Thought I would share an interesting short read. They do a good job explaining households doubling up, what I refer to as “pent up demand”. Makes me wonder if we are winding a spring tighter and tighter and when the economy starts moving will it trigger another bubble? Just thinking out-loud there..
During the Depression, few American homes had an empty bedroom. The housing recession of the past four years has made empty spare rooms a luxury again by freezing families in place for years and limiting their housing choices.
via Americans Double Up to Make Do.
Do you suppose that the Subprime Mortgages are less risky now or is the U.S. in that bad of shape?
Standard & Poor’s is giving a higher rating to securities backed by subprime home loans, the same type of investments that led to the worst financial crisis since the Great Depression, than it assigns the U.S. government.
Read Full Article from Bloomberg
CoreLogic released their July Report for their Home Price Index. The Lead on their report is July Home Price Index Shows Fourth Consecutive Month-Over-Month Increase. Except for Minnesota…
Excluding distressed sales, the five states with the greatest depreciation were: Nevada (-9.6 percent), Arizona (-8.1 percent), Delaware (-6.5 percent), Minnesota (-5.7 percent), and Michigan (-4.7 percent).
Including distressed sales, the five states with the greatest depreciation were: Nevada (-12.2 percent), Arizona (-11.9 percent), Illinois (-10.0 percent) Minnesota (-8.6 percent), and Idaho (-7.8 percent).
CoreLogic Home Price Index July 2011
I believe our region has something else going on other than the mortgage collapse and housing bubble. If you look at this data, and other data comparing us nationally we are not doing well at all. Our unemployment rate is better than nationally, however we are still losing jobs. We are also losing households in the 7 county metro region, which has a big impact.
The funny things about these reports is the true meaning of the data gets lost in translation. For example, regionally our median and average home prices are way down. That doesn’t mean that all home prices are down by that percentage, it is more reflective the price ranges that are selling bringing the average and median price down. That is part of this, but I would assume that would be the same in other markets but maybe not.
Now it may also be that we are the market that is actually correcting quicker so it looks bad right now, but in the long-term is a healthier market. This is a theory I don’t know how to prove other than with 20/20 hindsight. In other words, time will tell.
(Or for another perspective on this, check out A Cold Detroit post.)
Look how we make the top 5 list… (view CoreLogic’s full report).
CoreLogic HPI July 2011 (including distressed sales)
CoreLogic HPI July 2011 Excluding Distressed Sales
This market update was put on the back-burner on getting posted because the Quarterly Case Shiller Index came out this morning. This one should not be overlooked, because this is actually a leading indicator to the Case Shiller Index for our area.
Minneapolis Area Association of Realtor released their Market Update. We are experiencing positive signs in the market, we have inventory shrinking and pending sales picking up. Ultimately these 2 factors will converge into stabilizing then increasing prices. (simple supply and demand) Pending Sales were up 53.3%, that is outstanding! Inventory shrunk by 20%, another astonishing figure. Now we have a trend going, the average of the last 3 months have been a 15% decrease in inventory and 44.2% increase in pending sales. We are now down to 2005/2006 inventory levels! Prices should begin stabilizing at this inventory level and sales activity, assuming these levels continue.
- Week Ending 8/20/2011 Inventory of Homes (Twin Cities)
Now the really cool thing is that the Affordability Index is really high. The Median household income is 234% of what is required to qualify for the median-priced home under current interest rates. Right now it is cheaper to own a home than it is to rent. This should attract more buyers back into the home market, fueling added demand – stabilizing prices. (* my traditional disclaimer, assuming we add employment to the region…)
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