Mortgage delinquencies held steady this quarter, with pre-foreclosure notices up and actual foreclo-sures down. The delinquency rate of 5.6% was down from 8% about two years ago, but improvements ta-pered this quarter. Pre-foreclosure notices increased this quarter after recent declines.

MHP’s “2 x 4” ReportQuarterly Housing Indicators

Quarter 3 2011

MHP’s “2 x 4” Report tracks a set of two timely, important trends in each of four key housing areas: the rental market, the owners’ market, homelessness and the housing industry.

2446 University Avenue West, Suite 140Saint Paul, MN 55114

651-649-1710, 800-728-8916 fax: 651-649-1725

60+ day delinquency

Pre-foreclosurenotices

rate, primarymortgages

NoticesDelinquency rate

0

5,000

10,000

15,000

20,000

0%

2%

4%

6%

8%

10%

Q308

Q109

Q309

Q110

Q310

Q111

Q311

5.6%

14,586

Owners’ MarketRental Market

Twin Cities Rents & Vacancy Rates

Tenants in Non-Luxury Units with Rent Past Due Minnesota Foreclosures

The apartment vacancy rate for the Twin Cities Met-ro hit a 10-year low at 2.3%, in a dramatic decline from 7.3% in late 2009. In this tight rental market, aver-age rents rose to a new high of $925. Delinquencies among non-luxuruy renters increased this quarter to about 18%.

Minnesota Mortgage Delinquencies & Pre-foreclosure Notices

www.mhponline.org/publications/reports-and-research/2x4-report

Based on survey of 5,400 non-profit-owned units.

01,0002,0003,0004,0005,0006,0007,0008,000

Q3 08

Q109

Q3 09

Q1 10

Q3 10

Rest of Greater MN

St. Cloud

Duluth

Twin Cities Metro (11 Co.)

Rochester

Sher

iffs’

Sa

les

Q1 11

Q3 11

% of renters late on rent by one month or more

0%

5%

10%

15%

20%

25%

30%

Q109

Q309

Q110

Q310

Q111

Q311

Vacancy rate, all unitsVacancy rate, units under $1,000

Average market rent

$800$820$840$860$880$900$920$940$960$980

0%

1%

2%

3%

4%

5%

6%

7%

8%

Q3 08

Q1 09

Q3 09

Q1 10

Q3 10

Q1 11

Q3 11

$902

$925

0

50

100

150

200

250

300

350

400

Sep08

Mar09

Sep09

Mar10

Sep10

Mar11

Sep11

MHP’s “2 x 4” ReportHomelessness

Hennepin Family Homelessness

Homeless Kids

Family homelessness averaged 314 families per month in Hennepin County, the highest since 2000.Compared to last year, both family homelessness in Hennepin County, and homelessness among children in Duluth, St. Paul and Minneapolis com-bined, increased by about 8%.

Minnesota Residential BuildingConstruction Employment

Twin Cities Homes-for-Sale Inventory

Employment in residential housing construction averaged 10,000 per month this quarter, up about 4% compared to last year, after peaking at nearly 20,000 in 2005. The inventory of homes for sale aver-aged 7.2 months this quarter, inching downwards towards a balanced level of 5 to 6 months.

SOURCES: Renters: Marquette Advisors (top); MHP survey (bottom). Owners: Na-tional Delinquency Survey, Mortgage Bankers Association; MN Home Onwer-ship Center (top); HousingLink (bottom). Homelessness: Hennepin County (top); Minneapolis, St. Paul, & Duluth Public Schools (bottom). Industry: Current Employ-ment Statistics (CES)(top); Minneapolis Area Association of Realtors (bottom).

Unduplicated count of families using publicly funded shel-ters. Note seasonal nature of shelter usage, with usage lower during winter months.

For MHP’s “2 x 4” archives and data notes, visitwww.mhponline.org/publications/reports-and-research/2x4-report.

Inventory reported for the first day of the month.

p. 2

Sep08

Mar09

Sep09

Mar10

Sep10

Mar11

Sep11

6,000

8,000

10,000

12,000

14,000

Foreclosures& short salesfor sale (units)

Homes fortraditional sale (units)

Inventory (months)

Balanced inventory(months)

0

2

46

8

10

12

14

05,000

10,00015,00020,00025,00030,00035,00040,000

Sep 08

Mar 09

Sep 09

Mar 10

Sep 10

Mar 11

Units Months

Sep 11

St. Paul

Minneapolis

Children & youth identified by public school systems

2,175 2,211 2,563 2,600

535 648618 82381 87101

126

0500

1,0001,5002,0002,5003,0003,5004,000

Jul 08-Sep 08

Jul 09-Sep 09

Jul 10-Sep 10

Jul 11-Sep 11

Duluth

Housing Industry

MHP’s “2 x 4” Narrative – 2011 Quarter 3 (July - September)

(US)

 MHP’S “2 X 4” REPORT– 2011 Quarter 3        (Released December 13, 2011)  

Again  this  quarter,  the  data  point  to  severe disparities  in  the  housing  experiences  of Minnesotans. Weekly  earnings were  up  steadily, and  unemployment was  largely  unchanged.  This led to further tightening of the rental market and higher  rents.  Yet  the  benefits  of  higher  weekly earnings  for  employed  workers  in  Minnesota were not shared equally across the population. In the  third  quarter  of  2011,  nationwide,  32%  of jobless workers had been out of work  for a year or  longer,  compared  to  about  16%  two  years earlier,  according  to  a  Pew  analysis.  Here  in Minnesota,  our  state’s  share  of  long‐term unemployment  coupled  with  rising  rents,  is almost  certainly  contributing  to  a  rise  in homelessness.  Family  homelessness  rose  to  the highest  level  since  2000  in  Hennepin  County. Unfortunately,  this  trend  does  not  appear  to  be unique to the Twin Cities area. New data from the Duluth  Public  Schools  also  indicate  growing homelessness among kids.   Rental Market 

Average rents and apartment vacancy  rates  for  the Twin Cities metropolitan area both set records this quarter as the rental market tightened further. The previous high for average rents occurred  in the third quarter of 2008, just before October’s infamous stock market crash. This tightening reflects the impact of both increased demand as a result of 130,000 foreclosures since 2005, and limited new supply, with record lows in building of multi‐family housing in the second half of the last decade.  

• The average monthly rent rose to $925, the highest yet recorded by the Marquette Advisors quarterly survey and the fifth straight quarter of increase. 

• In the coming months, renters may see even higher rents, with vacancy rates descending to 2.3%, a 10‐year low. Less than two years ago, the vacancy rate was 7.3% 

• 18% of  renters  in non‐luxury units were delinquent  for  rent  this quarter, an  increase  from prior quarters.  

Owners’ Market 

Indicators for the beleaguered owners’ market were mixed this quarter. The number of foreclosures was down. However, pre‐foreclosure notices  rose again after a period of  recent decline,  indicating more  action  by  lenders  to  pursue  foreclosure  of  properties  with  loans  in  arrears.  Mortgage delinquencies fell a hair, but did not improve at the rate seen in recent quarters.  

• 4,935 homes foreclosed this quarter statewide, the lowest number in any quarter since 2007.  

MHP’s “2 x 4” Narrative – 2011 Quarter 3 (July - September)

  

• The 60+ day delinquency rate for mortgages was 5.6% for Minnesota.  Minnesota had the 9th lowest rate among the 50 states on this measure, compared to the 22nd in the 3rd quarter of 2009. 

• 14,600 pre‐foreclosure notices were issued this quarter, up from 13,400 last quarter. 85% of the  increase was attributable to the Twin Cities metro, with suburban Hennepin County hit particularly hard.  

Homelessness 

As  of  this  quarter,  the  2x4  Report  now  includes  data  on homeless  children  identified by Duluth  Public  Schools  as  an important indicator from Greater Minnesota. All three school districts  tracked  (Minneapolis,  St. Paul,  and Duluth)  showed an  increase  in  homelessness  compared  to  last  year  at  this time, as did Hennepin County data on  family homelessness. As  described  above,  long‐term  unemployment  is  playing  a marked  role  in  the  rise  in homelessness. Housing  resources, often facing stagnation or cuts at the state and federal levels, have  not  kept  pace  with  the  growing  need  for  affordable housing. Reports on serious unmet need for shelter have also appeared in recent media reports.  

• The number of homeless    children  and  youth  identified  since  the  start of  the  school  year totaled  over  3,500  for  the  Minneapolis,  St.  Paul,  and  Duluth  school  districts  combined (though counts may be duplicated). 

• Homelessness among children in the three school districts combined rose 8% from 2010 and 27% from 2008. Duluth has been hit particularly hard with the number up 56% since 2008. 

• The  number  of  homeless  families  seeking  shelter  in  Hennepin  County  averaged  314  per month, higher than in any quarter since the year 2000.  This number is up 8% in the last year.  

Housing Industry   

Early signs of stabilization in the troubled housing industry provide welcome news, given the market collapse still rocking the nation.  Employment in residential housing construction is at least stabilizing, if not improving, while the inventory of homes for sale is slowly being absorbed. This inventory still exceeds demand, but movement towards lower supply may portend stabilizing home values. Twin Cities home values have been falling for about five years running. 

• Quarterly employment in residential housing construction averaged 10,000 per month, about 4% higher than last year at this time. However, in 2005 almost double the number of housing construction workers were employed in the third quarter. 

• The  inventory  of  homes  on  the market  in  the  Twin  Cities  averaged  about  23,700  for  the quarter,  about  7.2 months  of  supply,  which  exceeds  the  “balanced”  level  of  five  to  six months. However, the inventory has not fallen to this level at this time of year since 2006.  

• In September of 2011, the median home sale price for the Twin Cities was $155,500, a drop of about 7% from the year before. 

 

For technical notes, visit http://mhponline.org/publications/reports‐and‐research/2x4‐report.