Minnesota Real Estate Weekly Update

For the week ending January 19th, the Twin Cities saw 1,877 new listings come on the market (roughly half of these were re-lists that had already been on the market at least once in the past year), 485 properties went pending, a decrease of 19.4% compared to the same time in 2007. Currently, there are 28,168 active properties on the market, an increase of 11.5% compared to 2007.

Year to date, The Minnesota Real Estate Team is at 81 sales. In spite of the negative spin put on by the media, our team is finding homes priced correctly are selling. Of course they also need effective marketing as well. Call us today at 952-223-1150 to find out how our team can help you out.

Again, we were the #1 REMAX team in Minnesota in both 2006 and 2007. Look for another real estate update next week!

Minnesota Real Estate Weekly Update

For the week ending January 12th, the Twin Cities saw 1,981 new listings come onto the market. This is a 4.8% drop from the same time in 2007. 443 properties went pending, a drop of 24% from the same time in 2007. There are 27,931 total properties on the market, an increase of 12.2% from 2007.

For comparison sake, there are 10.46 houses on the market per one buyer today in January 2008. In January 2007, there were 7.07 houses on the market for each buyer. In January 2006, there were 5.58 homes on the market for each buyer.

The Minnesota Real Estate Team is here to help you with all of your buying and selling needs. We have 35 agents, all across Minnesota and western Wisconsin. Call us here today at 952-223-1150.

Look for another real estate update here next week!

Metro home prices fell for first time in 20 years

The final numbers for 2007 are in: The median sale price declined 2.2%. This year might see another drop -- sobering news for anyone who bought at the peak of the market or has borrowed heavily against the value of their house.

By JIM BUCHTA, Star Tribune

Last update: January 17, 2008 - 12:06 AM

Home sale prices dipped in 2007 for the first time in at least 20 years and are expected to remain flat or fall slightly in the coming year, officials from several Twin Cities-area real estate groups said Wednesday.

The decline is bad news for anyone trying to sell a house and also is an indication of downward pressure on housing prices across the metro area -- sobering news for anyone who bought at the peak of the market or has borrowed heavily against the value of their house.

"It's significant in that prices declined," said Mark Allen, CEO of the Minneapolis Area Association of Realtors. "But insignificant when you look at long-term price growth."

During 2007 the median sale price of single-family houses, condominiums and townhouses fell to $225,000, a 2.2 percent decline from 2006.

However, the median sale prices still are $10,000 higher than the $215,000 median price that prevailed when market activity reached its peak in 2004.

But the first price decline in two decades of record-keeping debunks the long-held notion that home prices in this market don't fall.

Whether this decline signals a long-term trend or is just a blip is anyone's guess, but the slowdown has already left plenty of victims:

• The number of foreclosures in Minnesota doubled in 2007.

• The nation's biggest banks have lost tens of billions of dollars investing in mortgages that couldn't be repaid, sparking a global credit crunch and threatening a recession in the United States.

• Some home builders have resorted to mass auctions to unload new but empty homes.

Closed sales during 2007 in the Twin Cities metro area fell 16.4 percent to 40,055, and pending sales fell 15.5 percent to 43,560. At the same time, the number of new listings that hit the market declined. During 2007 there were 105,044 new listings on the market, down 2.8 percent from last year, but well head of activity in previous years.

That's evidence that prices could stabilize late in 2008 as inventory levels moderate and buyers regain confidence, said housing-sales officials, which also included representatives from the Southern Twin Cities Association of Realtors, the North Metro Realtors Association and the St. Paul Area Association of Realtors.

Officials from the National Association of Realtors last year predicted that prices would rise 1 percent during 2007. Instead, dogged by the subprime mortgage meltdown, rampant foreclosures and a steep decline in sales of new houses, the market couldn't gain enough momentum to beat back falling prices.

Tom Musil, director for the Shenehon Center for Real Estate at the University of St. Thomas, said that given the rapid price increases of recent years, a decline was inevitable.

"I was happy in the sense that prices have not eroded as much as they have in other markets," he said. In Naples, Fla., the median sale price last year was down more than 7 percent, and in Detroit, prices were down even more.

Nonetheless, Musil said Twin Cities prices are likely to fall again slightly this year before showing signs of recovery in mid-2009. But that likely will be only after the mortgage markets work through the instability that's causing lenders to tighten access to credit and charge more for the additional risk of doing business in these uncertain times.

More the 2 million adjustable-rate mortgages are expected to reset in the next two years. Although the impact of those rising rates is unknown, they are likely to lead to more foreclosures. And foreclosures have put downward pressure on prices throughout the metro area.

Tony Pistilli, chief retail appraiser at U.S. Bank in Minneapolis, said that even though optimists already are talking about a recovery, 2007 marked just the beginning of the market correction.

That, combined with the fact that the market oversold itself in 2005 and 2006, doesn't bode well for price increases in 2008.

"I don't think people are comfortable buying into a declining market," Pistilli said. "Time will tell. There's still a huge inventory of properties that has to get sold before people get more comfortable."

Some markets are exceptions

With buyers more discerning -- and cautious -- than they've been in a decade, the market has grown ever more fragmented. For every story of a house that's been on the market for two years, there's one about that special house or condo that got multiple offers or sold in just a few days.

For example, several Multiple Listing Service districts posted an increase in the median sale price, including several first- and second-ring suburbs, including Chanhassen. Some Minneapolis neighborhoods, such as southwest Minneapolis, also saw increases. And sales data suggests that while the upper-bracket market has the deepest inventory, 2007 sales in that price category kept pace with 2006.

Cynthia Froid of Keller Williams Integrity Realty in Minneapolis has had several upper-bracket listings in downtown Minneapolis that sold before hitting the market, and some of them had multiple offers from buyers who weren't concerned about selling their existing house to buy a new one. That includes a recent $2.75 million sale on a riverfront condo that closed last week for what she says is a record $854 per square foot.

"Those folks are just so insulated from what's going on in the mortgage markets," Froid said. "So all of this threat of recession impacts them, but not as dramatically."

At the same time, condo sales in downtown Minneapolis and St. Paul haven't kept pace with development plans, forcing developers to scrap several high-profile projects. Last year developers scrapped the Revue across the street from the Guthrie Theater on the river, the high-profile 222 Condos above the planned Whole Foods on Washington Avenue, and the Portland.

The story was similar in the suburbs, where new projects came to a virtual halt while builders and developers focused on reducing inventories of unsold homes.

Todd Bjerstedt, vice president of MarketGraphics, a data research company in Hudson, Wis., said there still is a glut of unsold new houses on the market, but that inventory levels have come down slightly.

As of December there were 3,548 houses that were finished but not sold, he said, down from a peak of 4,552 in April. And the number of ready-to-be-built lots peaked at 42,524 in August, but dropped slightly to 42,287 in December.

"Until this inventory is drawn down, we can't really expect normal construction activity," he said.

Ultimately, it's the decline in sale prices that could help drive the recovery as first-timers and investors take advantage of lower prices and the trail of bargains left behind in the wake of the foreclosure crisis.

With mortgage interest rates still near record lows and prices falling, the affordability index has risen from 131 in January 2006 to 141 this month. That means that a family with the local median income has 141 percent of the income needed to buy a median-priced house.

Difficult deliveries

"Sellers are being much more flexible," said Karen Rue, a sales agent for Edina Realty's Crocus Hill office in St. Paul. "I just think there are fair prices for the buyer."

Rue, who used to be a labor-and-delivery nurse and now specializes in selling architecturally distinct and unique houses, compared buying and selling in today's market to a "difficult delivery."

After working with a buyer for several months, for example, she helped him buy an unusual upper-bracket house in St. Paul that had been on the market for many months. With so much doubt and consternation in the market, it's a process, she says, that takes patience, trust and determination.

"And I trust the process," she said. "But you have to keep working through the ups and downs."

Minnesota Real Estate Weekly Update

For the week ending January 5th, 2008, the Twin Cities metro area saw 1,544 new listings come on the market. This is down 26% from the same time in 2007. 308 properties went pending, a decrease of over 22% from 2007. And lastly, there are 27,398 active properties for sale here in the Twin Cities. This is up 11.2% from the same time in 2007.

In spite of these numbers, The Minnesota Real Estate Team is excited for a promising 2008. This coming Friday, the team is opening up its southern "Short Sale and Bank Owned" branch out of the Lakeville REMAX Advantage Plus office. Currently, we have one northern branch that services all short sale and bank owned listings on the northern end, and this new branch will better be able to serve our clients "south of the river."

Look for another real estate update next week!

Minnesota Real Estate Weekly Update

For the week ending December 29th, the Twin Cities saw only 235 properties go pending, a decrease of 39% compared to the same time in 2006. New listings also decreased by 11.5%, with 568 properties going on the market. Overall inventory levels remained at 28,865 active listings, an increase of 12.6%. Average days on market is at 158 days, an increase of 4.6% compared to 2006.

There was however one positive note that came from this week's overall numbers: the supply demand ratio is 10.46 for January. This fell from 13.44 in December. This means there are 10.46 homes on the market for every one buyer.

Look for another real estate update next week!