How Much ‘Shadow Inventory’ Is There?

June 29, 2010 By 10 Comments

The National Association of REALTORS has put together a video discussing the amount and type of  ’Shadow Inventory’ nationally.  The biggest problem with such figures is that they are still based off of sampling & definitions of what is or is not counted in the definition.  Regardless of what the actual number is, the video discusses how banks are putting more focus on short sales than they have in the past – which I believe to be a much better option than letting these properties go through the entire foreclosure process.

Also of note is the reiteration that banks are not going to just dump huge amounts of new inventory on the market – they understand that this is not in their interest and to be honest, they can’t process this stuff fast enough to dump a huge number of new foreclosures on the market – the foreclosure process is a long one and each can take a little different timeline so by their very nature they are likely to come on in a staggerd fashion.

I still do not subscribe to the idea that there will be some huge “wave” of foreclosures coming, but rather that we will continue to see the high levels of activity that we have seen since 2008.

Filed Under: Foreclosures and Short Sales, Info for Buyers, Info for Sellers, Market Stats, Opinion, Short Sales Tagged With: , , , ,

Twin Cities Pending Home Sales Continue Drop

June 8, 2010 By Leave a Comment

Last week I discussed the precipitous drop in Twin Cities Pending Home Sales activity.  Today MAAR released another week’s activity report and the extended drop in buyer activity continues.

Twin Cities Pending Home Sales

While we had a few more pending sales than the week prior, we’re still 34.6% below the same week last year.  This great disparity is no doubt the continued hangover from the expiration of the tax credit but this hangover is quickly becoming a wicked one.  These are historically the busiest weeks of the year and instead our sales in May were anemically similar to what we’d usually see in November.

Thankfully we’ve also seen a dramatic drop of new listing activity as well, which has helped keep a lid on total inventory of homes for sale.

New Twin Cities Homes for Sale

Twin Cities Houses for Sale

This market lull isn’t bad for everyone – buyers still in the market to buy a home that were looking in the weeks leading up to the tax credit expiration have found that the 40% less competition has lead to better quality inventory to choose from.  Several of my buyers have located houses since the expiration and in each case the buyer and I felt that the house was better than what we were seeing for the same price prior to the tax credit expiration.

Filed Under: Info for Buyers, Info for Sellers, Market Stats, tax credits Tagged With: ,

Twin Cities Real Estate Rollercoaster

June 3, 2009 By Leave a Comment

Betsy Soderlund wants the emotional roller coaster that is the Minneapolis real estate market to be less like the cork screw and more like the flume. – @betsysoderlund

This Twitter post last night sums up what many people in the real estate market are feeling right now.  Things seem to be going up, down, left, right and twisting all at the same time. This is a list of the items I currently see as affecting everyone’s psychological health in the real estate market today:

REO’s/REO Brokers

  • I’ve talked at length about this here… ’nuff said

Appraisals/Appraisers

  • Fewer appraisers today than in year’s past
  • Large refinancing boom creating huge demand
  • Appraisals can take 1-3 weeks to complete
  • New appraisal rules add another layer of bureaucracy to the process
  • Appraisers are required to be much more detailed and precise in their appraisals, causing them to take much longer.
  • Some appraisals come in too low… often because the appraiser uses foreclosures and short sales as comps but makes very little adjustment for condition and sale distress, making apples and oranges look all like oranges on an appraisal.

Underwriters/Mortgage Companies

  • Underwriters were also trimmed in recent years
  • Underwriting guidelines continually are changing
  • Underwriters look at everything with a fine toothed comb
  • Underwriting can take a week longer than in the past
  • Underwriters sometimes come up with more requests a few days (or hours) before the closing

Title Work/Title Companies

  • Nearly all title companies reduced staff in the last 48 months to take into account the significantly lowered demand.  Now that closings are up 20% over last year, many find themselves overworked.
  • Title companies that sprung up during the “boom years” didn’t always do a good job on the paperwork (filing payoffs, clearing title) and consequently the current title company has to clean up their mess.

Buyers/Sellers

  • There seems to be more emotion on both sides of the table
  • Buyers are stressed about rates & qualifying
  • Buyers don’t want to “overpay” and are seeing/reading/hearing a lot of different things and can’t extract the gold from the ore

Competition

  • On the sell side, there are so many different types of sellers with so many different motivations: traditional, short sale, foreclosure, relocation, investor, etc
  • On the buy side, there’s increased competition for far fewer homes than last year
  • The best priced houses get an offer in the first 60 days on market

Interest Rates

  • Rates have been bouncing around like crazy in the last week or two.  I’ve seen quotes for 4.5% and 5.5% in the span of one week for the same loan type!

The Media

  • We’ve got local numbers, national numbers, numbers tracking the same thing but reported differently by 2-3 groups
  • Some say the bottom is here, some say the bottom is near, some say the bottom is far ahead… yet none of them agree on what a bottom is defined as.

It’s an interesting time in the real estate market today… don’t you think?

Filed Under: Community Issues, Foreclosures and Short Sales, Info for Buyers, Info for Sellers, Opinion, Personal Experiences, Useless Ramblings Tagged With: , ,

Twin Cities Real Estate Sales Climbing

November 25, 2008 By Leave a Comment

While the median sales price of homes in the Twin Cities continues to fall, there is some great news to be had as well.  No, this market downturn/correction/bubble burst/armageddeon/etc. isn’t over yet but there are some fundamentals that need to change before the market can turn around and several have or are close to changing.

Twin Cities Pending Sales

Pending Sales took a nice turn above 2007 sales volume in August and have stayed above the year-prior figures even with the loss of 0% down financing on October 1 and the recently worsening economy.  As long as demand stays at or above year-prior levels it shows a fundamental sales level.

Twin Cities Active Listings

Inventory is also down approximately 9% from the same time last year, which is also a great sign that competition is decreasing between listings for a finite number of buyers, though pricing pressure still remains at these levels.

Housing affordability has also hit a 5 year high to 161 this month, thanks mostly to the median sales price reductions in recent months.  The Housing Affordability Index from 1997-2003 was in the mid 150′s to low 160′s before falling to a stunningly low level of 131 in 2006.  When buyers purchase more home than they can reasonbly afford we get the spikes in price we saw in 2002-2005 and inevitably see the fall of 2006-today.

This is not a post saying “the market has hit a bottom” but rather a post that tells you that while we are still in a difficult time, the fundamentals are beginning to lay the groundwork for an improving market as we move forward.  When the market hits “bottom” I believe is now more in the hands of the economy than the in the fundamentals I’ve just presented to you.

(data and graphs courtesy the Minneapolis Area Association of REALTORS)

Filed Under: Foreclosures and Short Sales, Info for Buyers, Info for Sellers, Market Stats, Opinion, Personal Experiences Tagged With: , , ,
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