for week ending Jan 7, 2012 (craigkamman.com)
- Twin Cities Shatters Record High Temp (lakemtka.wordpress.com)
The University of St. Thomas has published it’s latest study on the Twin Cities commercial real estate marketplace. The article from Twin Cities Business Monthly is that professionals are not as optimistic about the direction of commercial real estate and development over the coming year or two.
The study is only 2 years old so I don’t think you can gain a lot of knowledge on trends by looking at the data. That said, it is still a helpful barometer of what the guys on the street are thinking about the commercial real estate business.
It would be great to see that actually move to a quarterly survey rather than a semi-annual survey.
I just saw this come across my Twitter stream…there’s not a lot of information here but Finance & Commerce is reporting that Twin Cities home builder, Rottlund Homes, is going to shut its doors after being in business for 40 years. Rottlund has built thousands and thousands of homes in the Twin Cities. It will be interesting to hear more of the details.
It has been extremely difficult for all home builders not only in the Twin Cities, but also across the country. In the Twin Cities metro, the big national builders have moved in aggressively during the past 10 years and I suspect in this tight environment, that has made the operations even more challenging for Rottlund Homes.
When more details become available, I will provide an update.