Two bright spots in housing market

Thursday, August 11, 2011

The Shenehon Center for Real Estate announced the creation of the UST Residential Real Estate Market Index for the Twin Cities metropolitan area. The index is designed to be a broad measure of the general strength and health of the 13-county Twin Cities residential housing market.

The UST index is a composite of different factors that influence the residential real estate market, including selling price, number of closed sales, the proportion of distressed to traditional sales, days on the market, months of supply, number of pending sales, number of new listings, number of homes for sale and the sale price as a percentage of the asking price. These factors are synthesized into a numerical index each month.

The index differentiates itself from other measurements because it explicitly accounts for the proportion of distressed sales in the market. Additionally, it reports a composite index value for the market as a whole, and an individual index for both traditional sales and distressed sales.
The index recorded its second consecutive monthly increase in June (4.25 percent), rising from 752 in May to 784 in June. Much of this increase is because the percentage of distressed sales decreased from 45 percent to 38 percent. While 38 percent is still historically high, it’s lower than in any of the last 11 months.

With the new UST Residential Real Estate Market Index, we will see a truer picture of the market than we have been able to glean from the Case Shiller index. Case Shiller compares sales prices nationally but without accounting for the number of distressed properties. That can lead to some erroneous conclusions, when, as in the case of Minnesota, the proportion of distressed sales is exceptionally high.

Read more: http://finance-commerce.com/2011/08/after-rough-week-for-u-s-two-bright-spots-in-housing-market/

Originally published: 08/11/2011, Finance and Commerce