Duplex Chick

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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.

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This week’s market statistics for Minneapolis duplex sales go a long way toward demonstrating what’s different about duplexes than other kinds of investment properties.

What is that?

Owner occupants.

A large portion of the Minneapolis and St Paul duplex market consists of first time home buyers who intend to live in one of the units.

And because of them, and the loss of last year’s first time home buyer tax credit, the Minneapolis duplex market was decidedly different the week ending March 12 than it was for the same week one year ago.

New listings were down 48 percent, as last year saw 54 owners try to sell before the end of the tax credit. This year, just 22 wanted to part ways with their multi-family properties.

Pended sales were down 15 percent.

The average price a property left the market dropped $27,260, which might not seem like much until you know that last year’s average sold price for the week was just $123,500.

This is once again in step with the impact the tax credit had on the single family home market, where the week saw 20.9 percent fewer pending sales, and 31.1 percent less new listings.

As there aren’t even whispers of reinstating any kind of tax credit, this may be the new normal.

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Traditional Minneapolis duplex sellers must have realized last fall’s temporary foreclosure freeze granted them a window of opportunity, because for the week ending January 15, 2011, they were responsible for 57.14% of the duplex market’s new inventory.

In the same week one year ago, they contributed just 33.3 percent of the new listings.

While also improved, pended sales figures were nowhere near as encouraging. Traditional sellers received 27.3 percent of the accepted purchase offers for the week; up 7.3 percent year-over-year, but still a long way from ending the market domination of lender-negotiated sales.

The average off-market price for the week was $136,442. This is up nearly $11,000 over last year’s sold average for the week. However, as the average list price to sold ratio in the market is presently 89 percent, sold statistics should easily erase any apparent gains.

The number of newly listed single family homes for the week was down 22.9 percent over the same week in 2010. This was the third consecutive week of declines in new single family home inventory.

However, because of the decline in the number of sales, the total number of active listings on the market was up 6.3 percent.

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Sometimes the Minneapolis and St Paul duplex market looks like a Jackson Pollock painting; all-over the place.

In the small multi-family property market for the week ending June 12, 40 percent fewer duplex owners received and accepted purchase agreements than they did last year.

Of this group, 52.38 percent of the sellers did not need to involve their lender in the decision to sell their property. This is up significantly from the 20 percent traditional sellers whose properties pended during the same week last year.

The average price a duplex left the market at during the second week of June was $165,152; representing a significant gain over last year’s $126,088.

Traditional sellers also made a strong showing in the week’s inventory that was new to the market; contributing a whopping 61.4 percent of the listings. Last year, this figure was a mere 41.8 percent.

There was all-over news in the single family home market as well. The 674 signed purchase agreements were up from the 527 during the week before. This is great news unless it’s compared with the 1,210 listings that pended during the same week in 2009.

While trailing last year’s number by 12.2 percent, the number of newly listed single family homes has begun to swell. To date, there are 1.1 percent more listings actively on the market than there were one year ago.

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Sometimes I wish I was a statistician. Or an economist. Or, even a psychic.

If I were any of those things, perhaps I could come up with a better answer to the question, “What’s the real estate market like?”

Because sometimes I’m not sure how to answer other than to say, “Dunno”, which is Minnesotan for “don’t know”.

For the week ending May 29, 2010, pended Minneapolis duplex sales were down 3.8 percent from the pace they set over the same stretch last year.

Uh-oh, right?

Well, hold on. The average off-market price for those properties was $164,276, and 40 percent of them were owned by traditional sellers.

Last year’s average sold price for the same week was just $93,454, with only 7.7 percent did not involve financial institutions in the negotiations.

Of the new listings for the last week in May, 54.7 percent were listed by traditional sellers. Not only was the number of listings up year-over-year by 15 percent, but traditional sellers also gained an additional 14 percent of the market share.

So is it good? Bad? Dunno.

Things are more clear over in the single family home market. Well, sort of.

The number of purchase agreements signed for the week was down 34.6 percent below the previous year. This was the fourth week in a row (and the fourth since the tax credit), in which this happened.

New listings were down 5.9 percent for the week from the mark they set last year.

However, those listings that received purchase agreements were also spending less days on the market than they had last year, and receiving 2.8 percent more of the original list price; at 94.1 percent.

Maybe we’ll know more next week. Maybe not.

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