RESOURCE CENTER REAL ESTATE GLOSSARY RENTALS

Kari Lundin
Coldwell Banker Burnet
7550 France Avenue S
Edina, MN 55435
(612) 290-5998

It’s been difficult to tell how the Twin Cities duplex and single family home markets have been performing the last couple of weeks due to the Thanksgiving holidays in 2007 and 2008 falling during different weeks. That changes with this week’s MAR activity report.

 

Of course, we Minnesotans like hunker down inside during the cold, dark winter months and we are distracted in the weeks ramping up to the holidays. Historically, housing activity reflects that. Overall in the single family home market, all the numbers were down in new listings, sales and total inventory.

 

The good news is pending sales for the week ending December 6 were up 27.6 percent, with 54.7 percent of these transactions involving lender-mediated short sales or foreclosures. There was little change in the amount of new inventory on the market as well, with new listings up just 0.7 percent over their mark for the comparable week in 2007.

 

Meanwhile, in the multi-family market new listings were down 10.8 percent from the same time last year. Of these properties new to the market, 86 percent are either lender-owned or mediated. This is an increase of 12 percent of lender-involved properties over the same stretch in 2007.

 

Pending small multi-family purchase agreements, on the other hand, continued their mind-numbing pace; up a full 300 percent over last year. Of the properties receiving offers, 93 percent were lender owned. Last year’s total represented 74 percent lender-mediated properties.

 

One non data-driven observation: several of  the desirably located, more expensive bank involved properties received offers the first week of December. Several had lingered on the market over the summer. A number of comparable short sales which were newer to the market suddenly listed as pending as well; far more quickly than it has taken most short sales to be negotiated in the past.

 

 

Oh how I wish I could just plug my calculator into my laptop and, in seconds, be able to know how the Twin Cities duplex market is doing!

 

But it’s week two of the market anomaly; comparing 2008’s Twin Cities duplex sales figures from the week of Thanksgiving, to the comparable week from 2007, which was the week after the holiday. If we did a side by side comparison, we wouldn’t necessarily get an accurate read. Because this year we were all eating turkey.

 

So we’re left with what we do know. During the holiday week, 44 new small multi-family listings came on the market. Of these, 36, or 82 percent are lender-mediated properties. Last year during the same period, there were 58 new listings, of which 79 percent were lender mediated.

 

Of the 31 properties that received purchase agreements this year, 24 were lender mediated. This figure represents 77 percent of the transactions. The average pending sales price of these properties was $125,740.

 

In the same week of 2007, 21 listings sold. Sixty-seven percent of these were lender mediated for an average sales price of $188,050.

 

While it looks like sales were up once again in 2008, next week’s statistics will offer a much more accurate update of recently played and purchased properties.

 

While Tuesday’s are generally the day MAAR likes to look at the market in the rear view mirror, the statistics available this week and next will look more like a reflection in a smudged fun house mirror. Why? Thanksgiving was a week earlier last year, meaning people were celebrating, travelling or spending time with family; not shopping for houses.

 

Needless to say, any sort of numerical comparison from one year to the next won’t reflect anything accurately. So let’s look at the week ending November 22 on its own.

 

While 52 new small multi-family listings came on the market, it is interesting to note that 80 percent of them are either lender owned or mediated.  Of the 33 properties that received purchase agreements in the same time frame, 91 percent involved a lender mediation.

 

While the average sales price of these transactions wasn’t as robust as in recent weeks, it did manage to stay in the six figure range at $101,845.

 

After next week, we should have a more accurate picture of what’s happening in the market.

MAAR s released its weekly report of market activity this morning, and in spite of all the doom and gloom in the media, pending home sales for the week ending were nonetheless 16.9 percent higher than they were over the same period in 2007. This has been a trend for some time. In fact, over the last three months, sales have been 26.6 percent higher than the same time in 2007 .‘

The first time home buyer is the engine that leads the housing train. And it looks like the wheels in that market have started to turn. Of course, lender-mediated foreclosures and short sales are fueling the market, with 54.4 percent of the transactions that week lender-mediated. However, a full 43.2 percent of those properties were priced below $150,000.

 

While pending sales of multi-family properties were down 44 percent from their mark for the week ending November 1, the average list price of those properties that received purchase agreements was $130,408. This is the third week in a row we’ve seen a significant jump in that number, coupled with a comparable drop in the average sales price for the same week last year; now down to $162,673.

 

What’s more, sales for the week were a robust 188 percent ahead of the mark for last year. Of the 32 duplexes that received purchase agreements, 84 percent involved lender mediated sales. In 2007, 75 percent of the properties that received purchase agreements were lender-mediated.

 

For the first time in months, new duplex listings year over year were up 167.5 percent over the same stretch last year. Supply in the single family home market, however, seems to have leveled off; down from last year, but holding.

 

There are some interesting trends starting to emerge in the housing market as evidenced by MAAR’s just released weekly activity report for the week ending November 1.

 

First, the average number of days a single family home sits on the market before selling was down .8 percent to 141. This is the first drop in average market time in the last two years.

 

The week also ended with 21 percent less new listings than for the same period in 2007, and 1.4 percent fewer pending sales. This is the first drop in pending sales since June.

 

Meanwhile in the multi-family market, the average price of duplexes that received purchase agreements rose for the third week in a row. For the week ending November 1, this figure was $116,320. While still not as robust as the 2007 average of $188,295 of the comparable week, it is, nonetheless, an increase over last week’s mark of 11.38 percent. A point of interest is the 2007 figure decreased for the third week in a row; declining 5 percent this time around.

 

The number of newly listed multi-family properties also continued their decline, falling a full 20 percent from those coming on the market in the same week last year. If inventory continues to tighten, prices are more likely to continue to rise.

 

There’s a lot of hope in the air today. And it isn’t limited to the voting booth.

 

In addition to the election, there is some encouraging news in the housing market. Last week, real estate headlines shouted that in September, new home sales unexpectedly rose 2.7 percent and existing home sales jumped 5.5 percent.

 

And today, MAAR reports that for the week ending October 25, pending sales were up 17.1 percent over the same week last year. New listings, meanwhile, were down 2 percent. While this is certainly encouraging news, it should also be noted that 51.1 percent of the pending sales were foreclosures or short sales, which should result in continued declines in sales prices.

 

In the small multi-family housing sector, the number of new listings was identical to last year’s mark, with exactly 61 new properties to choose from.

 

However, there was no comparison between 2007 and 2008 in terms of sales volume. Last year’s weekly mark featured just 9 units sold, at an average sales price of $178,600.

This year, 49 metro listings received purchase agreements for the week; an increase over last year’s mark of 544 percent. This year’s pending list price, however, was $104,439; a decline of 41.5 percent in value.

 

If media headlines were our sole source of information, it would be easy to believe the entire reason for the mortgage crisis is evil loan officers who gave bad buyers loans for properties they couldn’t afford.

 

However, a story in Inman News today served as a reminder that nothing about this crisis is that easy. The real estate media outlet reported that a real estate agent and two former loan officers are among 17 people indicted by a federal grand jury for their alleged roles in a mortgage fraud scheme involving 25 residential properties in Missouri.

The Realtor and two former loan officers are accused of conspiring with property buyers to submit false information to lenders in order to purchase homes at inflated prices and pocket the extra proceeds.

Mortgage fraud hasn’t received a great deal of media coverage in the latter half of 2008. However, I believe that when the forensics of history are applied to this economic crisis years from now, we’ll discover it played a much bigger role than we imagined. Read the rest of this entry »

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