Case-Schiller: Twin Cities Home Prices Down 13.8%

 
Standard & Poors has released the August 08 print of the Case-Schiller Home Price Index.  We pulled the graphic above to highlight what's happening in Minneapolis/St. Paul.

Click the graphic to make it bigger, or take our word that the average home price in the Twin Cities for August 2008 was 13.8% lower than August 2007. 

Though prices continue to slip, Teresa Boardman points out that (unlike last year) the market is slowly  moving in the right direction - toward price stability:

Teresa elaborates on the chart above:

"As the lines get closer to each other the supply of homes and the demand will be more balanced and theoretically home prices will stabilize. Last year the number of homes on the market went way up.  Supply and demand were out of balance because while listings were going up, sales were going down.  This year the inventory has been slowly decreasing all year."

10/28/08 at 09:44 AM Permalink | Comments (1) | TrackBack (0)
Filed Under: Banking Bailout, Blind Item, Case-Schiller Home Price Index, Market Stats, Minneapolis, Reports & Research, St. Paul

Report: Lender-Mediated Homes 34.5% of Twin Cities Sales

Please amuse yourselves be geeking out on the updated Foreclosures and Short Sales in the Twin Cities Housing Market report (pdf) from the Minneapolis Area Association of Realtors.  Lots of great data and insight, and here's one graphic that stuck out (click to biggify):

Lender-Mediated of course being the catch-all phrase for short sales, foreclosures, et al.

Also, don't confuse this:  34.5% of sales are lender mediated.  That does not mean that 34.5% of homes in the Twin Cities are in some stage of foreclosure.

Despite the fact that every media outlet likes to shout the F Word, foreclosures, short sales, and the like remain a very small percentage of overall housing stock - perhaps 1-3%.
PDF: Foreclosures and Short Sales in the TC Market [MAAR]

10/17/08 at 01:39 PM Permalink | Comments (0) | TrackBack (0)
Filed Under: Foreclosures, Reports & Research, Short Sales, Twin Cities

Making the Grade: Twin Cities Housing Market Gets a "C"

If you haven't noticed, discussion of the housing market has been relentlessly focused on price (average sales price, median sales price,) price direction, and units.

And for good reason - they are useful and telling numbers. But price movements alone do not tell the whole story. particularly if we are talking about the overall health of our real estate market, and especially it's long term prospects for recovery. 

In that case, the focus on price/units as the sole measure of the housing market is a little like diagnosing a patient with a influenza as terminally ill because they've spiked a fever.

Which is why we were pleased to see this piece from Finance & Commerce's Burl Gilyard on a recently released housing market study:

The new “Homeowners’ Market Fundamentals Index,” from Montana-based Redfish Emerging Markets LLC, ranks 185 U.S. metro areas, and the Twin Cities metro area comes in at an ignoble 108th place.

Mark McGlothlin, CEO of Redfish, noting that Minneapolis-St. Paul still gets a solid (if uninspiring) “C” grade.

Though the grade doesn't put us on any sort of honor roll, we do appreciate the study's attempt to look forward and weigh factors beyond simple price/unit metrics:

The Redfish rating system weighs five factors: population demographics, job growth, local economic development, single family market “metrics” and the health of the rental market.

McGlothlin said that Minneapolis and St. Paul were hurt in the rankings by slowing population growth, a lagging job outlook and the current supply of homes and condos available for sale on the market.

“I tell you what hurts Minneapolis the most … jobs,” McGlothlin said. “Job growth creates population growth, which drives housing demand.”

You can find the full study, and more information on it's methodology right here:
Homeowners' Market Fundamentals Index [Redfish Emerging Markets]

10/15/08 at 03:48 PM Permalink | Comments (0) | TrackBack (0)
Filed Under: Market Stats, Reports & Research

All Real Estate Is Local: Best and Worst Zip Codes

Felix Salmon has up a great little graphic (via Jake at Econompic Data) based on a Businessweek comparison of the best and worst performing zip codes in major metropolitan areas.

A very simple way of pressing home the point that despite the general negativity in the real estate market, some areas continue to appreciate, (and these areas tend to be of the long established and higher-priced ilk.)

In the Twin Cities, North Oaks nabbed the top spot, marking 15% appreciation.  South Minneapolis's 55409 (basically the Kingield neighborhood and other areas east of Uptown near 35W) zip code saw a 24% drop.

08/04/08 at 10:54 AM Permalink | Comments (0) | TrackBack (0)
Filed Under: Market Stats, Minneapolis, Reports & Research, Twin Cities

Case Schiller Says: Twin Cities Market Still Contracting

No surprise here, as the S&P/Case Schiller Home Price Index shows the continuing unwind of our local real estate market.  Median sales prices for March (year-over-year) were down 14.1%, in near lock-step with the reported national average of 14.4%.

Bloomberg reports the most useful summary, which can be applied to our market, and nearly all others:

"There is excess supply, weakening demand, prices are falling and will continue to fall,'' said Kevin Logan, senior market economist at Dresdner Kleinwort in New York. "Housing sales are still trending lower.''

We'd only add that demand in many quarters is not so much weakening as it is being curtailed by tighter lending standards and those that can't sell their current home (at a loss) to enter the market as buyers.

05/27/08 at 01:52 PM Permalink | Comments (3) | TrackBack (0)
Filed Under: Market Stats, Minneapolis, Reports & Research, Twin Cities

Foreclosures: Impact on Real Estate Market May Not be as Severe as Expected

We're talking about foreclosures and short-sales folks, or, as a new report from the Minneapolis Area Association of Realtors terms it: Lender-Mediated Sales.

Jeff Allen, research director at the MAAR and Aaron Dickinson, Edina Realty agent (and blogger) are responsible for this tight little report, entitled "Foreclosures and Short Sales in the Twin Cities Market" which gets to the heart of some questions that have been on a lot of minds lately. 

Chief among them: Just how much of the current market activity is foreclosure/short sale related, and what are the broader impacts?

The report itself confirms a fact that many of us tracking the issue anecdotally have suspected: Almost 30% of closed sales (Q1 2008 - see graphic above) are/were in some stage of foreclosure or other "lender-mediated" status, such as a short sale.

One surprising data point gleaned by Jeff and Aaron was the fact that there is a fairly stark dichotomy between lender-mediated and traditional real estate activity in our market.  Check out this graphic:

The key takeaway from this is that Median sales prices outside the universe of lender-mediated properties have only deteriorated by 3.9% over the last year.  One possible conclusion to be drawn from this is that the rising tide of foreclosures and short sales lender-mediated listings and sales are not putting as much downward pressure on prices of traditionally marketed properties as we would have imagined, and has been reported.

This obvious good news is also seasoned by this fact, from the report:

The actual number of traditional seller new listings has fallen by 27.4 percent over the last two years...So clearly, homeowners are holding steady in their current residences with greater frequency and home builders are producing far less new inventory.

In other words, many sellers, sensing a bear of a market, are simply opting out, while those that are selling, aren't taking nearly the bath that one would expect.

Though it is still early on, and we have a lot of ground to cover before the real estate contraction is over, this report presents a far more optimistic view of the state of our housing market than we, and many others, would have expected. 

Yes, prices are falling dramatically in the aggregate, but the bulk of the carnage is occuring in the lender-mediated market, and the traditional market is holding up rather well, all things considered.

Anyway, go read the report - too much good stuff to list it all here - and kudos to Jeff and Aaron for putting this together.   

05/06/08 at 08:45 AM Permalink | Comments (14) | TrackBack (0)
Filed Under: Foreclosures, Market Stats, Reports & Research, Short Sales, Twin Cities

Infoporn for the Real Estate Data Junkie

The 2007 Residential Real Estate Activity Report, from the Minneapolis Area Association of Realtors:

Mark it, dude. 2007 will go down as one of the most interesting years in the history of residential real estate.
                               - Jeff Allen, MAAR Research Manager

Though 2007 can definitely be characterized as an interesting year, our feeling is that by the end of 2008, we'll be looking back at 2007 as a pretty good year, relatively speaking.  Here's why:

It's all about supply right now.  There is simply too much, and too much to come, and with some estimates showing upwards of 35% of existing for-sale inventory in some stage of foreclosure, we find it hard to imagine the market achieving anything resembling price stability in 2008.

Also worth noting, if you haven't the stamina to wade through the entire report, is that despite the swoon we've seen since 2006, total appreciation since 2001 has still been fairly robust.  Though some may take that as another sign that we have further to fall, these figures are only slightly higher than the historical average annual appreciation rate of 5-6%.

02/22/08 at 08:35 AM Permalink | Comments (7) | TrackBack (0)
Filed Under: Market Stats, Reports & Research, Twin Cities

PMI Risk Index: 19% Chance That Twin Cities Home Prices Will be Lower in Two Years

The above mentioned graphic and stats come from the folks at PMI, who publish the US Market Risk index (link - PDF!), which purports to tell us which markets are at greatest risk for price declines.

How do they do this?  By comparing past historical data and trends in house price appreciation, affordability, housing supply, and foreclosure rates to our current situation, of course. 

Still lost?  Basically, it works like this.  Anywhere the aforementioned factors deviate from historic norms, a market is assigned a risk factor according to the severity of the deviation (the larger the deviaiton from past history, the more likely things will come back to earth, and the greater risk of decline.) Add 'em all up, weight them for impact, wash, rinse, repeat, and you get the US Market Risk Index, which assigns each major statistical area a percentage between 0 and 100 that describes their risk of housing declines over the next two years.

Which brings us to the Twin Cities.  As suggested by the graphic above, and in the report (link- PDF!) - the Twin Cities have a 19% chance of seeing price declines over the next 2 years.  That also means there is an 81% chance that we won't see price declines (glass half full! glass half full!)

With the exception of those sitting on the sidelines rooting for further price declines, I think most people would take those odds right now without missing a beat.  In fact, it's almost tempting to call this data a sign of stability.

How-ev-er, since we have a degree in nothing whatsoever to do with economics or statistical analysis, it's worth pointing out two factors that the risk index does not adjust for, that may add to the downside risks.

First, and most obvious, is the credit crunch.  The recent housing runup was based on the largest expansion of housing credit in the history of mankind.  The unwinding of the mortgage credit bubble will put pressure on demand for housing that this study does not seem to account for in any way.  We expect lending guidelines to tighten further throughout 2008, adding to these pressures. Sure, increases in affordability as prices fall may help, but we have a long way to go before simple price drops give back what what has already been taken away by tighter credit standards.  And did we mention things will get tighter?

The second factor is foreclosures, about which the study has this to say:

In today’s housing market changes in foreclosure rates are a leading indicator of changes in housing supply and provide additional insight into the direction ofhouse price movements. We would expect that house prices would be negatively affected by a rise in foreclosed properties in an area.

So what about our foreclosure rate?  A quick search of the Hennepin county website shows that in the first 15 days of this year, there have been 338 (!) sherriff's sales, on pace for 7 HUNDRED (!!)foreclosures in Hennepin County.  In January.  In ALL of January last year there were 218.   

It seems that foreclosures in MN are nowhere near peaking, are excacerbated by price declines, and we are just now getting into the reset periods for many of the worst sub-prime ARM's, with most of the ALT-A, Prime, and Option ARM resets forthcoming.

[Quick Aside: After all the wrangling about delinquent payments, potential short sales, etc. etc., the Sheriff sale is the first big step in a foreclosure, after which there is a redemption period of (usually) 6 months during which the owner can make good, after which the property can be re-sold by the "buyer" - usually the lender that held the mortgage.]

It will take at least 6 months before the properties being sold at foreclosure auction today are on the market, and at least another 3-6 months to actually sell and close.  This will put additional downward pressure on prices, especially in those areas hit hardest by foreclosure.

By not factoring in the credit crunch, and perhaps underestimating the impact of foreclosures on price pressure, we think this study underestimates the risk of further price declines in our market, though this is one case where we'd be very happy to be wrong. 
Winter 2008 Economic and Real Estate Trends Report [The PMI Group]

01/15/08 at 03:15 PM Permalink | Comments (0) | TrackBack (0)
Filed Under: Economy, Foreclosures, Market Stats, Reports & Research, Twin Cities

Getting Granular: Finding Some Positives in the Monthy Real Estate Data Dump

It's that time of the month again - When all the local realtor orgs disgorge their housing stats from the previous month, and the media covers the numbers.

The data, as expected, paints a fairly bleak picture for our housing market:  YOY Sales down 19%, Median Price Down 5.1%, and 13 homes for every buyer.  The lone bright spot in the face of declining prices:  Affordability is up. 

But before you get all negative and write off the housing market entirely, consider this:  In the same way that national real estate metrics don't necessarily give us an accurate rendering of our local market, the Twin Cities Metropolitan stats don't necessarily tell us much about prices in individual cities, suburbs, and the neighborhoods within.  In other words, in order to really asses the health of your neighborhood, we need to get granular.

Which brings us to one of our favorite (and under appreciated) reports published by the MAAR, called The 100 125, which breaks down the pricing trends in 125 individual communites.  In some cases, a closer look at these numbers will surprise you. In a good way.

For instance, here's a breakdown of average sales price in Minneapolis, by neighborhood:

Click to Biggify

As you can see, despite the overall decline, there are still pockets of decent appreciation, which is timely confirmation of the fact that despite the big-picture housing woes, you aren't necessarily signing up for financial ruin if you buy in this market.  There are good deals out there, and real estate is appreciating in some areas (and people accuse us of being all doom and gloom around here.  They do!)

So readers, lets get granular.  Check out the report, hit the comments, and let us know how your 'hood (or the hood you aspire to) is doing.

12/13/07 at 11:43 AM Permalink | Comments (6) | TrackBack (0)
Filed Under: Industry News, Market Stats, Minneapolis, Reports & Research, St. Paul, Twin Cities

Graphic: Prime vs. Subprime Late Payments

Just in case you've been living under a rock and have some lingering doubts about how poorly sub-prime home loans have been performing, and how utterly, insanely, lax lending standards had become in the sub-prime space, take a look at the graph at right from the WSJ.

That is one wicked looking curve, that has gone vertical, and shows no signs of stopping.  Ugly Stuff.

That said, we did find the performance of prime loans (you know, the ones made to people who actually had some prayer of repaying) encouraging.  Apparently well within historical norms.

In other words, everyone knows sub-prime is junk, but if prime delinquencies start to spike dramatically, look out.  Then we will have an actual housing crisis on our hands.

11/19/07 at 02:10 PM Permalink | Comments (2) | TrackBack (0)
Filed Under: Credit, Industry News, Reports & Research, Sub-Prime