How is the RE market in MSP?

[Navelinski]

Originally Posted by midwest456

Prices have come down from the peak? where is the hard/public data to show this? All I have seen is a 25% drop in the *volume* of sales, *not* the prices.

Is there a specific area you are interested in? The hard data is collected by the same REALTORS who handle the vast majority of the transactions. Your county does collect some similar data, eventually...

Most counties cannot afford to compile, maintain, and store the data outside of what is currently mandated. They generally do not do statistical analysis or try to extrapolate meaning from it. In general, they record the individual "public record information" about a property for tax purposes and even that can take 6 months or more after the sale of the home.

Hope that helps!

[midwest456]

http://www.chaskaherald.com/node/1749 (broken link)

This was in a local paper this week.

"For the entire Twin Cities region, closed sales are down 14.1 percent year to date and 12.2 percent down comparing April of this year to April of 2006.
"Chaska has an average year-to-date sales price of $269,306, ahead of last year by 0.9 percent. The Twin Cities metropolitan area as a whole saw an average sales price of $268,780 for the year so far, which is 1.5 percent behind the same time period in 2006."

In other words, big drop in volume, negligible drop in price (even a tiny increase in the case of Chaska). Of course, average is not the same as median, and median could be misleading in some ways as well.

What they should provide stats on is year over year price change in comparables-- in size, quality of neighborhood, distance from the metro area's economic "center of gravity" or what have you. how many extras were thrown into the deal to get the house sold at the price it did, etc. Looking at the inventory glut, restrictions on subprime lending in response to the foreclosures, and the fact that the economy if anything is likely to slow down meaning stagnant/dropping wages for most people outside boardrooms and wall street, I'd be very surprised if the prices didn't drop a lot more than that before it bottoms. Housing simply takes a lot longer to bottom than something like the stock market.

http://en.wikipedia.org/wiki/Sticky_Prices

It would also be interesting to look at the last peak and fall in housing prices in the area historically and how much it fell, how long that took, etc.

I do believe most realtors are decent people, and not like the ones described in that chapter of that "Freakonomics" book, but the real estate industry does have a vested interest in getting people to buy, so I can't regard that as an impartial source.

[SlyFrog]

Originally Posted by midwest456

In other words, big drop in volume, negligible drop in price (even a tiny increase in the case of Chaska). Of course, average is not the same as median, and median could be misleading in some ways as well.

My gut, entirely unsupported, feeling is that this is because people are still trying to "wait out the market" on the sell side. As I have mentioned before, I'm still just seeing a lot of crazy stupid prices for houses that have just been sitting on the market for month after month.

I'm looking, for example, but no Mr. Seller, I'm not going to buy the house you overpaid for in 2005 for another 20% more than you bought it for. I'm also not going to pay you 7-8 times the median family income for four for your genericbuilt 18 year old 3000 sq. ft. 4 bedroom in a second ring suburb.

I honestly think that a lot of potential buyers just woke up and said, "Why are you asking me to even consider a $3500 a month mortgage for your fungible, generic house?"

[catluvr]

My advice...

Buy now, but realize the townhome/condo market is way overbuilt, and is still building. Do not plan to sell it. Average time on market right now according to our realtor is 18 months.

Food for thought.

[maknadif]

Just to share an idea. My son is a senior this year and plans on attending the U next fall. I have planned for years to buy each of my three a four plex with in a 15 min drive to their school. The deal is that they maintain and manage the buildings for their time there. (I will of course aid if need be.) When they graduate they should have substantial equity, (the market is great if your looking at forclosures)- They can choose to buy me out and keep the place or sell it and use for their 1st home, investment, etc... Most brokerages have web sites that cover all of what is available on the market. Shop the web. I've been in Real Estate for 11+ years and this is the best market to buy in more than 5 years. You don't have to offer asking price and there is a great supply of properties to choose from. Good luck.

[nick is rulz]

The market is not the best time to buy, and I wish people would stop saying that.

For one, people selling are stubborn and feel that what the appraiser puts the value of their house at is gospel. Guess what? The reason properties aren't selling is because people are finally now realizing the gap between your living wage and the cost of a house is so obscenely high that its nonsense to even bother. If I wanted to buy for the cost of my rent, I would have to look towards a dump on a very unstable block on the Northside, or live 2 hours outside of the metro.

Everyones still caught up in this ridiculous mentality that investing in real estate is this bullet proof way to make money. From post-depression to now, yes, most places you would come out ahead when selling a property. However, when considering the vast amounts of baby boomers now wanting to downsize as they inch closer to retirement, and their "nest egg" is the home they own. Toss that into the already crappy market, and watch the trend continue.

And no, renting isnt throwing money away...its paying for a place to live.

[Cruz Azul Guy]

Nick is right on point. I've looked hard at the condo market for the last couple years and I just cannot see it being a good investment short-term or long-term. The older a condo becomes, the higher the association fee becomes. Who in their right mind would want an $80,000 1 bedroom condo built in 1960 with a $600 association fee? That's the kind of stuff I'm seeing on the market right now. The condo market will never be in demand because as soon as there is a shortage 12 more high rises get built. It's a lose-lose.

[moving123456]

Originally Posted by nick is rulz

The market is not the best time to buy, and I wish people would stop saying that.

I am with you. I would not consider the top of the biggest real estate price peak in U.S. history a great time to buy.

[nick is rulz]

the only people who continue to maintain how the housing market will "balance itself out soon" are:

1). homeowners in serious denial
2). realtor cheerleaders

people seemed to miss the whole high school economics lesson on supply and demand when it comes to real estate. Theres a mega supply of houses right now, and no one wants to drop the price, so no one buys. Couple that with people that fall into my demographic age group of 21-30. Most of us are pretty transient, and would prefer not to be tied down with a home. Even friends of mine that are married have no idea where they will be next year.

I think people who long bought into the "guaranteed return on your investment" principle will be in for somewhat of a shock in the coming years. Take a look at Japan.