The Skinny

A Thank You To and Introduction of RCU

MAAR's market reporting services have been around for awhile now, but it wasn't until the last two years that we'd like to think we hit our stride.

That's when things like "The 100," the Monthly Skinny Videos, the Skinny Blog (you're already here, dummy), the Lender-Mediated Report, the Housing Supply Outlook and much more started being produced and distributed with the intent of giving the Twin Cities community the most complete and detailed picture of local housing market conditions around.

To make this type of new development and innovation possible, MAAR has had to direct more resources towards market research than ever before, as one would expect. In other words, it ain't cheap. It's worth it, since our market research ranks as the top service behind MLS by our members in a recent survey, but now we've got a new friend jumping in to help sponsor the work.

MAAR's market research services—from top to bottom—are now sponsored by Royal Credit Union (RCU). RCU has been around Western Wisconsin for many years (decades even) but now have entered the wonderful world of the Twin Cities through their recent merger with the venerable Twin Cities REALTORS® credit union, formerly known as Real Financial. They're an ideal sponsor due to their new ties to the people we work for (REALTORS®, dummy) and the cities we work in.

You'll now see their logo and name on the Today in the Market section of our website, the sidebar of this here blog, the footer of our market reports and a few other discreet spots.

Please join us in welcoming RCU to the fold and thanking them for their ongoing support of MAAR's market reporting services.

What's the Better Seller Strategy?

We sent out a one question survey a few weeks back to our 8,000+ members:

Q: What's the better seller strategy for properties that are having a tough time selling?

1) Price reductions.

2) Financial incentives to the buyer (seller pays closing costs, throws in sweet flatscreen).

We had more than 240 respondents, which is pretty phenomenal for this sort of thing. Thank you for that. Respondents were asked to choose between "Price reductions" and "Financial incentives to buyer," and an "Other" category was given. Judging from all the write-ins for "Price it right from the start," we should have added that category as well.

Some of you answered "Both," which was against the spirit of the survey, but we'll give you credit for playing. Home staging rated along with some true "others," like "Original list price 5+% < recent activity & active."

Weekly Market Activity Report (1980s Power Ballad Edition)

"You don't know what you've got 'til it's gone." – Cinderella, 1980s power-balladeers
 
This week's quote-of-note applies to the current situation of available inventory in the Twin Cities housing market. Our disappearing supply—down 21.4 percent from this time last year—is being caused by absorption from strong pending sales activity (up 18.2 percent year-over-year for the week ending July 18) and weak new listings (down 12.1 percent for the same time period comparison).
 
With a consistently shrinking inventory and more buyers this summer than we've seen since 2005, buyers who lack urgency could find themselves singing along to that sad classic Cinderella song (click that link and thank us later).

 

Two Recent News Stories on the Molasses-Like Crawl That is the Upper Price Brackets

Longest blog post title ever.

We've made hay before about the stark differences in home sales activity between the lower price ranges and the upper price ranges. The less expensive prices ranges are red hot due to affordable lender-mediated inventory and heavy first-time buyer interest due to the federal tax credit, while the upper price ranges are much quieter.

Two recent well-done articles dig into the phenomenon that we thought we'd highlight here.

Chris Snowbeck from the Pioneer Press:

The misfortunes of the million-dollar home market reflect changes in so-called jumbo mortgages, said Alex Stenback, a mortgage broker with Residential Mortgage Group in Wayzata — another Twin Cities community with a large number of high-end homes.

In Minnesota, any mortgage with a principal balance of more than $417,000 is considered a jumbo mortgage. When the housing market was hot earlier this decade, borrowers could obtain jumbo mortgages with as little as zero to 5 percent down after clearing relatively lax standards in terms of credit score and documented income, Stenback said.

But that's all changed since the beginning of the credit crunch last year, which caused the secondary market in jumbo mortgages to dry up. Now, Stenback said, the vast majority of jumbo loans are being held in the portfolios of banks, which are requiring higher interest rates and bigger down payments. Lenders also are much more selective about whom they lend to and the collateral property.

"There's a much smaller number of people that can qualify for jumbo financing," he said.

Annie Baxter from Minnesota Public Radio:

Luger said a lot of people in higher priced homes are holding off on selling because the market is so tough right now. But his Century 21 brokerage does have some homes listed in the $500,000 and $1 million range in Edina and around the Twin Cities metro area.

"Those are not moving, period," Luger said.

That's a big change from the peak of the market, around four years ago, when houses that sold for $190,000 or more accounted for about 3 out of every 4 Twin Cities home sales. Now, those houses make up about 42 percent of sales, according to data from the Minneapolis Area Association of Realtors.

The reverse is happening for low-priced homes. Houses selling for $120,000 or less used to be just a blip on the radar -- about 2 percent of the total in 2005. Their share ballooned to 27 percent by last month.

Takeaway: the uptick in sales the overall market experienced has been welcome news, but we need to keep some perspective. Sellers in the middle and upper price ranges still face a challenging market.

Lender-Mediated Supply of Homes for Sale Continues to Drop

We just released our Q2-2009 Update to "Foreclosures and Short Sales in the Twin Cities Housing Market" this morning. Here's a breakdown of the key takeaways we discovered:

Takeaway #1: After reaching a historic peak in February, the number of foreclosures and short sales available for sale has fallen by more than 2,100 units to 6,685 at the start of July—the fewest available since March 2008. We’re not through the woods yet, but it’s a positive sign that so much of this inventory is being absorbed by buyers.

 

Takeaway #2: New analysis of RMLS data indicates that the supply of bank-owned foreclosures (excluding short sales) is much smaller. There were 1.84 bank-owned foreclosure homes available for each buyer in June—compared to 5.10 homes owned by a traditional seller and 10.22 homes in a short sale situation.

 

Takeaway #3: For Q2-2009, 30.0 percent of new listings and 44.2 percent of closed sales were lender-mediated.

Takeaway #4: Lender-mediated sales have increased 103.9 percent in the last year, while traditional sales have fallen by 17.2 percent.

Takeaway #5: New lender-mediated listings dropped slightly in Q2 2009 vs. Q1 2009 and have remained relatively flat for 5 quarters in a row. However, with rising unemployment and increasing mortgage defaults, high levels of new foreclosures are likely to continue into 2010.

Click here to view the full report.

Weekly Market Activity Report

As summer progresses, the Twin Cities housing market continues on a well-established pattern of shrinking supply and growing sales. New listings for the week ending July 11 were 1,867—a 13.7 percent decrease over last year but a nice pickup after the annual July 4 slowdown. Pending sales rose to 1,007, a year-over-year increase of 16.6 percent. That's not as much of a year-over-year expansion as the 30-plus percent growth this number has seen recently, but it still represents a trend of growing demand.
 
Active listings are at 26,279, a decrease of 21.3 percent from this time last year. Coupling this with a shrinking number for Months Supply of Inventory and a flattening of our Average Days on Market, it's apparent that the buyer advantage over sellers is waning, at least in the lower price ranges.

Click here for the full Weekly Market Activity Report.

We Want to Send Someone to Real Estate Connect

Flyover country. That is our label, no matter how many awards we win in Minneapolis for cleanest city or best place to raise a family or number of live theaters per capita. We can change our national perception if we can send someone to Real Estate Connect in San Francisco.

That is our 50-word response to a contest being put on via blog by The Real Estate Tomato to obtain a free ticket to Inman's Real Estate Connect being held in San Francisco at the luxurious Palace Hotel from August 5 to 7.

If we win a free ticket, it will be a victory for educational advancement in the country's belly section.

Reminder: Even if we don't win a free ticket, you can attend Inman Real Estate Connect at half price through a MAAR special because our illustrious CEO, Mark Allen, will be a panelist at the event. Click here to learn more.

July Monthly Skinny Video All Up in Your Internetz

The July Monthly Skinny Videois up live online. This month's edition is another quickfire update on the latest trends in the Twin Cities housing market, this time narrated by 2009 MAAR President Steve Havig and featuring a half-year summary as well as some sweet high-school-football-related graphics from our video team (i.e. Chelsie Foty).

Click here to view full screen or just check out the embedded clip below.

Proof the Recession is Improving That's Fun to Look At

The New York Times graphics department consistently produces work that explains complex trends in very unique and powerful ways. Recently, they took on some very complex economic data from the last several decades in an attempt to answer how severe our current economic malaise really is (historically speaking) and when we can expect to pull the nose of our plane out of it's tailspin.

Click here to view the fantastic visualization they came up with.

Go through the steps one by one and make sure to read each one. You'll be glad you did.

Weekly Market Activity Report

The Twin Cities housing market experienced its annual pre-Independence Day drop in activity as fireworks, barbeques and lake cabin excursions preoccupied the minds and schedules of many Twin Citizens. New listings took a steep dive prior to the holiday, dropping to 1,482 for the week ending July 4. This is an 8.3 percent decrease from the same week in 2008.
 
Pending sales also dropped to 989 for the week ending July 4.  Fortunately, this stat is still a healthy 34.6 percent above where it was last year, when there were just 735 pending sales reported. Further metric watching:

Housing Affordability Index – 192. While astoundingly high, it has dropped since January due to price rebounding and higher mortgage rates.
 
Months Supply of Inventory – 7.3. This is a 31.1 percent decrease from the 10.6 figure posted last year at this time.

The market is showing signs of slowly moving back towards balance.

Click here for the full Weekly Market Activity Report.

Prices Creep Up as Traditional Sales Grow

Word on the street is that people like lists more than prose for receiving information they can digest with ease. This hurts my writerly heart, but, hey, I get it. We're busy people these days. Two hundred emails per day, 15 blogs to follow, 65 Facebook status updates, 450 Twitter feeds. Plus all the other stuff you're actually trying to get paid to do, not to mention the personal life you want to have. Goodness gracious.

So let's do this for you, MSP:

Stats Snapshot:

1. June saw 5,183 signed purchase agreements, up 33.7 percent from this time last year.

2. 40.7 percent of closed sales in June were lender-mediated, compared to 59.7 percent in January.

3. A decrease in lender-mediated market share brought the overall median price up from last month to $173,500 in June. Despite the month-over-month increase, that's still a 15.4 percent drop from June 2008.

4. The median June sales price of traditional homes was $210,000, down 7.7 percent from a year ago

5. The median June sales price of lender-mediated homes was $124,025, down 16.8 percent from a year ago.

6. The number of properties for sale at the end of June was 26,204, down 21.9 percent from this time last year.

7. There are 7.3 months of supply available, down significantly from the 10.6 seen at this time last year and trending back down towards a balanced market of 5 to 6 months of supply.

8. There are 10.9 months of traditional supply and only 4.4 months of lender-mediated supply.

Primary Takeaways:

1. June's pending sales were the highest June showing since 2005 and the 12th consecutive month of year-over-year increases.

2. With low mortgage rates and the $8,000 federal tax credit for first-time home buyers, we're seeing the recent jump in sales spill over into the traditional market.

3. We still have an abnormally high number of foreclosures and short sales, but it's an improvement from six months ago.

4. Sellers still face a challenging market, but things look better for them than they have in awhile.

July Housing Supply Outlook

The July Housing Supply Outlook just hit the internetz and, as usual, here are some quick bullet points of what to watch for.

Takeaway #1: The months supply of inventory for homes under $120,000 has dropped 61.5 percent in the last twelve months from 9.3 to 3.6—the lowest mark for that price range since 2005. Sales have almost quadrupled in that category in the last year while inventory of available homes has basically held flat. In sum, it is now officially a seller's market in that price range.

Takeaway #2: The upper price brackets look markedly different, however. North of $190,000 sales are still in decline compared to a year ago. And north of $500,000 the months supply of inventory available continues to grow.

Takeaway #3: Condominiums remain the only property type that has still seen a year-over-year drop in home sales, down 8.2 percent over the last twelve months. Sales of single-family detached properties are up 20.2 percent and townhomes are up 4.9 percent.

Click here for the full July Housing Supply Outlook.

Weekly Market Activity Report

Welcome back from the 4th of July weekend. Our post-4th news is remarkably the same as our pre-4th news. New listings continue at an atypically slow pace but pending sales are robust.
 
The 1,719 new listings for the week ending June 27 is 18.9 percent less than a year ago. The 26,043 total listings available is 21.3 percent less than last year. However, the 1,121 pending sales for this week excels last year by a giant 31 percent.
 
Additional metrics worth paying attention to this month:
• Supply-Demand Ratio: 4.9 homes per buyer; 32.6 percent below last year; lowest since 2005.
• Days on Market Until Sale: 140; seemingly high but crawling down to a pre-bubble level.

Housing market improvement has been significant in the lower price ranges, while homes priced above conforming loan limits still face significant challenges. With fewer homes available than last year, the number of days on market dwindling, and the clock ticking on government incentives, the buyer advantage is not as great as it once was.

Click here for the full Weekly Market Activity Report.

New Numbers: Twin Cities Pre-Foreclosures Rising, More Foreclosures Coming

We've noted before that the number of new foreclosures and short sales coming on the market for sale slowed in recent months. A major reason for this slowdown was likely the temporary foreclosure moratoriums that some major financial institutions instituted, as opposed to some sort of wholesale improvement in the financial situations of Twin Cities homeowners.

Now that many of those moratoriums have expired we've been waiting for some signs of whether or not foreclosures will resume their robust pace. It looks like we've got it now, unfortunately.

The Minnesota Home Ownership Center (MNHOC) keeps tabs on some very valuable pre-foreclosure data in the Twin Cities. When notice of pre-foreclosure is posted, MNHOC tracks it. They posted a blog recently highlighting a nasty trend in the data from recent months. Take a look:

 

Youch.

2,814 pre-foreclosure notices in January up to 4,368 in May.

And we can't blame this on typical seasonal changes as foreclosure cycles are fairly unaffected by the shifts between winter and spring.

Considering the significant job losses we've seen in the last 12 months, stagnant wages and the still-not-yet-totally-finished-resetting ARMs this isn't necessarily surprising. But it certainly isn't welcome news. Expect foreclosures and short sales to be a significant part of the Twin Cities housing market for the next 18-24 months, and likely longer.

Hat-tip to Aaron Dickinson.