The Big Picture and the Little

Details

Jeff AllenDirector of ResearchMinneapolis Area Association of REALTORS®10K Research & Marketing

Big Picture: Buyer Activity is Up

Little Details: Where is activity up?

Little Details: Where is activity up?

Activity Up (+)• Lender-mediated sales up 131.7 percent• Sales below $190,000 up 61.3 percent

Activity Down (-)• New construction sales down 5.8 percent• Condominium sales down 5.2 percent• Sales above $190,000 down 17.6 percent

Big Picture: Supply is Down

Little Details: Where is supply down?

Little Details: Where is supply down?

Months Supply of Inventory(a balanced market has 5-6

months of supply)

11.8

8.8

8.1

7.6

6.5

6.2

5.2

1.4

12.8Short Sales

Above $250K

New Construction

Townhouse Condo

Traditional

Previously Owned

Single Family

Under $250K

Foreclosures

Big Picture: Prices are Stabilizing

Little Details: Where are prices strongest?

Looking Ahead: What’s Next?

Two Drivers of Recent Market Growth

1.Federal First-Time Home Buyer Tax Credit (and the sequel)

2.Historically Low Mortgage Rates

Looking Ahead: What’s Next?

Two Drivers of Recent Market Growth

1.Federal First-Time Home Buyer Tax Credit (and the sequel)

2.Historically Low Mortgage Rates

Gut Check: Will we still have those drivers in 6 months?

Looking Ahead: What’s Next?

When we lose these market boosters, what will happen?

Expect a second (smaller) dip in sales and prices.

The “Double Dip.”

Looking Ahead: What’s Next?

Two biggest challenges in next 3-5 years:

1. Short Sales

2.“Stuck Sellers”

Both are born from lost equity that will take some time to rebuild.

Taking Stock of the Last 12 Months

• Foreclosure inventory cut in half

• Prices dramatically slow their free-fall

• Thousands of new homeowners created

• Affordability at a record high

More bumps in the road are ahead, but we’ve made a lot of progress.