New Twin Cities Inventory Record ‘Staggering’
Some housing bubble reports from the Twin Cities. “Twin Cities home sales for May were down from a year ago, as the housing inventory continued its record growth, the local Realtors associations reported Monday. There were 5,039 closed home sales in May in the 13-county metro area. That is down 9.3 percent from a year ago.”
“There were 5,749 pending sales in May, down 14.5 percent from 6,726 a year ago. New listings continued to soar in May, jumping 16.6 percent to 11,419.”
“Following several months of increased listings, there was a record 30,179 active listings on the market in May, up a staggering 43.4 percent from 21,048 a year ago. There were 5.39 listings for each expected home sale in June, up 71.7 percent from last year at this time.”
The Star Tribune reports on area foreclosures. “During the housing boom of the past five years, mortgage brokers flooded mailboxes and called homes offering once-exotic products. Such loans allowed people to buy more house than they could have afforded under traditional lending terms.”
“The first signs of trouble are showing. In Hennepin County, sheriff’s foreclosure sales totaled 1,042 in the first five months of 2006, up 62 percent from the same period a year ago.”
“In Minneapolis, Paul Weingarden noticed the first waves last fall. ‘My file count’s way up, and I don’t anticipate it going down anytime soon,’ said Weingarden, a lawyer. ‘A lot of these loans are adjustable-rate mortgages. Some are subprime mortgages, balloon mortgages, nothing-down mortgages. People are trying to buy more house than they can afford. And if there’s any uptick in rates, they run into problems.”
“‘Nobody ever thinks that things will go bad. Nobody thinks property values will go down,’ he said. ‘And everybody presumes their income is going to keep going up, and they’ll be able to handle anything that happens. That’s not always true.’”
“Kelly Casey and her family managed to save their Cottage Grove home from a foreclosure sale this month. But she’s not sure for how long. They swapped their 30-year fixed-rate loan for a three-year adjustable-rate mortgage with lower payments.”
“But after a rough stretch, they’re uncertain what will happen when their interest rate resets upward in February. ‘It is a good loan; it’s just that it’s an ARM, and when it’s up, I don’t know what that means,’ Casey said. ‘I don’t even understand my ARM loan like I should.’”
“Critics say lenders’ relaxed standards for loan applicants made the problem worse. No industry officials contacted would comment on whether underwriters will become stricter. But Rick Sharga, of RealtyTrac, had this to say: ‘They realize they made some bad loans, so now they’re starting to tighten up their underwriting standards.’”
“That could compound the problem, Sharga said. Now somebody who shouldn’t have had a loan, who is going into default, is not going to be able to qualify for the next loan.”
Thanks to the readers who sent in these links. Here is another similar press release:
‘At the end of May more than 30,000 single-family units were on the market, an all-time high. The Realtors association said there were 5.39 homes available for every sale expected to occur in June.’
“That could compound the problem, Sharga said. Now somebody who shouldn’t have had a loan, who is going into default, is not going to be able to qualify for the next loan.”
And this is a bad thing because….?
I think what he means is, someone who would have qualified in 2007 for a conventional loan instead took a crazy loan in 2004 and will no longer be a qualified buyer in 2007.
I still don’t see why this makes things worse? It’s not “Houses for Everyone!” Not everyone can own, and defaulting on your mortgage would seem to make you not a good risk. It signals that you are not financially prudent.
Wouldn’t you agree that one’s finances can change dramatically in a few years- a few more raises, save up a downpayment, etc? The people who would have saved up downpayments and been in a position to buy in 2007 instead rushed in in 2004 and will now have a foreclosure on their record. This topic has been discussed on this blog before, this bubble sucking up the next generation of buyers before their time came.
It will certainly delay a recovery if lending standards tighten up and tens of thousands of people are foreclosed (or file for bankruptcy) and can’t buy again for seven years or so.
“The people who would have saved up downpayments…”
What tiny, tiny percentage of people can save up a down payment (assuming we are talking about 10% or more) in a few years? If they inherit, sure, but saving that much so fast is almost impossible unless their objective is a home that is priced at just one or two times their annual income.
“What tiny, tiny percentage of people can save up a down payment (assuming we are talking about 10% or more) in a few years?”
People who live beneath their means.
After college I used to save over $1,000/month (early to mid 90’s) by working two jobs, taking my lunch to work, ignoring my credit cards, etc. It’s easy to save if you ignore your friends and advertisers telling you to spend. Since leaving grad school in ‘03 I’ve had plenty for a traditional mortgage and down payment. I simply refused to buy because the prices were too outrageous. Now I will wait even longer and when prices are acceptable buy. I live in a hellhole, but it’s worth it. At least I still have spending money and am not house poor.
Anyone can save money. I did in my mid-20’s in spite of ally my spendthrift friends. Anyone CAN. Very few WILL. We have become too much about instant gratification in our society.
Just ANOTHER reason why “this time it is different” (i.e., much worse) — the howmuchamonth mindset that pervades this country.
70% Homeownership seems to be the maximum to me, just as 3.7% to 4% has been the maximum, due to “frictional unemployment.”
People move, and want to rent to test an area or (OOOH…AHHHH New Idea afraid to take out a toxic loan !) Smart!
It’s a bad thing because if rents start going up and they can’t find any rentals in their price range (a possibility) these people could conceivably end up on the streets.
Perhaps some of the buyers were foolish; but some may also have been misled, or stretched themselves to the limit because it was their only option at the time.
Rents aren’t going up. That fiction is pure NAR propaganda. Sure, we may see increases based on inflation (that, friends and neighbors, is most assuredly going up). But credit is tightening, and a lot of FBs will end up moving in with parents, family members, or friends rather than into a rental house or apartment. In addition, a lot of FBs who manage to hang onto their houses are going to have to take in roommates or lodgers to make ends meet. And what about all those foreclosures? Many are ending up with “rent-to-own” sharks, so it’s not like the supply of rentals is shrinking. Last but not least, good, creditworthy renters will ALWAYS be able to negotiate concessions with wise landlords, unlike the FBs and “cream of the crap” tenants.
Excellent points — most of these are never addressed by the media or the RE bulls and cheerleaders, as if to imply they are impossible events.
Well nobody wants to hear from a party pooper. Specially one that doesn’t buy publicity or take adds in your media. You will never get the truth from the big media. They cannot tell the truth. Have you heard in the official media that GM or Ford on the brink of bankruptcy? Wondn’t be good for the publicity sales department. It’s the same thing witn Real Estate.
But if they can’t find rentals in their price range, even assuming that they could qualify for a mortgage how would they manage those payments? All of these people who bought in the last couple of years lived SOMEWHERE before buying, so how was taking on a toxic loan to buy a place they couldn’t afford their only option?
“‘It is a good loan; it’s just that it’s an ARM, and when it’s up, I don’t know what that means,’ Casey said. ‘I don’t even understand my ARM loan like I should.’”
Am I the only one who almost puked after reading this???
If they had to refi into an ARM because they were having trouble with the fixed-rate loan, it shouldn’t be all that hard to figure out what that means when it adjusts…
The good news is, ARM is finally get a bad name. Previously, the quote would have been “It is a good loan; it’s an ARM!!”
No, you are not. I about lost my lunch. Good heavens there is no end to stupidity.
No puking here. We get that all the time here in SoCal.
Nope. I read it 3 times and still couldn’t believe it. This guy is an idiot.
Why would you puke? This imbecile and millions like her are going to be flushed from the housing market — as well they should. Sanity is starting to impose itself, and not a minute too soon.
As credit standards are dramatically tightened, creditworthy buyers, who prudently sat out the bubble, will no longer be competing with irresponsible FB idiots who were too “stoopid” to comprehend the lunacy of their actions. We’ll have the downpayments, we’ll have the credit scores, and we’ll own the field — while the FBs and speculators lick their wounds, reflect on lessons learned, and try to rebuild their shattered finances.
The Mother of All Liquidation Sales approaches — and to the victors go the spoils.
The Mother of All Liquidation Sales approaches — and to the victors go the spoils.
Oh boy, I really like that one a lot!
You’re still going to be a F’d buyer cause the lenders and real estate whores will figure out another way to shoe horn the buyers into houses and condos. If they don’t, they don’t make their fees and commissions.
Well it’s not that simple. There is a real good chance that it is Uncle Sam that will pay the bill for the whole mess. And Uncle Sam is you the taxpayer. But hey with George W. Bush, what’s 4 or 5 trillion more! Most will loose. Even the winners.
It sounded like a cry for help to me. Let’s face it, most members of the species are not that bright when it comes to finances. And some shark mortgage broker undoubtedly talked her into this POS loan. I hope the reporter at least explained to her what kind of fresh hell she’ll be in in a couple of years.
Good point and I agree. She was just repeating, perhaps with a rising feeling of doubt-driven desparation, what had been drilled into her head by her (realtor, broker, friend, etc…).
Anytime someone’s first statement is “it’s good,” and that is followed up with “but I don’t understand it,” it likely indicates a whole lot of confusion and inner turmoil.
So, I guess, pity it is!
What makes you think the reporter has a clue?
Just shows the seemibly-endless supply of Greater Fools.
Foreclosures have been rising sharply in South Florida since January, with Broward County topping the list with a 50% increase, according to Default Research Inc., a foreclosure research company based in Mt. Pleasant, Pa.
To me, the following quote from the foreclosure attorney says it all. People STILL don’t believe the bursting bubble will end up in anything but a soft landing. Even with all the things we’ve been predciting for months on end coming true, you can’t convince anyone that more — worse — ugliness is coming. Sigh.
“Nobody ever thinks that things will go bad. Nobody thinks property values will go down,” he said. “And everybody presumes their income is going to keep going up, and they’ll be able to handle anything that happens. That’s not always true.”
“The government planted bombs in the twin towers and paid middle easterners to fly planes into the buildings as a cover-up so I do not think bankrupting millions of homeowners is going to bother them either”
http://www.realestatedecline.com
This myth has been around for a while. Only the most vile person would post that let alone believe something so disgusting.
And they told all the Jews to stay home.
Idiot.
Hey Surffroggy,
Until medical science figures out a way to reverse your lobotomy, please don’t post anymore of your lunatic conspiracy theories in here. I had the same crap spewed to me by a Weird Cousin (we’ve all got ‘em) at a family reunion — picture a dude who looks like one of those Easter Island sculptures, who tries to validate his pathetic existence by “explaining” to anyone who will listened “what REALLY happened” on 9/11, the JFK assassination, etc, using “truths” he got from some obscure web site run by cranks and misfits.
Go adjust your tinfoil hate — maybe the signals from the Mothership will come in clearer. And please find another site to hang out in and post your, um, revelations. We’ve already got The Lingus so we’re all stocked up on crazy, thank you very much.
Sammy schadenfreude and “Joe”: Conspiracy theory? The quote that I posted was not my quote you idiots!. I just posted a link to it. Did you even take a look at it? Probably not! You are just another sheep to lazy to seek the truth. Take a look at the evidence before passing judgement you moron!
Sammy schadenfreude works for the government! Hey Sammy, do you believe in the housing bubble or is it a conspiracy theory too?
http://www.realestatedecline.com is the only other bubble web site that I visit besides this site. Just like this site, all of the articles posted on it are from legitimate news sources!
I have been living in the Twin Cities for over two years and I refuse to buy a house. If look at different neighborhoods using zillow.com, you can see how housing has appreciated 20-25% a year since 1999. This cannot be sustainable or realistic. To buy a house with the same size/ammenities of my apartment, I would have to spend 40% more. Prices and house values will come down.
Buy now or forever be priced out. A thousand Floridians move to the Twin Cities every week to retire. It’s completely different in Twin Cities. The difference in rent/mortagage of 40% only reflects that housing prices double every 2-3 years. If you don’t buy now, rent will be 10% of owning cost soon, and you will look like a ghetto smuck with no repsect. Your friends will laugh at you — if you manage to keep any. I can put you in an option ARM today, don’t worry about the details, when your houses doubles in value next year you can refinance and liberate some equity.
We would like to buy a house here in the Twin Cities, and waiting three years or more seems a long time.
> Prices and house values will come down.
I hope you’re right. House prices and rents must relate to reach other, but for now appartment rents are going up here.
Even after an 8% increase in rent after two years, there is still a 40% difference. I locked myself into a two year lease (betting on inflation)
That wasn’t an increase. It was the same rent, adjusted for inflation. Actually, since real inflation (i.e. what real people pay for goods and services in the real world) is running closer to 7-9%, so you’re actually paying less rent (in cheaper dollars) than you were when you started.
Doesn’t that warm your little heart?!!!
I think many of these buyers that are in trouble got greedy. They thought, hey….if I can buy a $200k house and it goes to $400k Why not buy $400k so I will net more gains with all this guaranteed appreciation. Who needs to understand the note anyway? I know mortgage brokers were really pushing this Idea to sell higher loans.
“I think many of these buyers that are in trouble got greedy. They thought, hey….if I can buy a $200k house and it goes to $400k Why not buy $400k so I will net more gains with all this guaranteed appreciation. Who needs to understand the note anyway? I know mortgage brokers were really pushing this Idea to sell higher loans.”
Even that is more complicated than the thinking processes many average people engaged in. All they saw and heard were mortgage lenders telling them it’s a good idea to take out home equity loans or refinance and “take advantage of your home equity”. Plus, practically everyone they knew was doing it. Thus, they decided it was a perfectly reasonable and normal thing to do, so they refi’d or HELOC’d to pay for their kids college, to pay for home improvements, to tide them over after a layoff, etc. Then their lenders approached them again, so they refi’d again…or they ran into a cash crunch and decided it was okay to do it again.
No lender ran ads saying, “Don’t do this unless it’s an absolute crisis - but if you’re in crisis, we *might* be willing to lend you money - assuming you qualify”. Instead, refis and HELOCs were touted as *normal* things to do, and risk was never mentioned. Qualifications were downplayed.
Don’t underestimate the power of advertising. When reputable (alleged) institutions like banks are running endless ads touting refi’s and HELOCs, and those reputable lenders are authorizing the loans, of course the majority of people are going to think it’s all right. They take the lender’s approval of their application as a sign that it’s okay - because everyone knows you’ll be turned down if you’re a bad risk. If the bank trusts you, well hey - then you _can’t_ be in over your head, right?
We on this blog know better. But the average person still assumes they can trust the advice from a professional. Thus they sign for sub-prime loans, for neg-am ARMs, etc, little understanding the noose they’ve just slipped around their necks. Some did it from greed, but a lot of others did it from pure ignorance.
But Mr Income Stream said….
Wonder how much the RE seminars pushed the idea of buy with no down and reap an infinite % in appreciation.
In Australia the seminars are still pushing this line 2 YEARS after the bubble burst.
We have had a textbook ’soft landing’ so far, although all bets are off if the US RE market drags the whole economy into recession. Even so, a lot of people got hurt and the tales keep coming as prices stay flat.
Ominous News Flash:
Instead of Americans bouncing checks.
The Czechs just bounced the Americans.
Sorry, I couldnt help it. The pun seemed so topical.
ajh (an Australian) after 80 minutes of the Japan game :(.
ajh after 85 minutes :).
ajh after 90 minutes :D.
ajh going to work the next morning :mrgreen:.
“‘It is a good loan; it’s just that it’s an ARM, and when it’s up, I don’t know what that means,’ Casey said. ‘I don’t even understand my ARM loan like I should.’”
he’s a good pitt bull. but sometimes i get frightened when it growls at the baby
That pit bull (ARM) is going to tear him limb from limb.
Kelly Casey, the clueless FB in the article, is a “she” not a “he.”
I want to explore how I can profit from all these ARMs going belly-up. Any ideas? I guess I could explore banks’ 10-Ks and find out those who are holding tons of NegAM or ARMs, and then short them. Any other thoughts? I think shorting the homebuilders might not produce much more–they’re all at 52-week lows, and they are still profitable.
Short the federal government if you can. It’s going to have real trouble making good on all of its’ promises and guarantees.
i don’t think so. as long as ink and paper are being made.
Hedge funds that bet againest the USD
A very crowded trade.
Here’s your gift for the day, there are two remaining thrifts that specialize in Neg am loans (Goldenwest is being taken over by Wachovia and I’d give their management team credit for surviving the last major housing bust and some serious interest rate problems that took essentially all their competitors down).
Downey Financial and FirstFed, both are up to their eyes in neg ams mostly in Southern California.
The pawn shop business should be booming pretty soon. Invest in a publicly traded national pawn shop.
“Invest in a publicly traded national pawn shop.”
That makes sense to me.
Is there such a thing?
There are a few of these companies around. One is called “Cash America” and trades on the NYSE as CSH. Net income was down in 2005 but cashflow from operations was up about 50%. This is not a recommedation on the company, I am just throwing it out there for the blog.
First Cash (FCFS)
I am starting to look into investing in companies that make tinfoil hats. They tend to do fairly well during times of economic and political turmoil.
What was Suzanne’s research on this pending Florida hurricane? I am sure she found it was a great place to live/invest? The Lennox ‘no brainer’ Financial will give you the loan.
Suzanne, who does not work in Florida, tells me that all Floridians will be leaving Florida soon because of the hurricanes. They will all be relocating to whatever city any particular client of hers happens to live in.
But Suzanne has also reassured me that if I own investment property in Florida I should keep it because prices there will not decline when everyone leaves.
I can’t tell you how happy I am to see an article like this. Tightening the lending standards, and letting the FBs go into foreclosure, will help speed the correction by getting the FBs out now, instead of having them keep trying to re-fi over and over again in a desperate attempt to stave off foreclosure. Let’s bring on the foreclosures, which will depress the prices and get the market back where it should be. Then, I can buy my house at a reasonable price on reasonable terms.
“It’s a bad thing because if rents start going up and they can’t find any rentals in their price range (a possibility) these people could conceivably end up on the streets.”
No, they won’t be out in the streets. They’ll just move on like gypsies. It’s the rest in the community that will have a problem trying to find workers for laundries, sales clerks, fast food workers, gardners, etc. Get real, for a community to thrive and prosper both house and rental costs have to be in line with wages.
“It’s a bad thing because if rents start going up and they can’t find any rentals in their price range (a possibility) these people could conceivably end up on the streets.”
No, they won’t be out in the streets. They’ll just move on like gypsies. It’s the rest in the community that will have a problem trying to find workers for laundries, sales clerks, fast food workers, gardners, etc. Get real, for a community to thrive and prosper both house and rental costs have to be in line with wages.
The myth of rising rents is a pipe dream of the over-leveraged specuvestor drug-addicts who still believe they aren’t making anymore land.
> The myth of rising rents is a pipe dream of the over-leveraged specuvestor …
At least in the Twin cities, it is not. In the past years, rents stayed flat, because many who could did also buy and stopped renting. Now the landlords see a possibility to increase rents. How far can they go? Good question - certainly not higher than wages allow.
Less a note on housing but on debt - the article also says:
> She’s a medical clinic supervisor. He’s a carpenter. Between them, they expect to make $70,000 to $80,000 a year. They don’t have much in savings, Casey said.
> “We’re probably like a majority of people at our level of income,” Casey said. “You live almost paycheck to paycheck. You barely put money into a 401(k). Your health insurance, your fuel, your taxes, keep going up — and then throw in a [higher] interest rate on top.”
70k is a lot of money, much higher than median income. If they cannot live on this, how would they fare if fate really strikes badly, depression type?
(Note: the painting referred to in the following article was based on an incident in the artist’s life. The painting can be viewed by clicking on the article link.)
The number of foreclosures on Twin Cities homes spikes
Out of House and Home
by Beth Hawkins
May 31, 2006
On the walls of Room 30, a cramped, windowless chamber in the bowels of Minneapolis’s City Hall, hang two decorations. One is the framed dust jacket of a book about the Minnesota Vikings and a note explaining that sales of the volume benefit Special Olympics Minnesota. The other is a small, framed print titled Foreclosure of the Mortgage, by George A. Reid. The image shows an invalid father surrounded by his destitute family, including an infant in a cradle, as a black-clad bailiff reads a notice of repossession of the family’s home. Reid actually painted the scene twice: The first work was burned, but the artist’s preparatory study, rendered in 1892, survived, and in 1935, Reid repainted it.
It’s a dismal scene and a curious choice of decoration. But Room 30 is where, weekdays at 10:00 a.m., delinquent mortgage holders and their properties are formally, quietly parted.
By the end of April, there were 50 percent more foreclosures in Hennepin County than there were in the year-to-date ending in April 2005, or 776 vs. 515.
Meanwhile, the fastest-growing sector of the mortgage industry has been the so-called subprime lenders, nontraditional lenders willing to extend credit—albeit on horrible terms—to consumers with bad track records. Because these lenders have been willing to loan homeowners more than the equity they have in their homes, or to overvalue their houses, borrowers in this category have been able to borrow far more than they can realistically pay. And because the fees associated with these loans are so high, borrowers often end up owing more than their home is worth.
It’s this last category of borrowers that credit counselors and consumer advocates suspect are behind the increase in foreclosure rates. Because of the rise in home values and interest rates that, until recently, were at historic lows, virtually anyone who owns a house has earned some equity and has been able to borrow against it. Having tried to get ahead by refinancing several times, people whose homes are now in foreclosure have most likely simply spent all of their equity, they say.
“The gas tank is empty in terms of options for refinancing out there,” says Dan Williams, foreclosure prevention coordinator for Lutheran Social Services Financial Counseling. “Once you’re out of equity, lenders don’t want you anymore.”
Twin Cities numbers are appalling, Williams adds, but if the calls to his office are any indication, rates are even higher in central Minnesota counties like Sherburne, Isanti, and Mille Lacs. “Property values there are rising terribly fast as people moving out of the metro area are willing to pay more,” he says. “That gives you more equity to refinance, but what doesn’t exist is any good jobs.” Another factor: Before the start of the recession, people had access to decently paid second and third jobs. That’s not the case these days.
Worse, Williams and others working with homeowners in foreclosure say that high as the new numbers are, they probably don’t reflect the number of households in dire straits. Because of a state law that went into effect in October 2004, anyone in Minnesota facing foreclosure is now given simple, clear information on where to turn for help forestalling the creditors. And homeowners who somehow miss the large, fluorescent-colored flyers that arrive with the default notices have several options for reclaiming their property—even after the sheriff has sold it.
Because his office hears from people who’ve read the flyers, Williams is sure people now losing their homes are truly penniless, and probably have been for a long time.
“When we look back on this era, we’re going to say, ‘Holy crap, people are spending wealth as if it were income,’” says Williams. “We’ve converted the whole American psyche of double-checking whether this transaction is reasonable.”
http://citypages.com/databank/27/1330/article14390.asp
My god, that picture is heartbreaking. And though the tendency toward schadenfraude is high, I still feel sorry for the poor slobs who have no concept of how to manage money.
Because that’s what it ultimately comes down to. The people caught in this boom have no money sense, and probably no math sense either. They see two imcompatible things— an impossibly high level of debt and their current income— and don’t have the ability to realize that they are incompatible…
What’s so amazing about this article is it’s georaphic context. This is MN for crissakes! So much for the prudent and sensible mid-westerner eh? But of course we all know that “there is no NATIONAL real estate market” and that in addition to only increasing in value ALL RE is local right? Why for the love of Pete should there be an anything “bubble” in MN? Nice enough place, don’t get me wrong. I have a lot of wonderful relatives up there and they all seem to be the nicest people. In ways to folks from the land of 10,000 lakes the other 49 states don’t really exist. If you’re born there you’ll likely die there. They seem to have very little interaction with the rest of the world other than an ice fishing tournament in Wisconsin. Why oh why did these people have a bubble?
Is it just possible that any time you have cheap, accessible money, easy money and tax free money in the equation you’re going to get a bubble REGARDLESS of that assets location? Is it just possible that when you have unscrupulous mortgage brokers sleeping in the same bed with everyone from the realtors to the appraisers and title companies you can have a bubble in North Dakota?
In ways to folks from the land of 10,000 lakes the other 49 states don’t really exist. If you’re born there you’ll likely die there. Actually, people are moving out in droves. We are going to lose a seat in the House in 2010 due to the population decline in the farm belt. Farm kids go to college and never move back. They move to the Twin Cities, Milwaukee, Chicago, etc…
Good question . I think its because the bubble went to Wisconsin . The flippers went in buying up some cheap real estate ,so the builders went in building more .So than the mortgage brokers went in getting people to go on ARM’s on houses they couldn’t really afford ,because the builder built because investors/flippers created the ball rolling .
Its a traveling bubble maker . The bubble makers have been trying to make markets .
MN has only one thing that makes it bubble worthy: Jobs.
We do have a VERY diversified economy, major players in almost every sector. (Agriculture like Cargill and General Mills etc, Retail like Target and Best Buy, Financial like Wells Fargo and US bank, HealthCare like UnitedHealth Group, Medical Technology like Medtronic, St. Judes, and Boston Scientific, Aviation like Northwest and the list goes on)
Many of us (like me) moved to MN because we have MUCH higher salaries AND MUCH lower COL (this is changing though).
MN has never had the “everybody wants to live here” mantra (obviously), and we never really had the mania of the Coasts. But housing just progressively marched up year after year. Some areas (like mine) saw a tripling of value since 1997. (my house is “worth” the 400’s, it sold for 127k in 1997 as an example). But most areas I’d guess went up about 7-13% per year from 1998-current… Nothing like the coasts where you saw 25% and above, but still above wage increases.
We will fall like everywhere else. The ONLY saving grace here is that modest resale houses can be had for the mid $250k range, and nice homes (resale) can be had for the $400’s or so. Not bad. Especially since we have some of the highest incomes in the country. (our income is much higher here than in CA as example).
So at least our homes are affordable. Still far too expensive by historical measures, and sure to fall, but affordable to the average Joe/Jill.
Where we will get spanked is in the new construction sector, especially “luxury” condos. Everything being built new is in the $400k and above (small condo) range, many into the millions… and the SFH new stuff is easily starting in the high $600k range and shoots way up rapidly from there. This to me makes no sense… in many parts of Mpls you will spend more on a 800 sq ft condo than you will on a 3000 sq ft SFH.
Oh, and we are growing in population (MN is growing in pop, but slower than a lot of other places… but the metro area, especially the outer ring Mpls suburbs is where almost all of the growth really is, they’re growing like gangbusters).
just some rambling,
CLouseau
Having a little problem with the server, apparently. Testing..
Amazing how in two markets with similiar numbers, one has a “staggering” jump in inventory while the other has a “heavy load”. Sounds kind of like they’re describing their own article, although Imust admit this is much more reaslistic than preceding months–they actuall refer to a 32% price drop on a sale in the city.
http://tinyurl.com/eevle
A 43% increase in nothing in many “bubble” markets, including mine (up 126%!), yet we see no such
I lost a sentence in there…the very unclear “heavy load” comment is refering to the Balto Sun’s article about our May numbers to which I linked. Sorry.
upfront statements. I lost a sentence in there…the very unclear “heavy load” comment is refering to the Balto Sun’s article about our May numbers to which I linked. Sorry.
Watch that Nassau Suffolk number. Inventory there is now huge. People just want out.
One last thing,
I don’t know if any of you MN folk have seen this, but I’m seeing a LOT of “sold” signs lately in my neighborhood. (zip code 55410, the East Lake Harriet/East Lake Calhoun/West Kingfield area)
I see even more “for sale” signs, it really is impressive. But the last few weeks a lot of them have “sold” on them… Evidently not enough to overcome new listings though.
The house across the street from me was just bought by a flipper. We’ll see. He’s doing a lot of work on it though. To me, it’s the one nice thing about a flipper… they can improve the neighborhood by fixing up dumps!
Wonder if he’ll make a profit? I wouldn’t bet on his side.
Thanks Ben for covering sleepy ole MN too! I love the Cali posts (it vindicates my move from there amidst the craziness) but I like to hear about sleepy MN too!
clouseau
I see the “for sale” signs but only a few “sold” signs in Mpls - I must travel through other areas than you
- saw Lake Calhoun only by bike on the weekend. What I see (because I am looking out for them) are “for rent” signs side by side with “for sale” signs. If enough people who want to sell but can’t find buyers need to rent out their homes, that should have a dampening effect on the renting market.
I also thank Ben for covering Mpls - I scan the Star Tribune regularly for housing posts, but had missed the business journal’s article.
“Following several months of increased listings, there was a record 30,179 active listings on the market in May, up a staggering 43.4 percent from 21,048 a year ago.”
If 43 percent is staggering what would they call Phoenix? Or even my locale, Monmouth County NJ which is up about 55 percent?