Comment
The Minneapolis duplex market reminds me of a puzzle my family had when I was growing up.
Called Drive Ya Nuts, it consisted of 7 nuts. The object of it was to line all of the numbers up on each nut so that they matched the numbers on the nuts next to them.
It wasn’t as easy as it sounds. And I vividly recall getting to the sixth or seventh nut, with all sides matching and me thinking I had it solved, only to discover I had it wrong.
That’s what the duplex market feels like today. I was sure there was a trend, with traditional sellers claiming more and more market share of new listings and pending sales, and average off-market prices going up. Then I looked at the numbers from the week ending July 23, 2011, and I wonder if I have it all wrong.
Pending sales were up 4 percent over the same week in 2010. I suppose that’s good news. However, the percentage of the duplex sellers who received offers and didn’t have to get a bank’s permission to sell was down 7.3 percent.
The average final list price duplexes left the market for the week at was $106,014. With properties selling for, on average, 92 percent of what they were originally listed for, this figure is likely to drop when these transactions close.
Last year, the average sold price for the duplexes that left the market during the week was $109,821.
The good news here is listings were up year over year. Now that sounds counter to the news over in the single family home market, where they’re hoping the amount of inventory on the market shrinks. In fact, they celebrated 13.2 percent fewer new listings than they did during the week in 2010.
However, duplex inventory has seemed scarce this year. So the sight of 41 new listings for the week, versus the 25 that came on during the week last year, was, for this Realtor with buyers looking, welcome news indeed.
Of these new opportunities in late July, 51.2 percent belonged to traditional sellers. This is a much stronger showing than the 20 percent market share they claimed last year.
In the single family home market, sales were up 54.3 percent over the same week in 2010. That would be staggering if not for the fact that many of last year’s buyer’s rushed to buy houses earlier in the year in order to meet the home buyer tax credit deadline.
I’m anxious to see what the rest of the year brings. If it’s anything like the puzzle, the answer will hinge on that one right piece.
Comment
Four doesn’t seem like a lot of Minneapolis duplexes, triplexes or small multi-family properties, does it?
But that’s exactly how much pended sales for the week ending April 16, 2011 went up over the same week last year.
Of course, when you view this as a percentage, perceptions change. Four more duplexes represents a 16.7 percent increase in pending sales.
Of these, 41.7 percent were brought to the market by equity, or traditional sellers. The balance involved lenders in the negotiations.
Sure, that means duplex short sales and foreclosures are still dominating the Minneapolis and St Paul markets. However, during the same week last year, just 20 percent of the pended sales didn’t involve bank negotiations.
So traditional sellers doubled their share of the market. And this helped boost the average off-market price to $133,734. This is well-above last year’s sold price of $103,553 for the week. Even when these transactions close, it is likely the average price will still outpace that of the week for 2010.
Traditional sellers brought 42.2 percent of the new listings to the market for the week, this is down just .6 percent from their contributions to the market in 2010.
It’s interesting to note, however, that there were 18 fewer new listings for the week this year. That translates to 28.6 percent fewer new properties on the market for buyers to choose from.
This trend holds in the single family home market, where new listings for the week were down 21.5 percent from the same week in 2010.
In all, there are 15.4 percent fewer homes on the market for buyers to choose from than a year ago.
Of course, this year’s absence of a first time home buyer’s tax credit also resulted in 18.6 percent fewer purchase agreements signed for the week.
As the tax credit expired April 30, 2010, we should start to get a more accurate measure of the Twin Cities single family and duplex markets in the coming months.
Comment
As of late, the Minneapolis duplex market seems to have tendinitis in its throwing arm. It aims in the general direction of a recovery, but never seems to find an open receiver.
For the week ending October 2, 2010, just 18 purchase agreements were signed. Of those, a mere 16.67 percent did not involve a bank in the negotiations.
These 18 transactions were 33.3 percent fewer than those that pended during the same week last fall. One-third of those sales involved traditional sellers.
The good news is there are fewer new listings as well. While there were 50 new duplexes, triplexes and fourplexes on the MLS during the week last year, this year saw just 28 new listings.
Thirty-two percent of the 2009 listings were offered by traditional sellers. This year, 53.6 percent were not bank owned or short sales.
The average off-market price of $110,794 trailed last year’s average sold price of $112,530 as well.
Let’s hope the housing market finds some Advil soon.
Comment
Thank God that shipment of newly listed single family homes and duplexes hit the market just in time for the expiration of the first time and repeat buyer tax credits.
I’m being sarcastic, of course.
But with 2,147 new single family listings for the week ending April 24, representing an increase of 19.1 percent over last year, and duplex and multifamily listings up 32.7 percent year over year, it does appear sellers were rushing to get their properties on the market before the incentives ended.
Traditional sellers represented a clear majority of the new to market duplexes, with 60,9 percent of the new listings. This represents a significant jump from last year’s 21.2 percent market share.
Of the multifamily properties that received purchase agreements over the week, 38 percent were offered by traditional sellers. While not the majority of the transactions, this figure nonetheless represents healthy improvement over last year’s 7.9 percent.
This increase in traditional seller market share may also account for the average off market price of $155,428 compared to $88,026 for the same week last year.
Have the tax credits had an impact? We won’t know until the numbers for last week come in, but pended single family home sales for the week were up 9.8 percent over the same stretch last year.
Guess we’ll have to wait until next week’s report to see if sellers, as well as buyers, benefited from the tax credit’s end.
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Just when we thought the light might be turning green in the Twin Cities duplex market, statistics for the week ending November 21, 2009 continued to send mixed signals.
The average off-market price for the week was $123,244, compared to last year’s average sales figure for the same week in November, which was $103, 659. This represents an increase of nearly $20,000.
Pending sales for the week were up 21.9 percent from last year as well. So too was the percentage of those transactions that represented traditional sellers; 21.9 percent this year, compared with just a 12 percent market share for the week in 2008.
It all sounds like a reason to put your foot down on the accelerator, right?
Hold off a second. The number of new listings week over week was actually up 28.9 percent. Normally, this would be cause for alarm. However, as we have recently seemed to experience a shortage of inventory, this may help inspire buyers lurking in the market to act.
Traditional sellers also continued to show signs of gaining traction among new listings. Thirty-one percent of the week’s new inventory was also offered by traditional sellers, compared with 12.5 percent for the week in 2008.
Single family home transactions also sent mixed signals. The number of transactions was up 5.2 percent from the same week in 2008. However, sales have slowed considerably since the rush to beat the tax credit ended.
Comment
I saw a Oujia board in the closet of a foreclosure I showed recently. I should have gone right out while I was thinking of it and bought one.
It might help me make sense of the numbers for Twin Cities duplex sales in the Market Activity Report for the week ending August 8.
The number of bank-owned listings new to the market dropped 20 percent from the same stretch last year. Whether this is a reflection of a shift in the market, or last winter’s foreclosure moratorium is a mystery.
Overall, the number of new listings for the week was down 15 percent.
The number of properties that received purchase agreements for the week was up 29 percent over last year. Unfortunately, the average off market price dropped from $147, 210 to a meager $88,021.39.
Both year’s transactions consisted of 89 percent lender-mediated sales.
MAAR reports that the single family housing market saw a 9.5 percent drop in new inventory for the week, while there were 15.2 percent more purchase agreements signed.
A balanced market occurs when there is a 5 month supply of inventory available. Right now, we have a 7.2 month supply; down 31.4 percent from the 10.5 month supply seen at this time last year.
Will things be different next week?
Ask the Ouija. Yes? Or no?
Comment
If you’re considering taking advantage of the $8000 first time home buyer tax credit to buy a duplex, you’d better hustle. Not only is time running out, but so is the inventory.
Wait? A housing shortage? Well…
According to MAAR, there are 21.4 percent fewer homes for sale in the Twin Cities market than there were at this time last year. In just the week ending July 18, there were 12.1 percent fewer new listings than there were for the comparable week in 2008.
Meanwhile, pending sales the week ending July 18 jumped 18.2 percent. Of course, most of these transactions involve homes in the first time home buyer price range.
As a result of shrinking first time home buyer single family inventory, frustrated buyers may be opting for duplexes. Pending sales for the week were up five percent from last year, with 15 percent of those properties did not involve a lender in the negotiations.
Sadly, the 2009 average off market price of the pended properties was just $104,927, as 16 percent drop from the same week in July in 2008.
There were, however, 18.9 percent fewer new listings year over year. While 70 percent of these continue to involve a short sale or foreclosure property, 67.57 percent of the 2008 properties did. In other words, we haven’t seen a dramatic leap in the percentage of foreclosures hitting the market.
A word of caution. In late 2008 and early 2009, there was a moratorium placed on foreclosures by the government. Word is those properties where the seller was not able to successfully renegotiate the terms of their loans will begin hitting the market August 1.
What’s more, numerous real estate reporters like Diana Olick of CNBC are talking about a ”shadow inventory” of bank foreclosures; properties the lenders have already seized, but are holding on to in order to not flood the market, causing further declines in home values.
While I have no statistical data to support this assertion, I do personally know of several properties that were foreclosed on as much as a year ago that have yet to hit the market.
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While the media continues to report disheartening news for the national housing market, the most recent data for the Minneapolis/St Paul real estate market again suggests there may be reasons for cautious optimism locally.
With their release of the Weekly Activity Report for the week ending June 27, MAAR reports that new listings for the week were down 18.9 percent from the same period last year. In fact, the total supply of listings is down 21.3 percent from 2008.
The number of pending sales for the week were also encouraging. The 1,121 propererties that received purchase agreements was a leap of 31 percent over last year.
On a broader scale, there are now just 4.9 homes available for sale for every buyer. That’s 32.6 percent lower than last year, and a number that hasn’t been seen since 2005.
In the multi-family market, pending duplex sales were up 25.7 percent from the comparable week in 2008. Of the properties that received purchase agreements, 91 percent were lender owned or mediated, with an average off market price of $109,742.
This figure once again represents an increase in the number of short and foreclosure sales from the 2008 mark. The duplexes that pended for the same week in 2008, meanwhile, averaged a sale price of $122,389.
The number of new listings for the last week in June, however, was down an incredible 34.9 percent from last year. As supply continues to decline, we may see price improvements in the near future.
Comment
The weekly MAAR activity report came out and there appears to be a bit of good news in the single family and multi-family home markets.
New listings of single family homes continued to drop, being 23 percent behind the same week in 2007. Meanwhile, pending sales increased 4.9 percent over last year; a number that represents the biggest year-over-year increase in 117 weeks (29.25 months!) This is only the third increase in that time. The second happened just two weeks ago.
Meanwhile, the multi-family market continued along at a healthy clip. Sales of 2-4 unit properties were up 182.4 percent over the same week last year. Of these sales, 84 percent were for properties in a short sale or foreclosure situation.
New listings in the multi-family category decreased by 22.2 percent, meaning, for now anyway, supply has begun to decrease.
It will be interesting to see whether Freddie Mac’s August lending restrictions impact this market.
Comment
During the recent real estate boom, selling small small multi-family housing (duplexes, triplexes and fourplexes) was almost as easy as simply sticking a “For Sale” sign in the ground and getting the property on the MLS.
But the rules have changed for everybody.
When investing in larger apartment buildings, one of the first questions a buyer asks is, “What are the rents?” In other words, how much revenue does the building generate every year? If the property doesn’t generate enough money to cover its expenses and mortgage, it obviously isn’t a good investment.
That principle is increasingly true in the small multi-family market. In addition to location and condition, more buyers are comparing the rent of one building to another.
A client recently looked at three gorgeous duplexes, all next door to one another, all in a fabulous location. All were three bedroom units, with separate utilities, fireplaces, built-ins and good tenants. They were slightly different in size, but almost imperceptibly so. The only obvious difference was one had two bathrooms per unit. All three properties were in a short sale situation.
O.K., slight detour here. What’s a short sale? Think of it like this. If I borrow $100 from you, and when it comes time to pay you back I only have $90 on me. In that case, I may ask if even though I’m $10 short, if we can still call it good.
In this case, the sellers of these properties may or may not be behind in their payments. And their motivations for selling may or may not have anything to do with financial duress. However, they recognize under current market conditions they can’t sell the property for what they owe on it. So they’re talking to and working with the bank to find a way to pay back as much as they can.
Back to the buyer. Three comparable properties, virtually next door to each other. One was listed at $369,000, one at $395,000 and the third at $409,000. All had taxable values at or above $500,000.
Which one did he write an offer on?
The cheapest one, right?
Nope.
Would it help if I told you the first grossed $30,000/year in rent, the second $31,200/year and the third $38,400. Now which one did he want to buy?
The one with the highest rents; which was also the most expensive.
While it may seem like $7000-8000 a year in rent isn’t that important (after all that’s “only” $650 or so a month), it made the difference as to whether the property could support itself financially. The less expensive properties didn’t generate enough revenue to even break even. As a result, the buyer would have to reach into his pocket every month to make up the difference.
Due to higher vacancy rates the last five years (everybody who could bought a house), landlords have been forced to keep rents low. The poor housing market has turned rentals around, however. Now, more people have been forced to rent. So rents can be raised.
It’s important to keep your rents as close to market value as possible. It will make all the difference when it comes time to sell.
