Posted at 1:53 PM on November 18, 2011
by Paul Tosto
Filed under: Housing and mortgages
Aaron Dickinson is a Realtor and source in the MPR News Public Insight Network. He writes a detailed, data-driven blog on the Twin Cities real estate market. When stuff's come up the past few years, he's helped us in a measured way make sense of it.
With the news that local home building giant Rottlund Homes was going out of business, we asked Dickinson for perspective on the market and where things are headed.
"With the multiyear housing boom most builders loaded up on land at peak prices," he wrote us.
As the market slowed and prices fell, these builders were left holding the bag on overpriced land. Some builders let certain developments go back to the banks while others continued to build on these lots to try and get some money back out of them.Many builders have gone belly up in the last few years and I wouldn't be surprised if a few more still do.What about the overall market for homes and housing? "From a market health standpoint, the worst appears to be well behind us," he said.
Rottlund's liquidation, however, may provide opportunity for other builders to come in and pick up dirt at dirt-cheap prices but with the lower demand for housing right now, thousands of lots in the Twin Cities remain undeveloped.
"Foreclosures and short sales are still at high levels but foreclosure inventory is at multiyear lows and both pre-foreclosure notices and sheriff sales are down significantly from their peak."
Don't expect that to translate quickly into higher prices. They're "unlikely to move much however in the next couple years as we continue to deal with foreclosures and short sales," Dickinson added.
"(The market) will meet headwinds when rates move higher and as more sellers move into the market when prices do start to tick up."
What do you think of Dickinson's analysis? Add some thoughts below.
These are quarterly numbers, not seasonally adjusted.
The index ran from January 1988 to January 2007 --77 quarters-- without a single quarterly decline.
From April 2007 to April 11, the index was flat or declining in 14 of 17 quarters.