Green Shoots -- Housing Market Version

More Demand Coming Off the Sidelines?

I wouldn't say its a trend, at least not yet, but at my Sunday open house I encountered an encouraging sign for the housing market: a couple in their late '50's - early '60's, now renters, contemplating buying my client's (very nice) townhome.

Their credit was (more than) fine, they both had jobs, and they weren't particularly rattled about the economy.

Having rented for the last 3 years, they had no particular beef with their landlord -- at least beyond the usual, garden variety inattention. But their rent was going up for the second time in three years, and their location was noisy and crowded rather than private and residential.

Too, the now-renters wanted to plant flowers and a garden.

Even if their rented townhome had the space, it wouldn't feel the same.

Just as no one washes a rental car, few renters put a lot of TLC into improving their rentals.

vs. 2006

Contrast the aforementioned, ultra-conservative profile with what Realtors were seeing just three years ago: waves of renters, many with dubious (or no) credit, wanting in on the housing boom.

In the stock market, it's a strong bullish indicator when people are defensive, and there's a lot of cash on the sidelines.

At least in theory, the pool of cash represents buying fuel for another upswing.

Similarly, a large pool of former owners-now renters bodes well for future housing demand.

Pre-Thanksgiving Leftovers

Sizing Up (What's Left of) the Summer Market

Maybe it's just the unseasonably cool weather prompting thoughts of Fall(!), but here's how I see the Twin Cities housing market shaping up between now and Thanksgiving, when things traditionally slow down.

Basically, I think the sub-$500k market has different qualities before and after Labor Day (housing above $500k is likely to mirror overall economic strength or weakness).

Between now and Labor Day, Buyers will have the best selection, and can expect stronger (higher) pricing.

After Labor Day, that will reverse, and Buyers can anticipate softer pricing, but smaller selection.

Swimsuits -- and Houses -- in Feb.

That's so because the Twin Cities market still has a strong seasonal component, with "Spring" (beginning mid-Feb.) the busiest, and Nov. - Jan. predictably the slowest.

Think of it this way: if you listed your home in April, and still haven't sold -- it's time to get serious. Cut the price, invest some money in fix-up, make a final marketing push.

In fact, many home Sellers are already at this point, and alert Buyers will snatch up the most enticing of these homes.

Once this process is complete, what will be left on the market?

The true "leftovers."

Such Sellers will now have to overcome three obstacles: 1) even greater accumulated market time (referred to on MLS as "CDOM," for cumulative days on market); 2) a rapidly closing window to sell before truly cold weather arrives; and 3) a depleted pool of Buyers.

Offsetting these negatives will require a truly compelling (read, low) asking price.