West Savage Real Estate Blog

November 2014 - REALTOR Confidence Index Results for October are now in

The National Association of REALTORS conducts surveys of REALTORS each month to establish their percieved outlook on the market based on their dealings with consumers every day.   The following is the results of the October 2014 survey.

REALTORS®’ assessment of market conditions indicate flat market activity in October 2013 compared to September and a year ago. The REALTOR® Confidence Index-Current Conditions for single family homes and the Buyer Traffic Index registered near 50, a level that indicates an equal number of respondents with “strong” and “weak” outlook. 

REALTORS® reported on market conditions. Properties stayed longer on the market, typically at two months. First-time home buyers continued to account for less than a third of the market. Home purchases for investment purposes were steady compared to September but weaker than a year ago. Sales of distressed properties continued to be on the downtrend. REALTORS® continued to report that obtaining financing is a challenge for many buyers and that the loan approval process has become protracted, in many cases exceeding 30 days. The effective increase in insurance payments for FHA-insured loans has also put a financial strain on borrowers. REALTORS® also reported the lack of “affordable” and “good” houses on the market. Obtaining FHA financing for condominiums that are the entry points for home ownership has also remained a challenge.

Buyer traffic remained at about the same pace in October compared to September but slower compared to a year ago. The Buyer Traffic Index registered at 43 in October (44 in September 2014; 56 in October 2013). Seller traffic remained broadly “weak” with the Seller Traffic Index at 38 ( 39 in September 2013; 43 in October 2013). An index below 50 indicates that more REALTOR® respondents viewed traffic conditions as “weak” compared to those who viewed conditions as “strong.”

Obtaining financing and the lack of “affordable” homes were reported as the major constraints to homebuying. In coastal areas, uncertainty about the flood zone insurance rates continued to weigh down the market.

Approximately 27 percent of REALTOR® respondents reported that their last transaction was a cash sale (24 percent in September 2013; 31 percent in October 2013). The share of cash sales has declined from an average of about 30 percent. This appears to be tied to the decline in the share of purchases for investment purposes as well as the decline in share of sales of distressed properties.

 

West Savage Update - November 2014

Inventory in West Savage dropped 36% in one month, as a whole new crop of listings pended or sold in recent weeks, bringing us back to 21 homes on the market as of today.  Last month produced 12 new listings and 2 pending sales, compared to only 7 new listings and 7 pending sales this month.

Now is also the time when some homes are starting to come off the market for the holidays:  Perhaps many will elect to try the market again in the spring.  

Analysts are predicting we are getting closer to returning to a normal market.  Some Savage locals have expressed their concerns about whether that is true, much of it based on a comparison to last year, and the number of homes still on the market in their neighborhood(s.)   The balance of inventory levels and sales rates suggests a more balanced market this year compared to 2013.   And this too, varies by price point. 

New construction remains a draw to the $400+ market, and for a time a couple builders were giving away a free basement finish with a new home.   There is a new development slated for the land in the southwest corner of McColl Drive and Dakota (27,) with both single family and townhome home sites starting at $275K for townhomes and $350K-$400K for single family homes.   So we do expect the new construction trend and competition for West Savage properties to continue.

This month, single family and townhome inventory in both Savage and Scott County has declined.  The West Savage absorption rate is 3.93 this month.  That means if zero new homes come on the market, it will take 3.93 months to sell our existing inventory.    

Gains in Traditional Activity Almost Offset Declines in Distressed Activity

In October 2014, overall buyer and seller activity both cooled slightly in the 13-county Minneapolis–St. Paul metropolitan area. Pending sales declined 1.3 percent from last year, while new listings decreased 2.3 percent. 

Gains in traditional activity nearly offset dramatic declines in the foreclosure and short sale arena. Inventory levels rose 4.3 percent to 17,132 homes, providing buyers with more options. The median sales price rose 7.2 percent to $209,000, marking 32 consecutive months of year-over-year median price gains. Price per square foot rose 5.6 percent to $123.   

The amount of time a home spends on the market fell 4.0 percent to 72 days, on average. Months’ supply of inventory rose 10.8 percent to 4.1 months, suggesting that the market is moving back toward balance after favoring sellers. The sales mix continued to skew toward traditional homes that sell in less time and at higher price points.

Despite an overall 2.3 percent decrease in seller activity, traditional new listings rose 6.7 percent while foreclosure and short sale new listings were down 42.4 and 31.3 percent, respectively. Similarly, overall closed sales were down 1.5 percent, but traditional closed sales rose 9.7 percent while foreclosure and short sale closings fell 41.1 and 48.3 percent. Market-wide inventory levels increased 4.3 percent, but traditional inventory was up 17.9 percent while foreclosure and short sale inventory levels declined 39.0 and 43.5 percent.

“Traditional activity is going strong,” said Emily Green, President of the Minneapolis Area Association of REALTORS® (MAAR). “That helps strengthen prices, which in turn encourages more sellers to list their homes, giving motivated buyers more options.”

The Twin Cities housing affordability index of 188 means that the median household income was 88 percent higher than what’s necessary to qualify for the median-priced home given current interest rates. While the index is below its 2012 peak, it remains above its long-term average.

According to the Bureau of Labor Statistics, the Twin Cities has the lowest unemployment rate among major metros in the nation at about 3.8 percent. The national rate recently dropped below 6.0 percent for the first time since 2008.

“Stronger job growth and extremely low interest rates continue to put homeownership within reach of more families,” said Mike Hoffman, MAAR President-Elect. “Further improvements are still needed, but both the economy and housing have clearly been moving in the right direction.”

Weekly Market Activity Update - For the Week Ending November 1

As many markets begin to prepare for colder weather or festive family gatherings, a familiar seasonal slowing will begin to creep into the weekly numbers. Yet housing activity can be expected to float along at a seasonally healthy pace like a fallen leaf on a lazy river. With no big, negative economic news on the horizon, reliable sales, price and inventory figures, though not flashy, are quite welcome.

In the Twin Cities region, for the week ending November 1:

• New Listings decreased 9.2% to 1,076

• Pending Sales decreased 6.2% to 940

• Inventory increased 5.7% to 17,760

For the month of October:

• Median Sales Price increased 7.2% to $209,000

• Days on Market decreased 4.0% to 72

• Percent of Original List Price Received decreased 0.6% to 95.2%

• Months Supply of Inventory increased 10.8% to 4.1

Weekly Market Activity Update for the Week Ending October 25

In the buildup of anticipation for the season of pumpkin carving, caramel apple eating and haunted house touring, it came out that one number was spookily down. Homeownership is at its lowest point in 20 years and has been steadily dropping since the housing bubble years from 2004 to 2006. Interestingly, we are now at levels consistent with a healthy market. Also, rising rents should eventually give cause to more households seeking ownership positions. So-called bad news is good, especially in the dark days surrounding the start of November.

In the Twin Cities region, for the week ending October 25:

• New Listings increased 4.5% to 1,267

• Pending Sales decreased 10.4% to 861

• Inventory increased 5.5% to 17,894

For the month of September:

• Median Sales Price increased 5.1% to $205,000

• Days on Market remained flat at 71

• Percent of Original List Price Received decreased 0.9% to 95.6%

• Months Supply of Inventory increased 18.4% to 4.5