The US Census and HUD (Department of Housing and Development) released this morning the August 2011 New Residential Sales Report. (Sold, New Construction)
The headlines are reading: “New Residential Sales down 2.3% for August 2011.” Which is a true statement on a national statistic. Unfortunately they don’t break these figures down by County, City or State. They do however break it down by Region. Below is a graph I produced from this report showing the Midwest Region.
As a region, we fared much better than the rest of the nation. The Midwest Region had an 8.2% increase from July 2011 to August 2011 and a 65.6% increase from August 2010 to August 2011 in New Residential Sales. The midwest region was the only region that saw growth.
This is a good sign for our market.
Had to post this, this is a great article about the basic economics behind the local housing markets. It explains why you should read my Blog and why you should work with me when buying or selling real estate!
You’re about to put an offer on a home, but you’re worried that prices will sink and you wont get the best deal. Youre putting your home on the market and you want to get the most you can for it but you can’t wait forever to sell it. Youve found a great deal on a foreclosure that looks like a great investment, but how what will it be worth a year from now?
via How to Predict Local Home Prices.
Wow, OMG, WTF, how many other 3 letter words could describe this?
I was reading this article from HousingWire and the numbers are staggering. If these numbers prove to be accurate I will be eating my words that “I think we have weeded a lot of our shadow inventory by Short Sales“. 10 Million – that is only 200,000 more mortgage defaults per State! (and I hardly think North and South Dakota will have that many mortgage defaults, that’s more than half their population! Sorry Dakotan’s – couldn’t resist!) Good thing we have managed to sell off that excess 10,000 in inventory over the last 3.5years, looks like we have another 60.5 years in inventory to sell off!
Thought I would pass this along. I am a little skeptical of these figures because these are figures being used to “get Congress to act” and quite often that kind of stuff involves Hockey Stick charts and such. I do know there is a big number in shadow inventory. I have been reading numbers more in line with 1.5million to 2million in Shadow Inventory and no one seems to really pin-point a number just taking estimates based on late payments. But 10 million, that is a BIG number!
Any opinions on this? Do you believe these numbers are for real? 1 in 5 outstanding home loans? That tells me that the unemployment and under-employment are far bigger problems than we are being told…
Roughly 10.4 million mortgages, or one in five outstanding home loans in the U.S., will likely default if Congress refuses to implement new policy changes to prevent and sell more foreclosures, according to analyst Laurie Goodman fromAmherst Securities Group….
…”Many analysts looking at the housing problem mistakenly assume it is limited to loans that are currently non-performing (or 60-plus days past due). Such borrowers have a high probability of eventually losing their homes. However, the problem also includes loans with a compromised pay history; these are re-defaulting at a rapid rate,” Goodman told a Senate subcommittee Tuesday.
Read Full Article
Image via Wikipedia
The US Census released the 2nd Quarter report on Housing Units completed. There is a fair amount of attention placed on this report from a National perspective. Calculated Risk did a good job on reporting on the national figures of this report.
I am more interested in our regional activity, this report does not break it down by State but they do break it down by the Midwest region. These figures are the US Census Midwest Region which includes Chicago area.
As you can see on the graph above, there is slight uptick in housing units completed in the Midwest primarily due to Detached Units. The region is still bouncing along the bottom and will likely remain bouncing along the bottom for at least another year. This will not pick up until the employment situation turns around, once the employment situation begins to turn around creating added demand for new housing – construction will pick up adding even more jobs.
Above is the Housing Starts graph. (I forgot to attach this when I originally posted this early today.) This also shows a slight uptick in housing starts, however also bouncing along the bottom… We will be seeing reports on how housing starts are falling, listen for “seasonally adjusted” figures – we are heading into the winter months and starts will naturally slow down. Locally I am anticipating an increase next year in new housing starts assuming our housing inventory stays down and we don’t get swamped with a wave of new foreclosures.
What I found interesting in this report is the Square Footage of the completed housing units. It appears that builders tried reducing the square footage of new homes to get the pricing down, yet it appears the market is still demanding larger homes. I don’t know if you remember hearing all the media attention saying the “era of mcmansions” is over, only in their dreams. The consumer still loves their “elbow room” and space…
There is a demographic shift taking place where household size is shrinking and the expectation is that this demographic will no longer want the large homes. I am not so sure about that… Certainly there will be a need for less expensive housing and that can be achieved through smaller homes, but overall “size matters” in housing.
Builders Association of the Twin Cities, BATC has the Twin Cities Building Permits for July.
Continued market improvement – good sign. This wraps up the weekly market updates nicely, we should be getting the new weekly update tomorrow. I will post that right away when I receive it, probably around 7pm.
Nice little video from Minneapolis Area Association of Realtors about our Twin Cities September market conditions.
Ever wonder how you can add employment and yet the unemployment rate stays the same? It always seems like “fuzzy” math to me… But then again, I am no economist – I am only looking into the employment situation because this is the key factor holding the real estate market down.
Basically the report indicates Minnesota added 28,400 jobs in August, of which 22,600 were government workers going back to work after the State shutdown. (wow. that’s a big number!)
According to their news release: 5,800 private sector jobs were created and we still hold at a 7.2% unemployment rate.
…other sectors that gained jobs during the month were trade, transportation and utilities (up 4,100), construction (up 2,200), education and health services (up 1,400), manufacturing (up 1,200), and professional and business services (up 700).
The construction industry has added 7,500 jobs in the past four months, the first gain in jobs during the summer construction season since before the housing crash in 2006.
Job losses occurred in Minnesota last month in leisure and hospitality (down 3,300), financial activities (down 200), other services (down 200) and information (down 100). Mining and logging was unchanged.
Read Full Report from State of Minnesota DEED (Department of Employment and Economic Development)
Image by Wonderlane via Flickr
We have all heard about the “pent up demand” for housing. What exactly is that? Quite simply, it is the younger generation that have not been able to enter the workforce because 14.9% unemployment rate and underemployment. It is possible when we get through this “recession” or “recovery” we could see a shortage of housing relatively quickly. It will likely start with the “starter home” price ranges, which then starts a domino effect up the price ranges. The housing market is basically stuck until this age group gets steady employment. To which I might say “Get a Job!”, like an old codger… They are in a tough spot, as we all are.
Back to Jobs, Jobs, Jobs.
Read Full Article from Star Trib.
For most young adults, the only jobs market they know is the one shaped by the Great Recession. Unemployment for 20- to 24-year-olds is about 14.9 percent, still well above the national average of 9.1 percent. That doesn’t allow young workers to think much about the job they want, just the job they can get. And if they live on their own, it’s often with roommates.
The economic impact extends well beyond mom and dad’s wallet. With young adults struggling to live independently, household spending is diminished as fewer new households are being created. As a result, less need exists for furniture, appliances and a variety of services.
“Job formation helps determine household formation,” said Maury Harris, chief U.S. economist for UBS Securities.
From March 2009 to March 2010, the number of new households in the United States was the lowest on record. The plight of younger workers played a large part in the downturn of households, as families were forced to consolidate.