The Skinny

Seasonal price increases suggest early signs of market stabilization

Today MAAR released its monthly housing statistics press release. It said this and more:

The median price values of homes in the Twin Cities housing market are showing signs of seasonal increase. The April median sales price of $204,500 represents the second consecutive month of monthly upward price movement, on the heels of seven consecutive months of downward movement.

Despite the seasonal increase, the overall April median sales price of $204,500 is 7.9 percent behind April of last year. Lender-mediated properties, which include foreclosures and short sales, saw a decline of 9.6 percent for the same time period, while traditional, non-lender-mediated properties saw a decline of only 1.4 percent.

At the end of April there were 32,368 homes for sale, a mere 1.5 percent above this time last year, the lowest such year-over-year growth since MAAR began tracking the figures. Year-to-date, the number of new listings has fallen by 9.5 percent relative to the same time period in 2007. The number of year-to-date new listings which are not lender-mediated is decreasing at an even quicker pace—down by 24.0 percent from the same time period last year.

The number of signed purchase agreements (pending sales) in April was 4,208, down only 6.6 percent from last April. Since 2006, these year-over-year declines have typically been between 12 and 20 percent.

MAAR Research Report: "Foreclosures and Short Sales in the Twin Cities Housing Market"

Foreclosures and short sales have become topics of great interest over the past year. Providing data and statistics on the exact impact of these growing phenomena upon the regional housing market has, so far, proved challenging, with little yet produced on exactly how (and how much) these unfortunate events are affecting the buying and selling decisions of Twin Cities real estate consumers.

We're proud to announce the release of “Foreclosures and Short Sales in the Twin Cities Housing Market,” a special new research report that attempts to answer some of the more pressing questions surrounding lender-mediated properties. Inside you’ll find an analysis of current inventory, new listings, closed sales, sales prices, and the impact that the growth of lender-mediated properties is having on each trend.

The data was gathered and analyzed by MAAR staff in collaboration with Aaron Dickinson, REALTOR® member with Edina Realty, and utilizes a new data approach based upon information from the NorthstarMLS system.

To share comments or questions on this new report, please contact Jeff Allen, MAAR Research Manager, at jeffa@mplsrealtor.com or Aaron Dickinson at aarondickinson@edinarealty.com.

The 100 is Updated for March

Pop quiz, hot shot:

How many communities does "The 100"—our localized market tool—cover on a monthly basis?

Your answer might've been "100," which, logically, I suppose is an excellent educated guess. But you'd be so wrong. Your other answer might've been "125" since you probably remember that we added 25 areas to our cadre of area reports in late 2007, but again, you'd be so totally wrong.

The correct answer is....205! That's right, "The 100" is bigger and badder than ever. Dozens of new communities, a visual map interface and easy-to-access archived reports. It's so huge that we've had to actually change the name to "The 100+." Check the logo below for the shiny new look.

And click here to access the updated March figures for "The 100+."

Sellers relax inventory growth

Today MAAR released its monthly housing statistics press release. It said this and more:

The typical spring increase of new home listings for sale has not been as explosive as the record pace of the last few years.

The number of new listings in March was 8,523, a healthy 17.0 percent decline from last March. Year-to-date, the number of listings has fallen by 8.7 percent relative to the same time period in 2007. The net effect of this tepid spring showing is dramatically slowed growth in the total number of houses for sale. At the end of March, there were 30,652 homes for sale in the 13-county Twin Cities region, up only 4.7 percent from the year previous—the lowest such year-over-year increase since MAAR began tracking the figures.

Despite the attractive buying opportunities and signs that the peak of housing supply growth is behind us, home buyers remain surprisingly inactive. The number of signed purchase agreements (pending sales) in March was 3,632, down 14.6 percent from last March.

Those sellers who did keep their homes on the market—be they traditional sellers, builders or banks—continue to price their homes aggressively to stimulate activity. The March median sales price of $200,000 is 2.5 percent above last month but remains 9.5 percent below March 2007. The March percent of original asking price that sellers received at sale declined from 95.6 to 91.0 during the same time period.

How Do You Measure Home Values?

With both the local and national housing markets experiencing prolonged, downward pressure on home values for the first time since The Great Depression, everyone and their mother is understandably curious about just how much less their home is worth this year, if at all. So the dataheads and number-crunchers and economists who make it their business to understand the inner mechanics of the housing market are suddenly finding their work in high demand. To think, after all these years it's finally sexy to be able to explain the role of shifting supply and demand dynamics on price (thank God I actually paid attention in undergraduate-level Econ 101).

We're all collectively turn our eyes towards measurements of home values, trying to squeeze out any semblance of a realistic picture of how what is likely the largest asset in our personal wealth portfolios is fairing. We look at OFHEO Quarterly Appreciation figures, NAR Median Sales Price figures, Case-Schiller Index figures—whatever we can get our hands on. And while each tends to paint a relatively similar picture, they all seem to provide a different number.

Realistically, none of these methodologies is perfect—at least not yet. Each has their own inherent limitations. The Case-Schiller Index has started to receive a good deal of notoriety and, some believe, deservedly so, due to their focus upon comparing values of the same kind of house, year-over-year—rather then a marketwide median price comparison.

But there are some chinks in the Case-Schiller armor that are worth talking about. One of our very own members, Pat Paulson from Exit Lakes Realty, has posted some excellent thoughts on this very subject in a blog post called "The Case Against Case (Schiller)." Take a look at it by clicking here.

Video Killed the Radio Star II

More fun with visuals!

On January 16th, 2008 we helped put on a huge Residential Real Estate Summit, along with the three other Twin Cities REALTOR® associations and the Real Estate Communications Group. The event was a fascinating mix of people, with panels on a wide-ranging scope of subjects including market projections, new construction, lending law changes, generational dynamics, emerging markets and more.

Our own Chelsie Foty put together a quick and painless video recap of some of the event's best moments. Take a look here.

 

Buyers spring for falling home prices

The substantial corrective price declines first seen in January were further fleshed out in February, as the median sales price for the month of $195,060 is a decrease of 12.5 percent from the same month last year. There were 3,087 purchase agreements signed and 2,009 sales closed—down only 10.2 and 13.6 percent from last year, respectively. This is a lesser decline than seen in recent months.

The MAAR Housing Affordability Index (HAI) shot up eight points from last month to 157. That's the healthiest HAI figure since 2003. Additionally, the number of homes for sale continues to post record levels despite a drop-off in new listing supply. At the end of February, there were 29,842 homes for sale, which amounts to 8.72 homes for each buyer expected during the upcoming month.

A note to those scouting the market for rock-bottom prices: The decline in median sales price is just as much a function of what kinds of properties are being sold as it is a slashing of listing prices. According to MAAR's February Housing Supply Outlook, there recently has been a large increase in the sales of properties priced under $150,000, which does have the effect of skewing the overall median sales price downward. | READ THE FULL PRESS RELEASE

Video Killed the Radio Star

As some of you have probably noticed, we recently overhauled our entire website. This is something that most businesses do but once in a blue moon due to the time, effort and costs involved. Knowing that this was going to to be the website we're stuck with for some time—for better or worse—we tried to bring a keen eye towards all the interactive bells and whistles that we all expect our modern web-surfing experience to have.

Web video is one such bell or whistle that we've all come to know and love (except when it helps create phenomena like this). So, yes, we are dipping our toes in the video waters; carefully at first and likely with more confidence in the near future. You can take a look at our videos here. Chelsie Foty, our Member Relations staff representative, helped put together these clips.

The clip with the most relevance to The Skinny and our focus on market insight, is the "Intro to Market Info Tools" video, which provides a quick tutorial on our 5 different research tools—where to find them and how to use them to help answer the burning questions you might have.

Click here to view the video. Anything else you'd like us to make a video on? Let us know in the "Comments" section below.

P.S. The music being played is Les Savy Fav, "We'll Make A Lover of You" from the 2004 album Inches.

FHA mortgage limits increase to $365,000 in the Twin Cities Metro

HUD announced the new FHA mortgage limits created by the Fed's economic stimulus plan and the winner is...the Minneapolis–St. Paul metro area!

Why is this good news? FHA programs are now the best option for many buyers who fall short of meeting the downpayment and/or qualifying ratios required by conventional financing.

With the amount that can be borrowed using an FHA mortgage increasing from $271,050 to $365,000, an additional 25 percent of the homes currently on the market are candidates for FHA financing. This means more than 77 percent of homes currently for sale could be purchased using FHA. This important financing option brings additional buyers into the market who could not otherwise afford to purchase these homes.

More good news: A recent court ruling allows for home buyers to continue to use certain downpayment assistance programs when purchasing a home using an FHA mortgage.

Years ago, a large percentage of metro area home sales involved FHA financing. With the advent of alternate subprime conventional programs, FHA lost much of its market share. Unfortunately, we all know too well the problems created by some of the alternate subprime conventional programs.

FHA is not the irresponsible, overly exuberant mortgage program that some of the subprime programs proved to be. FHA has a long-proven track record of putting qualified buyers who were not eligible for traditional conventional mortgage programs into homes.

If you are not familiar with FHA financing, now is the time to learn. Talk with your broker and contact your mortgage specialist to learn what new options are available for your buyers. More information can also be obtained at www.fha.gov.

We encourage you to share your thoughts about the FHA loan limit increase and how you believe it could change your business. Please utilize the Comments link directly below this story to give us your feedback.

The RREAR is Here!

Hey! Look here!

Now that we've got your attention, here's the deal.

If you've at all paid attention to the research we put out, then you probably already know that one of our most popular research products is the Annual Residential Real Estate Activity Report, released every year around this time. Around these parts, we like to call it "The RREAR" cause like, you know, it's easier to say and sounds kinda funny and vagely dirty. Think about it phonetically and just try not to laugh.

Well, the 2007 RREAR is here. As per usual, it's a thorough annual reference guide that provides a detailed look at everything that happened in the Twin Cities housing market in 2007. And we mean everything. Just posted online on our website moments ago, the 2007 edition carries forward some of the exciting new traditions we started last year -- additional analysis, tables, charts and thematic maps all designed to go further in depth.

Over the coming weeks, we'll be posting some interesting info nuggets that we gleaned from this year's report. Keep your eyes open and check back.

In the meantime, feel free to comment below with your questions or comments regarding the report. Feel free to let us know what you think!

Click here to view the 2007 Residential Real Estate Activity Report (RREAR).