There has been modest job growth in the Twin Cities combined with record low mortgage rates fueled the housing market.

The 2012 figures are:

• 65,914 new listings (4.3% decrease from 2011 and 10 year low).
• 48,641 listings sold (16.9% increase from 2011, and the highest figures since 2006
• 2.9 Month Supply (42.2% drop)
• $167,900 Median Sales Price (11.9% increase)
• 117 Days Cumulative Days on Market on average (20.6% decrease)
• 34.6% of all New Listings were lender-mediated (either foreclosure-s or short sales) (41.9% decrease from 2011 and 42.6% decrease from 2010)
• 37.3% of all Inventory was lender-mediated (44.4% decrease from 2011 and 47.4% decrease from 2010)
• 39.7% of all Closed Sales were lender-mediated (50% decrease from 2011 and 47.9% decrease from 2010)

Read More from MAAR’s report.

2013 is beginning to look positive for the Twin Cities housing market.  The housing inventory is really low and demand is there, so I expect to see price increases in many areas and certain price ranges.

The headwinds still facing the housing market are Jobs, the market needs continued job growth to keep demand up for housing.  In a few weeks Congress and the President will be contending with budget cuts and taxes on the Fiscal Ciff again, as they only kicked the can down the road.  Will the mortgage interest deduction come back into question?  Will the can get kicked down the road again?

Dodd Frank legislation is going to be a “gift the keeps on giving”.  The regulations keep coming out of the committee and are beginning to be implemented.  We haven’t seen the impact from this yet – while there are some some good regulations that have come from this, there are also some regulations that have the  potential to shut down the lenders.  For example, a lender can now be sued for lending to someone who is unable to repay the loan.  At the same time, they can be sued for not lending in certain areas a.k.a. redlining.  Add this to thousands of regulations in this Bill.  (some light reading on Dodd Frank regulations)

The other concern I have going forward are the artificially low interest rates.  Much of this housing market recovery has been fueled by these artificially low interest rates and not by real economic growth.  Operation Twist,  in the short term it is providing for a surge in demand and beneficial to the housing market – but at what price?  What will interest rates eventually have to bounce back to?   Is this just a 2nd Bubble spurred on by artificially low interest rates and not real economic growth?  Time will tell…

As you can see, I am still Bearish on the housing market.  If you do take advantage of these artificially low interest rates, which is a good idea, I recommend being conservative on your purchase.  Rents are a good indication on a properties real value.

Related articles

• Final Twin Cities home sale report: 2012 was a good year compared to 2011
• Twin Cities home sales last year highest since 2006
• St. Thomas real estate analysis: 2012 will be seen as the year the housing market finally hit bottom and began its recovery
• REALTORS Report Tight Financing/credit

2012-06-01   5.8
2012-07-01   5.9
2012-08-01   5.7
2012-09-01   5.3
2012-10-01   5.2
2012-11-01   5.0

All rental property owners, managers or operators must provide a Certificate of Rent Paid (CRP) to each person who rented from them during the previous year unless the property is tax-exempt.

You must give each renter a CRP by Jan. 31, 2013 if:

• property tax was payable in 2012 on the property, or
• you were not required to pay property tax but you made “payments in lieu of property taxes”

Renters need the CRP to apply for the state Property Tax Refund (“renter’s refund”).

For detailed information and a copy of the CRP, see Landlord Instructions for Form CRP (2012).

Source: Minnesota Department of Revenue

 

1 Units Structure permits dipped to 481 in November.  It is fair to expect to see these permits begin to increase going into the spring.

2012-08-01   567
2012-09-01   557
2012-10-01   556
2012-11-01   481

Permits including Apartment Buildings have seen a big increase in 2012.  This is mainly due to an apartment building will have 1 permit issued for every unit.

There is still a long way to go before the market gets back to “normal”.  Given the current inventory of homes available for sale in Minneapolis / St Paul – there will be need for more homes to be built assuming there is even modest demand.

The Composite 20 index posted a -0.1% decline from September to October but an increase of 4.3% year to date.

Minneapolis, MN index posted a -0.7% decline from September to October but an increase of 9.2% year to date.

Read more from S&P

Basically the housing market is trying to gain traction, but struggling to take off.   Given the inventory levels in the Twin Cities market, I expect to see price increases through the spring market of 2013 – assuming interest rates remain low.   The big wild card in the housing market continues to be job growth.  The wild card in the job growth is the Debt Spending in Washington and the looming “Fiscal Cliff”.   My opinion on the “fiscal cliff” is that we should go over it to get a handle on the out of control spending.  There would likely be a recession, but small compared to the cliff we will go over if we continue on this out of control spending.

Related articles

• Case-Shiller House Price Indexes – Phoenix? Really?
• Case-Shiller Index Verifies Home Value Gains Through Q3 2012
• Twin Cities home prices continue to increase: Case Shiller national report

Monthly: Not Seasonally Adjusted:

2012-06-01   766
2012-07-01  1091
2012-08-01   749
2012-09-01  1501
2012-10-01  1577

If we look at just 1-Unit structures, aka. Single Family Homes – we see a little different result.  It paints a pretty clear picture of the marketplace.  The market is still “Renting” vs. “Owning”.   It doesn’t tell us why, but that is a pretty easy speculation.  Lack of Jobs, Lack of Confidence, and difficulty financing.

Monthly - Not Seasonally Adjusted:

2012-06-01   594
2012-07-01   511
2012-08-01   567
2012-09-01   557
2012-10-01   556

Related articles

• Housing Starts, Building Permits Point To Rising 2013 Housing Market
• Building permits and housing starts in October were highest since 2007, with huge gains of 30% and 42% vs. last year

2012-10: 5.2 Percent

2012-09:	5.3
2012-08:	5.7
2012-07:	5.9
2012-06:	5.8

Monthly, Not Seasonally Adjusted, Updated: 2012-11-28 10:22 AM CST

Related articles

• Minneapolis / St Paul, MN Unemployment Rate
• State Unemployment Rates decreased in 37 States in October

Read Full Report from Standard & Poor’s

Below is a comparison of the Minneapolis, MN Case Shiller Index vs the Composite 20 Index.

Related articles

• Real House Prices, Price-to-Rent Ratio
• Case-Shiller Indices Reflect Six Months of Price Increases
• Case-shiller: House Prices Rise 3% From Last Year

The Minneapolis Area Association of Realtors Weekly Market Update shows continued inventory decline.  The Twin Cities is now suffering a shortage of homes for sale.   According to MAAR, the Twin Cities is at a 3.8 Month Supply of Homes for sale which puts this in a Seller’s Market range.  Prices are nudging up as demand chases fewer and fewer home for sale.

Read Full Report from MAAR

Related articles

• Twin Cities remain real estate powerhouses
• Twin Cities house price increases among the highest in the nation

2012-04-01   5.1
2012-05-01   5.2
2012-06-01   5.8
2012-07-01   5.9
2012-08-01   5.7
2012-09-01   5.3