Notes on Real Estate

Since the last newsletter, we've added another seller and three buyers to our list of clients.

Both buyer and seller activity in the Twin Cities residential real estate market continues to be strong. Weekly Pending Sales (homes "sold" but not yet completed transactions) are running neck and neck with last year's record pace. New Listings continue to break records. Total listing supply, up 105 units over last week continues to grow. Last week, Active Listings in the Twin Cities market surpassed the 30,000 threshold for the first time ever.

Typically, seller activity begins to slow more rapidly than buyer activity as we approach the end of the fourth quarter. Come the first quarter of '06, both supply and demand will most likely regain momentum at a similar pace.

Consumers more quickly spend a portion of their increased housing wealth than their stock wealth according to the Housing Wealth Effects Report.

Plus, a one-dollar increase in housing wealth or stock wealth each lead to a long-run increase in consumer spending of about 5.5 cents.

This would indicate that housing wealth makes about a 20% / Dollar contribution to the economy. A healthy housing market is a significant essential to a generally healthy economy. As far as carts and horses are concerned, it would seem quite possible that the housing market is the horse.

Informational Source: National Association of REALTOR® (NAR)

My friend, Glenn Shifflet, sent me a copy of an article in the November issue of Wired (which was a gift subscription to him, and not to be confused with his persona). The title is "What Housing Bubble?"

The next time you hear someone complain about the cost of housing, give them one of these factoids concerning the difference between 1950 and today. (Then: 3.4 people per household; Now: 2.6 people per household)

So, tell Chicken Little the sky is not falling. Pessimism and doom and gloom sell newspapers and keep us attuned to the evening news. Positive stories are by-and-large puffy and fluffy. Here's some hard-core optimism to add to your diet. If anything is inflated, it's the concern, not the reality, and remember that self- fulfilling prophecies are often the result of this sort of thinking.

In the last fifty-five years, housing prices are up 133%, yet square footage is up 137%. Household income has increased 113%, and the cost of heating has gone down by 23%.

Maybe these are the good old days.

That’s it for now. Except this:

1. If you have interests or questions, please e-mail me or give me a call.
2. Check out my website HERE

The opinions expressed in this newsletter are solely those of Tom Crone and others being quoted and do not necessarily reflect the opinions of Coldwell Banker Burnet or its affiliates.