Twin Cities Improving Housing Market and National Improving Markets Index: from Home Destination

Minneapolis Improving Housing Market Predictions For 2013

Home Remodeler Of The year 2010 Liz Sprenger and husband Butch Sprenger, owners of Destiny Homes, provide Minneapolis home improvement projects often pay for themselves through a comparable increase in the home’s value.

For many Minneapolis and St +Paul area home owners, the appreciation in house prices in 2012 added nicely to their net worth. Similarly, Minnetonka home makeovers and Wayzata home renovations often paid for themselves through a comparable increase in the home’s value. Energy efficiency in the face of high fuel prices is one logical reason why replacement home renovation projects are high-value performers, as many Minnesota homeowners have determined with upgrading to better home insulation. Among other reasons, like less draftiness, homeowners do it because they want the the sound-deadening component that is gained along with lower utility costs. It’s nice to recover your expense.

Up from 201 markets listed as improving in December, the national IMI and includes entrants coming from 48 states and the District of Columbia. The National Association of Home Builders (NAHB) housing market report released news of 201 new metropolitan housing markets on the improved list - a significant confirmation of a sustained housing recovery by a promising five month consecutive increase. Destiny Homes, a Minneapolis luxury home builder comments on the national report and the strength of the Minneapolis housing market.

The NAHB IHM tracks housing markets throughout the country which show signs of improving economic health. The index measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas. The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, housing price appreciation from Freddie Mac, and the number of single-family housing permits growth from the U.S. Census Bureau.

Employment growth - Bureau of Labor Statistics
Housing price appreciation - Freddie Mac
Number of single-family housing permits - U.S. Census Bureau

Positive Momentum In Home Prices

Home builders are confident in the Twin Cities housing market and predict continued home price improvement in 2013.

Potential home buyers and families considering a major home renovation in 2013 should be encouraged by the positive momentum in home prices, the number of new construction permits that are up and employment indices that are increasingly evident that a housing recovery is solid across Twin Cities real estate communities.

"We created the improving markets list in September of 2011 to spotlight individual metros where - contrary to the national headlines - housing markets were on the mend. Today, 242 out of 361 metros nationwide appear on that list, including representatives from almost every state in the country. The story is no longer about exceptions to the rule, but about the growing breadth of the housing recovery even as overly strict mortgage requirements hold back the pace of improvement." ~ NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Florida

NAHB Improving Housing Market Predictions For 2013

The IMI has climbed to almost doubled in the past two months as stronger demand during prime home buying season boosted prices across a broader number of metropolitan housing markets. NAHB Chief Economist David Crowe predicted that 2013 will see: "Similar home price gains, and hence the IMI, may be tempered in the future as we see data from typically slower months for home sales." the National Association of Realtors is projecting that existing home sales will be up 8%-9% in 2013 and that median home prices will be up 4% (following a projected 7% increase for 2012).

Minneapolis Housing Market Shows Slow and Steady Gains

Minneapolis housing market is generally a nationally lead housing market in positive indices.

The latest additions included Atlanta; San Francisco and San Jose, Calif.; Denver; Jacksonville and Orlando, Fla.; Indianapolis; Baltimore; Minneapolis; Las Vegas; Portland, Ore.; Philadelphia; and Spokane, Wash. Metropolitan housing markets move on and off the list as monthly statistics change; the Minneapolis housing market is generally a nationally lead housing market in positive indices.

Improving Market Reports Help Homeowners Make Informed Decisions

Minneapolis home improvement projects in 2012 often paid for themselves through a comparable housing investment increase in the home’s value.

In an actual real estate transaction, homeowners who follow housing market trends and indices are better informed for any given remodeling project. Decisions on when and where to start a newly constructed home depends on a variety of factors. These include the condition of the local housing market, the value of similar homes nearby, and the rate at which single-family residential home and property values are changing in the surrounding area. A home’s urban, suburban, or rural setting also affects its value, as does the availability and cost of new and existing homes in the immediate vicinity.

In the Twin Cities region, according to housing market January 7, 2012 report by "The Skinny" for the week ending December 29:

• New Home Listings decreased 40.1% to 358
• Pending Home Sales decreased 12.6% to 442
• Housing Inventory decreased 30.0% to 12,916

Case Shiller Report Confirms Home Price Increases

Parallel reports showing strong housing markets confirm the stability of the housing recovery.

The Case Shiller 20 City Home Price Index reported on December 26, 2012 showed that year-over-year data was up 4.3% from October to October. This now puts this metric only slightly behind the 4.7% calculated by the FHFA, and it's closing in on the 5.4% growth rate reported by CoreLogic(CLGX) for the same period. "The fact that all three metrics are moving upward by parallel amounts suggests that recent home price increases are not happenstances," says Sprenger. Being that the methodology and scope for these metrics vary slightly, we do see some divergence that is expected any confirm the big picture view.

Qualified Residential Mortgage Ruling

Pending rule if set too tight could mean that only home loan applicants with pristine everything may be able to obtain a home loan.

Brian Coester, CEO of Coester VMS, a home appraisal company, spoke on 9 News Now with Jessica Doyle today about a huge pending mortgage rule. This important piece of the 2013 housing market outlook depends on the Qualified Residential Mortgage (QRM) upcoming ruling at the end of the month on what defines a good mortgage. "If they make that credit definition too narrow, you are going to have a very limited market for residential home mortgages. This is bigger than all of the other mortgage regulations coming through. Currently the only loans exempt from the QRM are FHA and Fannie Mae and Freddie Mac when its under Conservatorships, as it is. If the Qualified Residential Mortgage gets done right, 2013 could be a great year." While optimistic, concern remains that if the ruling is set too tight, only homeowners "with the best credit scores, the best income, everything 'pristine perfect' could be able to get home loans," concluded Coester.

Higher credit score
Creditor risk retention (now 5%)
Income ration to loan amount

The underlying problem comes from the definition of a new “qualified mortgage” (QM) as required under the Dodd-Frank legislation passed in 2010 that could have a profound effect on mortgage originations. The legislation includes an “ability to repay” provision that requires lenders to establish that home buyers have a reasonable chance of paying back the loan at the time the mortgage is written to lessen risks. This will set the foundation for the future of mortgage financing for homesowners seeking funds to build a home or renocate an exisging home, as all mortgages will be subject to these requirements.

Contact Destiny Homes for any questions you may have. Homeowners in the Minneapolis and surrounding area residential real estate communities ready to build or renovate their homes may reach either Butch or Liz by calling 952-934-5706.

Download NAHB's January 2013 Improving Housing Markets Index Spreadsheet
Download NAHB's January 2013 Improving Markets Index Report
Download the Case Shiller Home Prices Indices Report from December 26, 2012

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