gsitaramiah@pioneerpress.com
Updated: 02/11/2011 09:34:24 PM CST

Homes sales were up in the Twin Cities metro last month, but prices took a tumble.
The median sale price fell 10.8 percent in the 13-county area to $140,000 in January as distressed sales put downward pressure on prices, according to local real estate data released Friday.
Jennifer Snyder, president of the St. Paul Area Association of Realtors, thinks news of the rising mortgage interest rates may motivate some potential buyers to take action. The average rate for a 30-year home loan rose above 5 percent this week for the first time since April.
“That might give people an incentive to stop shopping and start doing something,” she said.
A big reason for last month’s median price decline: More than half of the homes sold in January involved foreclosure or so-called “short sales,” where lenders agree to a sale price that falls short of the balance owed on the mortgage.
“Buyers tend to shop for value during the winter months, equating to lower prices, while traditional sales begin to warm up with the spring thaw,” said Brad Fisher, president of the Minneapolis Area Association of Realtors.
East metro counties including Anoka, Dakota, Ramsey, Washington and St. Croix, Wis., all experienced price drops for the month. The median price dropped nearly 19 percent in Ramsey County, to $100,000 last month compared with the same period in 2010.
The Minneapolis Area Association of Realtors said the median price of a home in a traditional sale increased 1.9 percent last month to $201,500.
Closed sales rose 10.4 percent to 2,209 last month for the 13-county metro. Pending sales, an indicator of future activity, increased 3.7 percent to 2,838 for January from the year-ago period. That’s the first year-over-year increase since the tax-credit days of April, the Minneapolis association reported. The deadline for purchase agreements to qualify for the federal tax credit was April 30.
The tough climate means homes are on the market longer — the average ticked up more than 9 percent in January to 146 days, according to the Minneapolis group. Sellers are getting less than 88 percent of original list price, the lowest number on record.
The supply of homes is growing despite a 15.6 percent decline in the number of new listings coming on the market, the Minneapolis association reported. The slowed sales seen in the second half of 2010 have led to short-term increases in supply.
Gita Sitaramiah can be reached at 651-228-5472.

Foreclosures see 11% increase over the rate in 2009
gsitaramiah@pioneerpress.com
Updated: 02/10/2011 09:56:42 PM CST

Not all rising economic indicators in Minnesota last year were positive. Case in point: the number of people losing their homes.
The state saw an 11 percent increase in foreclosures in 2010, making it the second-worst year for home repossessions. And this year may be similar.
There were 25,673 foreclosures in 2010, up from the 23,092 foreclosures in 2009, according to a report distributed by the Minnesota Home Ownership Center. Foreclosures began rising in 2005 and peaked in 2008, with 26,251, before easing slightly the following year.
This year’s number is expected to be similar to 2009 and 2010 levels.
“The primary driver for foreclosures continues to be underemployment and unemployment,” said Julie Gugin, executive director of the Minnesota Home Ownership Center. “Until we see sustained improvement in the job market, we’re going to continue to see elevated (foreclosure) numbers.”
Job growth in Minnesota is expected to be slow. The state lost 150,000 jobs from the end of 2007 to September 2009. Since then, it has gained back just 33,000 of those jobs but won’t erase the deficit for two or three years at current growth rates.
Last year’s uptick in foreclosures was most dramatic in greater Minnesota, where foreclosure sales increased 16 percent over 2009, to 9,894. The Twin Cities metro area saw a 9 percent increase to 15,779.
Hennepin led all counties with 6,161 foreclosures, up 9 percent from 2009; Ramsey was second with 2,608, up 4 percent from 2009. Dakota County had the largest east-metro increase in foreclosures at 15 percent, to 2,147.
Given that values may not recover for years, some households struggling to pay the bills are opting to go through foreclosure rather than keep a house that is “under water,” meaning it’s worth less than what is owed on the mortgage, Gugin said. Folks become renters to pay off debt or reduce overhead to manageable levels, she said.
Seattle-based Zillow.com reported this week that 42.3 percent of all Twin Cities single-family homes with mortgages were under water in the fourth quarter, compared with 36.8 percent for the previous quarter. Nationally, the negative equity rate is 27 percent.
The Zillow.com report also noted that the rate of homes selling for a loss is climbing. Of all metro homes sold in December, 36.1 percent sold for a loss compared with 32.4 percent for the same period a year earlier, the report said. Nationally, 34.1 percent of all homes sold for a loss.
Even with the slowdown in the number of foreclosure sales that were completed in the fourth quarter, as lenders worked out legal and paperwork-related issues, the number of Minnesota foreclosures last year still was four to five times higher than before the start of the crisis, Gugin said.
“I think the recovery in foreclosure numbers is going to happen slowly and not dramatically,” she said.
The Minnesota Home Ownership Center, Greater Minnesota Housing Fund, Minnesota Housing and Family Housing Fund published the report, with research provided by HousingLink.
The report, “Foreclosures in Minnesota,” analyzes sheriffs’ sale data, the primary means of identifying foreclosures, from all Minnesota counties. Minnesota is unique among states in the availability of such data.
Gita Sitaramiah can be reached at 651-228-5472.

 

 

After nearly two years of declines, home prices in the Twin Cities and around the country appear to be stabilizing. But without government support, some question whether recent gains will continue.
Twin Cities-area home prices declined slightly in November, as cold weather set in and the government announced that tax credits for home buyers would be extended into 2010. Locally, prices in November dropped 0.5 percent from October, according to the widely watched S&P/Case-Shiller home price index released Tuesday.

Prices in the 20 housing markets tracked by the composite index dropped 0.2 percent.

Although the Minneapolis-St. Paul area had month-over-month price increases during the summer months and the market appears to have stabilized, prices are down 6.8 percent year-over-year and 27.2 percent from the September 2006 high.

Nationwide, prices were 5.3 percent lower in November than they were a year ago. Analysts note that even that is an improvement. Month-over-month results have tapered from a stream of double-digit declines to November’s 0.2 percent. Four markets—Dallas, Denver, San Diego and San Francisco—saw prices rise slightly in 2009.

When adjusted for seasonality, prices in November rose in the Twin Cities area by 0.3 percent and 0.2 percent nationwide.

Still, economists are hesitant to declare that good times are here.

“The latest data show a far more mixed picture when you look at other details,” Standard & Poor’s Chairman David Blitzer stated, citing how just five of the 20 markets experienced price increases in November.

For prices to increase, we need to “work through those gimmick mortgages,” said Tom Musil, a real estate professor at the University of St. Thomas.

Many of these loans, with interest-only payments or other bells and whistles, are set to adjust in the next couple of years. Economists predict the resulting higher mortgage payments could propel more homeowners into foreclosure.

The jobs picture is also of concern, Musil said. But he thinks the government will inject further stimulus into the housing market this spring by extending the home buyer’s tax credit a second time in an attempt to stabilize and possibly boost prices.

Patrick Newport, economist for IHS Global Insight, expects foreclosures to continue and interest rates to rise if the Fed stops buying mortgages securities as planned.

For more than a year, the government has been the major buyer of mortgage-backed securities, single-handedly propping up the dried-up market. But the government announced that it would stop purchasing them in March. “We believe that prices have further to fall—about another 5 percent,” Newport said.

Kara McGuire • 612-673-7293

 

The housing market in 2009 shaped up to be much better than 2008, a relieved group of Twin Cities Realtors announced Tuesday. Sales were up, inventory was down and the months of total supply on the market is a healthy five.

“We’ve got more affordable homes today than we had before. Interest rates are still incredibly low,” said Brad Fisher, president of the Minneapolis Area Association of Realtors.

Still, the market faces a collection of challenges. The median sales price for 2009 ended at $166,000, 14.9 percent lower than it was in 2008—to a low not seen since 2000. Median prices for December, however, fell just 3 percent compared with December 2008, an indication that median prices are beginning to stabilize.

Still gun-shy consumers worried about joining unemployed friends and neighbors were hesitant to make a move. Some analysts expect another wave of foreclosures. And no one knows what will happen when the home buyer tax credits end midyear.

There were 52,167 pending sales in 2009, up 18.4 percent from 2008. Closed sales were up 16.7 percent over last year. It was the lower end of the housing market—homes under $150,000, many of them foreclosures—that really propelled the sales numbers higher. Home sales in this range soared 72 percent from a year ago. These homes tend to appeal to first-time home buyers, a market segment that eagerly traipsed through bank-owned properties hoping to take advantage of the $8,000 first-time home buyer tax credit. Sales for homes in the $250,000 and above range were down year-over-year. But Fisher is hopeful that the $6,500 tax credit for move-up buyers will improve that segment of the market.

Another bright spot: A decline in housing inventory. Housing inventory fell 22.3 percent from a year ago, with 19,179 homes for sale at the beginning of 2010. The average housing supply of five months “is right where the market should be,” said Ryan Jones, director of the Twin Cities Market for the housing research and consulting firm Metrostudy. He expects listings to increase in the spring as “potential sellers who have backed off or held off will start to feel that maybe they should try again,” he said.

If you weren’t selling a foreclosure in 2009, your sales price didn’t suffer as much. The median sales price of traditional home sales in 2009 was $204,000 compared with $124,000 for lender-mediated properties, the Realtors report found.

Jennifer Snyder, president-elect of the St. Paul Area Association of Realtors, also said pockets of the housing market—inner-ring suburbs such as Roseville and St. Louis Park, as well as southwest Minneapolis, for example—fared better than the overall market.

Monthly numbers were also released Tuesday. In December, closed sales were up 8.9 percent, but pending sales, or signed purchase agreements, were down 0.8 percent as cold weather and the holidays settled in. New listings were off 17.4 percent.

Patrick Newport, U.S. economist for IHS Global Insight, forecasts nationwide home prices will drop an additional 3 to 5 percent in 2010. “Everything else in the economy is starting to improve, but the foreclosure rates and delinquency rates just keep getting higher,” he explained. Mortgage delinquencies in Minnesota reached an all-time high late last year, according to the Mortgage Bankers Association’s most recent report.

Pat Paulson, a Realtor with Exit Lakes Realty in Minneapolis who handles foreclosures for banks, expects historically high numbers of foreclosure to continue for the next two years. “Although I do think the demand is there to buy all of those, there are still a lot of homeowners with negative equity which could potentially become foreclosures or short sales and prevent the market from returning to some kind of booming market,” he said.

In the third quarter, 15.5 percent of Minnesota homeowners had negative equity, owing more on a mortgage than a home is worth, according to a recent report from First American CoreLogic

Like everyone, Newport has his eyes on the job market, which needs to improve for the economy to stabilize and bring residential real estate along with it. But don’t expect the market to go back to normal in 2010.

“It’s going to take three years to get rid of the excesses we have now,” he predicts.

Twin Cities home prices declined in November by the smallest amount in more than two years as the inventory of homes for sale returned to more-normal levels. Those are the latest glimmers of a market on the mend found in the monthly housing numbers released Thursday by the Minneapolis Area Association of Realtors (MAAR).

“We are bottomed out. We are on the road to recovery,” said MAAR president Steve Havig.

The metro area’s $170,000 median sale price in November is up a skosh from $169,000 in October and the same as September. And while $170,000 is down 3 percent from a year ago, it’s not a big double-digit drop like the declines earlier this year. That’s a flash of hope for homeowners weary of watching their equity vaporize.

A surge in sales helped the cause, with a hand from the government. Closed sales, down from October, jumped nearly 70 percent from a year ago to 4,304, thanks in part to the bump from buyers rushing to take advantage of the $8,000 first-time home buyers tax credit which was originally slated to end in late November. That rush is expected to taper off this month, historically a slow one for home sales. The tax credit has since been extended to the end of April and expanded to include a new $6,500 tax credit for some repeat home buyers.

November’s pending sales, a sign of future activity, fell to 2,987, down 36 percent from October but 10 percent higher than a year ago. MAAR’s monthly numbers are not seasonally adjusted.

Brisk sales last month helped shrink the number of homes listed for sale. Listings dropped to 21,959, down from previous months and about 20 percent less than a year ago. That’s about a six-month supply of inventory for sale. A five-month supply is generally considered a balanced market.

Another ray of light: About one-third of the final sales last month were lender-mediated, down from about 60 percent of sales at the start of the year. Lender-mediated sales are some type of foreclosure or short sale where a lender agrees to have homeowners sell a house for less than they owe on it. The resulting bargain-basement prices have been a drag on overall values.

The road ahead remains bumpy. One problem, Havig said, is that banks and lenders continue to stumble with short sales.

“We have everywhere from a three- to nine-month lag in response time from lenders on short sales [offers],” said Havig. He noted that the inventory of foreclosures has dropped, but the supply of short sales remains high.

There’s also more pain in the pipeline as Minnesotans struggle with unemployment. Nearly 7 percent of Minnesota homeowners with mortgages are late on their payments, according to the Mortgage Bankers Association. That’s the highest since 1979, when the association started tracking delinquencies at the state level. And it’s a signal that more lenders and struggling homeowners will be forced to put homes on the market, depressing prices.

Mark Zandi, chief economist at Moody’s Economy.com, recently released a sober 2010 forecast calling for still more trouble in the nation’s housing market, partly because of job losses. He predicted that median home prices in the metro area will fall another 5 percent next year, then pick up about 2 percent in 2011.

Jennifer Bjorhus • 612-673-4683

The Twin Cities housing market performed contrary to the typical September slowdown and reported a sharp increase in pending sales, the Minneapolis Area Association of Realtors (MAAR) is reporting this morning.

There were nearly 5,000 pending sales signed in September in the metro area, up 23.5 percent from the same month a year ago, the Realtors group said. This also is the 15th consecutive month that pending sales beat the same month from the previous year.

The increase comes as the federal tax credit for first-time home buyers ticked toward a Nov. 30 deadline.

“Buyers using the credit are in the 11th hour, so we expect high activity levels for the next week or two,” said Steve Havig, President of the MAAR.

The September median sales price of $170,000 represents a slight dip from the prior month, but the decline is less extreme than what has been typical.

“We’re obviously pleased with the positive signs we’re seeing,” said MAAR President-Elect Brad Fisher. “But the

ongoing recession and impending loss of the tax credit make the future a bit uncertain.”

The MAAR serves the Twin Cities 13-county metro area and western Wisconsin.

Paul Walsh • 612-673-4482

Minneapolis-St. Paul area home prices rose 3.2 percent in August.It’s the fourth straight month of improvement and second month in a row the Cities came out on top.

The Twin Cities area was one of the nation’s warmer housing markets this summer as home prices rose faster here than in other metro areas, according to a closely watched housing index released Tuesday.

But market observers still warn that economic uncertainty could cause prices to start sinking again in a “double dip” scenario.

Minneapolis-St. Paul area home prices rose 3.2 percent from July to August, according to the Standard & Poor’s/Case-Shiller national home price index, compared with a 1.2 percent average increase for the 20 cities tracked by the index. Only Cleveland failed to show an improvement in prices.

This is the fourth straight month of improvement for Minneapolis-St. Paul and the nation. It is also the second month in a row that the Twin Cities came out on top of the index; prices here rose 4.6 percent from June to July.

Still, home prices have a long way to go before recovering what they’ve lost. In this market, median home prices are still 13.7 percent below August 2008 levels. That is slightly worse than the 11.3 percent that prices are down nationwide.

The Minneapolis Area Association of Realtors reported the August median home price for the metro area was $175,000. Case-Shiller data show August prices in the Twin Cities area are about where they were in August 2001.

David Blitzer, chairman of the Index Committee at Standard & Poor’s, said the Twin Cities may be on the top of the index for the second month in a row because the area’s prices peaked and bottomed earlier than the other areas tracked.

The median price peaked in September 2006 at $229,000 and bottomed in April at $153,000.

“Plus, the run-up was not as wild as some places, so the recovery is probably easier,” he explained in an e-mail.

Buying before winter

Chris Galler, chief operating officer for the Minnesota Association of Realtors, said he thinks area prices have risen faster because of the area’s many cold months.

“Consumers are trying to get into houses before the winter comes,” he said, adding he wouldn’t be surprised to see prices fall in December and January.

The widely reported Case-Shiller numbers aren’t seasonally adjusted. When taking seasonal variations into account, home prices here were up 2.3 percent in August, a slightly lower increase than San Francisco, and up 1.0 percent nationwide.

Housing experts such as Blitzer and Galler worry that prices may head south again if the unemployment rate continues to rise and the home buyer tax credit is not extended.

An extension seemed likely Tuesday afternoon as Senate leaders debated the details.

The credit could buoy home prices through the winter, especially if the credit expires before the housing market traditionally heats up in spring.

The Conference Board reported Tuesday that consumer confidence fell unexpectedly this month because of the unemployment picture. Home prices are tied to consumer confidence, because housing values make up a large percentage of net worth for many families.

Foreclosures still loom

Galler worries about a new wave of foreclosures hitting the market in 2010 due to failed loan modifications and more homeowners losing jobs. Foreclosures depress overall home prices, as homeowners hunt for deals.

“It’s very difficult to see where we’re not going to have foreclosures going forward,” he said.

Data released today by Realty Trac, an online marketplace for foreclosed properties, show foreclosures rising faster locally than nationally. The Minneapolis-St. Paul metro area had 9,767 foreclosure filings in the third quarter, a 13.5 percent increase from the second quarter and nearly double the third-quarter total last year, Realty Trac said.

The report found one in every 136 Twin Cities area households received a foreclosure notice during that period, on par with the national figure.

Kara McGuire • 612-673-7293

The index showed a widespread turnaround with prices rising month-over-month in 15 metro areas since June. San Francisco, Minneapolis and San Diego led the way.

NEW YORK – Home prices rose in August for the third straight month, a rapid pace of recovery that surprised economists and raised questions about how long the trend can last.

After a steep three-year descent, home prices rebounded this summer at an annualized pace of almost 7 percent, the Standard & Poor’s/Case-Shiller home price index showed Tuesday. Against a backdrop of rising unemployment and falling consumer confidence, the speed of the recovery stumped Robert Shiller, economist and co-creator of the index.

“It’s a time of exceptional uncertainty,” Shiller said. “It doesn’t seem like a time to see home prices booming, but that’s what’s happening.”

He expects prices will continue to rise for the next few months, but can’t forecast beyond that, explaining, “There’s no way to be a statistician about this.”

The Case-Shiller index of 20 major cities climbed 1 percent from July to a seasonally adjusted reading of 144.5. While prices were down 11.4 percent from August a year ago, the annual declines have slowed since February.

Rising home prices are a key ingredient to rebuilding the economy. Homeowners feel wealthier when their property appreciates in value and are more likely to spend money. Rising prices also help millions of homeowners who owe more to the bank than their homes are worth.

But many economists expect a double dip in prices. Despite signs the economy is recovering, home prices could decline again as unemployment and foreclosures rise and a tax credit for first-time homebuyers expires next month.

Zach Pandl, an economist at Nomura Global Economics, expects prices to fall to the lows reached earlier this year before recovering in early 2010.

“We need to see flat to rising prices in the winter months,” Pandl said. “That would be a very encouraging sign that prices have bottomed out.”

While prices are still down about 30 percent from the peak in 2006, the rebound appears widespread. Prices rose month-over-month in 15 metro areas since June, with San Francisco, Minneapolis and San Diego leading the way.

September home sales figures back up the recovery. Home resales climbed more than 9 percent last month, the largest amount in more than 26 years, the National Association of Realtors said last week. Sales figures for newly built homes are due out Wednesday.

Jacqueline Buchanan picked up a two-bedroom bargain foreclosure five miles from her work in Miami. She plans to qualify for the federal tax credit and spend the money on her new home.

“You want to know how good of a deal it was? In 2007, the property sold for $449,000 and I got it for $71,000,” said the 50-year-old nurse, who moved here from England more than two years ago. “And it’s immaculate.”

Though prices in Miami have edged up for three months in a row, they are about half the level they were in 2006, according to the Case-Shiller index.

Congress is considering extending the tax credit that saves first-time buyers 10 percent of the sales price, up to $8,000. This week, top Democrats in the Senate pressed a plan that would prolong the credit but gradually phase it out over the next year.

Supporters will likely point to new data Tuesday that showed confidence about the U.S. economy receded unexpectedly in October. With job prospects bleak, the Conference Board’s Consumer Confidence Index fell almost 6 points from September to the lowest level since May.

And home prices are not rising everywhere.

Prices in Las Vegas, Seattle and Charlotte, N.C., all fell to their lowest levels in August. Prices in Las Vegas have plunged by 56 percent since peaking in April 2006, the largest peak-to-trough decline of all 20 cities.

“My worry,” Shiller said, “is that confidence will drop back and the rally we’re seeing in the housing market will collapse.”

 

Lower mortgage rates and first-time home buyers rushing to find good deals before the $8,000 federal tax credit expires made for a busy Twin Cities housing market in September. Pending home sales rose 23.5 percent over a year ago, with 4,986 signed purchase agreements, the Minneapolis Area Association of Realtors reported Monday.

That’s the 15th consecutive month of year-over-year increases. Pending sales are 75.6 percent higher than they were in September 2007. Because they can fall through, pending sales are a somewhat volatile measure. Closed sales in September were flat year-over-year.

The first-time home buyer credit, devised to help jump-start the housing market, is set to expire Nov. 30. Buyers must close on their home on or before that date to qualify. Realtors suggest buyers give themselves at least 45 days from finding the home to closing, meaning time is running out.

But Realtors are saying that even move-up buyers are starting to dip their toes into the market. “People are really waking up,” said Larry Kriedberg, a real estate agent with Coldwell Banker Burnet in Minneapolis. “People are saying ‘We’ve waited. We see that the market is good as a buying person. We want to get into the market because that interest rate is so low.’” Rates for 30-year fixed-rate mortgages have hovered around 5 percent or lower in recent weeks.

But Scott Anderson, senior economist at Wells Fargo, said he thinks higher interest rates are on the horizon as the dollar weakens and the Federal Reserve slows its purchase of mortgage debt. “The road to recovery is not going to be in one direction, and we’re going to see a lot of ups and downs month-to-month. And we’re still pretty pessimistic that we’ve hit bottom on home prices,” he said.