Category Archives: real estate, new construction, development, wayzata real estate, foreclosures, economy

“New Construction sales shaping up to be worst in 50 years.”


If you have read the headlines today, you will see that New Construction sales are the worst in 50 years.  These reports are based off of the US Census report  issued this morning.  Minneapolis Star Tribune covered this story as well.

Sales of new single-family houses in July 2011 were at a seasonally adjusted annual rate of 298,000 … This is 0.7 percent (±12.9%)* below the revised June rate of 300,000, but is 6.8 percent (±13.5%)* above the July 2010 estimate of 279,000.

The Twin Cities did a little better, we saw an increase of 23.5% in new construction sales from July 2010 to July 2011.

Here is a great graph from this report from Calculated Risk Blog:

New Homes Sales 07/2011 CalculatedRisk Blog

Looks pretty terrible.  This is based on a National statistic, but how does it relate to our Twin Cities market?  Below is a chart to compare, this chart only goes back to 2009 – but shows us the recent activity.  We are in slightly better shape than this time last year.  We are also tracking about right for New Construction inventory vs. Previously Owned Inventory, approx 1/5.  However on the Sales, new construction is only accounting for about 6% of the sales – this should be closer to the 1/5 range.

 One of the reasons for this disconnect is financing.  Builders have almost no option on financing new inventory on a spec basis, so a good portion of the “actives” are listed as “To Be Built” (just a proposal).   Buyers are reluctant to buy a house that can only be seen on paper…

  On a side note, when the market comes back it is going to feel like it happened overnight.  With the lending restrictions, it is going to be extremely difficult for Builders to gear production back up when our market will need additional inventory.  This is not a problem yet, but I am predicting it will be.

Twin Cities New Construction Solds July 2011

 

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Delinquencies Rise, Foreclosures Fall in Latest MBA Mortgage Delinquency Survey


Delinquencies Rise, Foreclosures Fall in Latest MBA Mortgage Delinquency Survey. Mortgage Bankers Association

This is troubling news.  We were seeing a trend of delinquencies and foreclosures falling, now this report is showing a reversal of that trend.  I guess we are not out of the woods yet… This is probably reflective of the unemployment rate inching up again.  Jobs, Jobs, Jobs is what the housing market needs…

Calculatedriskblog.com chart

From Calculatedriskblog.com: This graph shows the percent of loans delinquent by days past due.

Loans 30 days delinquent increased to 3.46% from 3.35% in Q1. This is probably related to the increase in the unemployment rate.

Delinquent loans in the 60 day bucket increased slightly to 1.37% from 1.35%.

There was a slight decrease in the 90+ day delinquent bucket. This decreased to 3.61% from 3.65% in Q1 2011.

The percent of loans in the foreclosure process decreased to 4.43%.

So short term delinquencies ticked up, and the 90+ day and in-foreclosure rates declined. I’ll have more later after the conference call this morning.

(From MBAA Press Release) WASHINGTON, D.C. (August 22, 2011)  — The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 8.44 percent of all loans outstanding as of the end of the second quarter of 2011, an increase of 12 basis points from the first quarter of 2011, and a decrease of 141 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate increased 32 basis points to 8.11 percent this quarter from 7.79 percent last quarter.

“While overall mortgage delinquencies increased only slightly between the first and second quarters of this year, it is clear that the downward trend we saw through most of 2010 has stopped.  Mortgage delinquencies are no longer improving and are now showing some signs of worsening,” said Jay Brinkmann, MBA’s Chief Economist. “The good news is the continued decline in long-term delinquencies, those mortgages that are three payments or more past due. The bad news is that drop is offset by an increase in newly delinquent loans one payment past due.”

UPDATED:  Hats off the calculated risk blog.  They keep coming up with great statistics.  For more charts like the one below, check out their updated post.   Although Minnesota isn’t in the worst shape by comparison to other states, we are still in rough shape – approx 8% of first mortgages are either in foreclosure or more than 30 days delinquent.  Staggering.  That is 8% of all first mortgages in Minnesota.  (back to our new real estate motto: Jobs, Jobs, Jobs.)

 

calculatedrisk blog State delinquency by %

 

 

 

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Case Shiller Index: Twin Cities map comparison to the nation.


I was reading John Murphy’s report on the Case Shiller home price index in some areas is back to 1997 pricing.  That post got me curious on how we compare.  I am more of a visual learner, so  I was able to create this map using the St Louis Federal Reserve Banks database to show the declines.

Keep in mind, January 2000 = 100 on this index. so the higher the number the less of a price decline.  Minneapolis St Paul is ranked fairly hard hit on price declines along with Chicago, Atlanta, and appears to Charlotte NC.    We are doing better than Detroit and a couple Metro areas like Las Vegas, and parts of Arizona and Ohio. 

This  burst my dream world fantasy that being in Minnesota makes us immune from the national trends.  Looks to me like we clobbered on this one… 

Case Shiller Home Index Map

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Minnesota Unemployment Rate up to 7.2% August 19,2011


One of the key components we need for a healthy real estate market recovery is Jobs. If you don’t have a job, it is rather difficult to buy a home.  Unfortunately this report is bad news.  We are back up to 7.2% unemployment rate in Minnesota.

For your property values to recover, we need people working.  If this trend of higher unemployment continues in Minnesota, we will continue to see the housing prices fall.

August 19, 2011 Minnesota Unemployment Rate

 
There is a ratio used when we calculate housing units needed in an area.  This number is general number used from NAHB, and it can vary depending on the type of jobs created.
But for general purposes, for every 1.1 job created there is need for 1 housing unit.
Instead of adding 1.1 job, we are taking away 1.1 jobs.  What do you suppose will happen to the price of the homes?
 
No more Location, Location, Location.  Now it is Jobs, Jobs, Jobs!
 
 

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Pulte’s Preliminary Plat approval for Marshes of Bloomfield Rosemount, MN


Pulte Homes logo

Image via Wikipedia

Pulte has received preliminary plat approval from Rosemount for a  new 182 lot sub-division called  the Marshes of Bloomfield.

The plans may change slightly as Pulte tabled the approval process while they work on some revisions.  Check back with the City of Rosemount to see when they get back on the agenda.

Marshes of Bloomfield location map
Marshes of Bloomfield Preliminary Plat

Looks like a nice project for Pulte.  There is no pricing information available as this project is not through the approval process yet.  I will keep you posted.

 Although it looks like a nice project, they may have some tough competition depending on their price point.
 
Currently Lennar appears to be in the final phase of the Glendalough of Evermoor neighborhood of 155 home sites.
 
Rottlund is still working on their Harmony neighborhood of 519 mixed use units.
 
RMLS data shows an 8 month supply of homes, or 194 actives, in Rosemount for month ending July 2011.  This is on the higher end of what you should be adding inventory to.  I would venture to guess the Pulte is well aware of this and phase their project accordingly.

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Mattamy Homes MN Hires New Marketing Coordinator


This is for the Builders and Developers that read my posts, just some industry news…

EDINA, Minn. – Mattamy Homes has hired Lauren DeZellar as sales and marketing coordinator for its Minnesota division in the Twin Cities area.

In her new position, DeZellar will be responsible for promoting and marketing Mattamy’s Minnesota division, including assisting in the implementation of sales promotions and coordinating and organizing community sales events, said Steve Logan, vice president of Mattamy Homes in Minnesota.

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City of Plymouth Mosque. Zoning


This mosque proposal has certainly gotten a lot of attention, so I thought I would gather some general information on this.  unfortunately the Minutes from the Planning Commission meeting are not yet published online, so I will go with what is available right now.

  The property the mosque is looking at building on is located on the old Post Office site across from City Hall.  It consists of approx 2.54 acres and is listed for sale at $800,000.

The current Zoning Map, the Property is CC-P (City Center Public)  Based on the City of Plymouth‘s Zoning and their Zoning Guidelines for CC-P, rezoning wouldn’t have to take place – it depends on how you define Community Center.  According to Plymouth’s Zoning, Community Center is defined as:

A Building or room or group of rooms within a building designed specifically as a gathering place for the general public or for a specific sement of the general public and operated on a non-profit basis.  (source: Plymouth Zoning Ordinance)

That sounds to me like a religious gathering place would be permitted by the zoning. (Church, Synagogue, Temple and Mosque – did I leave anyone out?).

Here is the Zoning Guidelines for CC-P in Plymouth:  (can also be found on Plymouth’s website)

21475.05. PERMITTED USES:

The following are permitted uses within the CC District:

Subd. 1.

CC-P.

(a) Amphitheaters.

(b) Bus/transit stations or terminals without vehicle storage.

(c) Commercial recreation, indoor (e.g., bowling alleys, roller rinks).

(d) Community centers.

(e) Essential services not including structures, except those requiring administrative permits or conditional use permits pursuant to Section 21160 of this Chapter.

(f) Governmental and public utility (essential service) buildings and structures, including public works type facilities, excluding outdoor storage.

(g) Parks and recreational facilities, structures and buildings.

(h) Publicly owned civic or cultural buildings such as libraries, city offices, auditoriums, public administration buildings and historical developments.

(i) Sports and fitness clubs.

(Amended by Ord. No. 2002-32, 11/26/02) (Amended by Ord. No. 2005-01, 01/11/05) (Amended by Ord. No. 2006-04, 02/07/06) (Amended by Ord. No. 2007-28, 11/13/07) (Amended by Ord. No. 2009-07, 05/12/09)

The City does not exactly have a track record of following their “Zoning”.  They have time and again turned people down on proposals that fit within in the zoning requirements by coming up with other “objections” that can’t always be quantified.  A recent disregard for property rights was the denial of Wal-Mart’s proposal on 169 and 9 recently, they fit within the zoning requirements and were still turned down.  So it is anyones guess what will happen with this proposal.

I am a huge proponent of Property Rights.  If the use fits within in the City’s Zoning laws, than it should be permitted.  Whether or not neighbors object it, and whether or not I object to it – it is the Owner’s Rights to do with their land what they see fit (within the law – Zoning being one of them)

If people really object to the mosque or Wal-Mart being built, then they should buy the property and do with it what they think should be put there.

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