Real Estate Agents - Has the real estate boom gone bust?

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Has the real estate boom gone bust?

Just Me

2005-12-13, 2:21 pm

Today's St Paul Pioneer Press newspaper business section headline: Area
home sales decline 12%: Big drop in November sales. One county in the
Minneapolis-St Paul metro area reported a nearly 29% drop in closed
sales compared to November of last year. What's more, the median sale
price went down in that county by over 2%. Every county in this metro
reported lower sales than November, 2004. Also, the inventory of homes
for sale is now up by 27% over one year ago.

The weak local real estate market news was also the lead story on the
local NBC TV station last night, profiling home sellers who have had to
lower asking prices and still have not sold.

Is the status this bleak in other metro markets?
And, why are some real estate sales reps so eager to scoff at reports
like these, and spin-doctor the news to make it look rosey? IO

paul.vigil@comcast.net

2005-12-13, 11:21 pm

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darrenli516@yahoo.com

2005-12-16, 12:21 am

Well, I am a real estate sales agent in a large "metro" market(Long
Island, NY), and while I don't exactly scoff at these reports, I do
take them with a grain of salt.
A 29% drop in closed sales in only one county is not good, but it is
not a generic indicator of the market.
Energy prices are way, way up, and mortgage interest rates are rising
too. I think both are having an effect on the market.
But if median prices in the Minneapolis area are down only 2%, that is
hardly cause for concern.
All across the country, the real estate market is changing every day,
and although my market area is very active, it is now in a "buyer's
market" to be sure.
Sellers here can no longer be as greedy, and must price their houses in
accordance with what the market will allow.

Darren
darrenli516@yahoo.com
Licensed Real Estate Agent

Rick Mons

2005-12-18, 5:21 pm

Well, I'm an agent in the Twin Cities and I've been telling my clients
(both buyers and sellers) that the market has slowed down. (In
addition, there's the traditional slow-down that starts just before
Thanksgiving and generally runs until after January 1.)

In fact, we saw signs of the market slowing several months ago -- when
the local media were making claims about how the market was so robust.

A 2% decline in median value for a one-month period of time isn't a
major issue per se ... a lot depends on the number of transactions and
whether you're comparing apples to apples. IIRC, that value was skewed
somewhat by new construction properties.

When you read the local papers (and especially the TV stations), you
need to be pretty careful to note what they're reporting. Several
months ago, when they were talking about the "robust market" they were
reporting "closed sales" ... those were transactions that really
weren't reflecting the buying market but the market 2-3 months earlier.
This latest report is for "pending sales" which is a more
contemporaneous measurement of sales activity.

The current conditions translate to a better market for first-time
buyers ... but the percentage of first-time buyers has been lower than
before. I'd expect the first-time buyer market to pick up in February
.... as those homes move, you'll see increased demand for more expensive
homes (the seller of the home that the first-time buyer bought will
begin searching for the "move-up" home)

At the same time, given the inventory, I don't think we'll see the same
overall "seller's market" that we experienced in the past several
years. We will see more of a seller's market in some high-demand areas
(Linden Hills, Highland Park, etc) but the overall market will be more
balanced.

RM

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