Tara O'Brien's Minneapolis Real Estate Update: August 2011

For the week ending August 20, Twin Cities home sellers continued to list fewer properties than last year at this time, as new listings were down 11.8 percent to 1,342. that makes for 11 consecutive weeks of (still welcome) declines. Meanwhile, buyer activity was up 53.3 percent over last year, the largest increase in 12 weeks and the 15th consecutive week of double-digit gains.

Inventory has been a winner all summer, and we haven't broken the positive pattern yet. The number of active listings for sale was down 20.0% from 2010 to 24,183 homes. That's the largest decline since the beginning of 2004 and represents more than 6,000 fewer homes on the market than at this time last year.

A flurry of housing and employment reports due out this week could set the stage for the rest of the year. These two economic indicators are more closely tied than ever.
-Star Tribune

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1. Meet with a local agent who actively sells homes in your neighborhood, far in advance of listing or house hunting. You need them to brief you on items like how long you should expect your home to take to sell on today's market, what (if anything) you can do to move it faster, and whether listing after doing some improvements to your home, at a different time of year or at a different price point than you had planned can realistically be expected to make an impact on your time frame. Call me and with Edina Realty we can get you on your way.

You also need their professional opinion as to what price you can expect to get for your home. This will impact whether you need to consider a short sale (if your home's value is less than you owe on it, for example) which, in turn may affect your ability to qualify for a home loan in the short-term. (Short sales often make it difficult to qualify for a new home loan for a couple of years.) If you need to buy in the near-term, but your home is unlikely to sell except as a short sale, you'll need to discuss the legalities and logistics with your mortgage pro, attorney and/or a CPA, as well.

Actually, the information about how long your home will take to sell, how much you can expect to sell it for and whether you're expecting to have to unload it at a short sale is all information you'll need to provide to your mortgage pro, so definitely collect it as early as possible in the process. A year before you need to move is not too soon to have your first meet up with your agent.

2. Meet with your mortgage broker before your start looking for homes or put your own home on the market. Of course, this is something you would have done eventually in preparation for your purchase, but it's essential that you have them walk with you through both your sell and your plans to buy, before you do either.

Why?

Well, a good local mortgage broker can work with you and your agent to help you:

•do the math on what you'll net from your home sale;
•help you know how much you (a) can qualify to buy, and (b) will need to come up with for your purchase;
•understand whether the sale will impact your credit at all all and by how much
•time your sale vs your purchase.

There are dozens of ways the sequence might need to play out, to be successful at both buying and selling, and you'll need your mortgage pro to be a partner in the process of determining how to order things - before you actually do anything. For example, you might be under the impression that you can't buy before you sell, because you can't qualify for both, when in fact your mortgage pro could suggest a solution like a low- or no-cost refi first, to bring your payment down so you can qualify to buy before you sell. Or maybe you ARE in a situation where you can't qualify to carry two loans, so you need to sell first and use your own cash to make up the difference between what you owe on your home and what it sells for to avoid a short sale so you can still qualify to buy your next property.

In any event, you won't know what exactly your capabilities are, from a mortgage and timing perspective, until you hear it from the source. So, get that meeting on the calendar, too, as early as possible.

3. Know your options for staying in after closing - or moving in early. Many homeowners try to buy and sell at precisely the simultaneous moment, with very little overlap, because they don't want to throw money away on rentals. The reality of today's market is that very, very few sales close precisely when they are expected to, mostly for reasons entirely out of the control of either party. The seller's bank takes months longer than expected to allow a short sale to close, or the buyer's bank takes eons to sign off on the appraised value of the home. In any event, if you are selling your home, before your purchase will be complete, know that it's okay to ask for a "rent-back" where you can stay in the property for as long as a month or more after the sale closes by agreement with the buyer to pay them rent on the property in the amount of their mortgage payment, taxes and insurance for the time you remain in the home.

On the other hand, if you are buying after your sale closes, some sellers will allow you to move in before closing on a similar arrangement - essentially a lease or early move-in arrangement. They may ask you to sign a document waiving their liability for your belongings and anything else that goes wrong while you're there, before closing - you'll have to negotiate and decide what works for all involved. Before you start to freak out at the thought that your 'buy' won't close when you need it to, know that this option might be available, and talk with your home's seller to see if they'll consider it.

4. Plan for gaps - and for overlaps. There is very little in this world we can be sure of, except the high probability of your escrow closing late. Having a backup plan in place just in case you close one or both transactions off-schedule is essential to avoiding the surprise-induced panic attacks so frequently suffered by those intrepid housing consumers who try to buy and sell homes at the same time. And, frankly, sometimes the best defense against these surprises is simply to plan for gaps and/or overlaps.

So, if you want or need to buy before you sell, build a cash cushion that can cover double payments for a couple of a months - and just plan on that. If that's not in the budget, or if you'd like to try out your new neighborhood or town before you buy, close your home's sale, then plan on renting a place during your house hunt - if you just need a place for a month or two, you might want to consider a suite hotel or a short-term rental for the piece of mind of knowing you will not be out of a place to stay.
-Trulia

This great city lot is available for purchase from Edina Realty and Tara O'Brien. There are very few lots available in the city of Minneapolis and even fewer in NE Minneapolis. The address of this lot is 1811 Taylor Street NE. Priced at $33,000 with a motivated seller. Want to build your dream home? Looking to invest in land? Here it is, this is the one you have been waiting for. Walk to the athletic fields. Close proximity to Hwy 35 and Hwy 65. Great Windom Park location.

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This beautiful home is now for sale by Tara O'Brien and Edina Realty. 3 bedrooms, 2 bathrooms on a corner lot. Walk to Riverview Theater and parkway. Home has newly refinshed hardwood floors throughout, coved ceilings and some new windows. New flooring upstairs and skylights in upper level. Huge family room in lower level and a den also. Nice large laudry room and plenty of storage. The kitchen and bathrooms are updated. This home is ready for the new buyer. Situated on a corner lot in a great location of Howe neighborhood in Longfellow.
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While day traders continue along their roller coaster ride, 997 Twin Cities home buyers made the smart investment in real estate. That's 40.0 percent more than those who made the investment last year. As this year's pending sales trend line rounds off its seasonal peak, you'll notice that purchase demand is coming back in line with historical trends.

Sellers were another story. There were 1,433 new listings, 18.7 percent fewer than this time last year. Seller activity has also likely reached its seasonal peak but remains below historical levels for this time of year. Consequently, buyers have effectively absorbed existing supply. That's a good thing. The number of active listings is down 18.5 percent to 24,362 available homes for sale.

With strong sales and less new supply entering the market, the balance is shifting toward neutral. Both the prevalence and magnitude of seller concessions have stabilized, and absorption rates improved in July after 12 months of sizable increases. Though still slightly lower than last summer, prices have increased nearly 18.0 percent from March to June of this year.
-MAAR
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1. Do I have enough money for a down payment?

And how much, exactly, is “enough?” Today’s minimum down payment requirements range from 3.5 percent on an FHA loan to 10 or even 20 percent for conventional loans. That means coming up with anywhere from $7,000 to $40,000 on a typical $200,000 house. While there are still programs that can give you a down payment assistance, much of the heavy lifting here will need to come from you - in the form of saving up your hard earned cash. And keep in mind there are also closing costs you’ll probably have to pay in cash, which can run as high as 3-4% of your total purchase price; most sellers are willing to help in this department but not all, so buyer beware.

Talk with a real estate pro and a mortgage broker in your areas to start wrapping your head around how much “cash to close” (i.e., down payment + closing costs) will run, approximately, on a local property that would meet your needs. Can your savings cover this? If not, where will you get the money - what’s your plan for coming up with it?
Putting down as much as you can a) makes you more attractive to lenders, so you might qualify you for better loan terms and b) gives you additional purchasing power, either decreasing your monthly mortgage payment or increasing your purchase price limit for a home.

2. Can I handle the not-so-glamorous aspects of homeownership?

If you can’t even fathom the prospect of having a home maintenance crisis without having a landlord to call to fix it, you might want to reconsider homeownership - or at the very least, buy a lower maintenance condo or townhome in great condition, and make sure you get a home warranty! As a home owner, after all, you essentially are your own landlord. Pipe bursts in the middle of the night? Guess who’ll be up fixing it or calling (and paying) the plumber? (Hint: you.)

There are also some less-than-glamorous bills you’ll have to deal with in your new role as a homeowner that you never laid eyes on as a renter: property taxes and hazard insurance, to name two. When you go from renter to owner, you also need to account for the cost of appliances and maintaining the property’s roof, windows, and landscaping, among other things.

3. How long do I intend to stay in the house?

If you think you might move out of the area next year, then you really shouldn’t be thinking about buying a house (unless of course, you want to play landlord and rent it out after you leave - a prospect which requires its own risk/rewards analysis). For your home purchase to pencil out as a good deal, financially, you’ll shouldn’t buy unless you’re comfortable staying in the house at least 5-7 years - even longer, if you’re buying a home in a foreclosure hot spot or an area with a sluggish job market.. This gives you some time to build up equity and make up for the costs of buying, selling and moving.

4. Are my job and finances stable?

Maybe you just went through a major career change and are in the process of working your way back up from the top. Or maybe you work in a field that has been hit really hard by layoffs and cutbacks. The worst case scenario is to find yourself in a spot with mortgage payment you have no way to make, when you could have avoided that by seeing the writing on the wall. If you feel like there’s a real chance you could lose your job or income tomorrow, you may want to hold off on buying a house - that has the added bonus of giving you the geographic freedom to move, if needed, to get a new job.

Is there really such a thing as 100 percent job security in today’s economy? Probably not. But the best practice is to be confident that your finances could handle a temporary loss of income and still make your mortgage payments, before you buy. One way to do this is to have enough money in the bank to cover 4-6 months’ worth of living expenses, calculating them to include your mortgage payment - before you deem yourself ready to buy. That way, even if you lose your job with no warning at all, you’ll at least have a reasonable window of time to find a new one without digging yourself into a hole - or worse, losing your home altogether.

5. What are my real reasons for buying?

Buying a home is a long-term commitment that will have massive impacts on your lifestyle, your family and your finances. In other words, don’t do it unless you’re really sure you want to and are ready for the lifestyle change - don’t let someone else talk you into it. Worthy reasons renters with homeowning readiness give for their decision to buy include some or all of the following:
•You want to build equity instead of paying a landlord. Fact is, if you get a fixed rate mortgage and make the payments for the full term of the loan, you'll eventually pay it off. That's not possible when you're renting.
•You want a place to call your own, where you can paint a wall green, have a fence for your dogs or decorate like its 1970 because it's your prerogative.
•You want the tax advantages of homeownership.
•You want a stable place you and your family can live for as long as you'd like.

Ask yourself these questions, and be honest with your answers. If you really want to buy, but your answers to these questions today don’t weigh in that direction, it doesn’t mean you’ll never own a home. It’s usually just a matter of strategically timing your purchase out a year or two when your savings, your career and your lifestyle are in alignment with the implications of ownership - consider working closely with a real estate broker and a mortgage professional to get an action plan in place and start working that plan.
--Tara on Facebook
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Labels: buying a home, home buying process, minneapolis homes for sale.

July saw two positive indicators in the market: higher pending sales and lower inventory. We may be coming into a more balanced market in the Twin Cities, say market experts.

Edina, Minn. – Aug. 15, 2011 – The Twin Cities metro area is showing signs of coming into a balanced market, as homebuyers work through the inventory of homes for sale in Edina and the 13-county metro area at an accelerated pace.

Overall, the Twin Cities area saw a 43 percent increase in pending sales last month. For every sale in the Twin Cities, only six properties remain on the market.
According to the Minneapolis Area Association of Realtors (MAAR), new listings in the Twin Cities were down by 16.1 percent – a trend true for six of the past seven months. Overall, the inventory of homes for sale has decreased 18.8 percent. In Edina, active listings were down by 8 percent, and new listings were up by 9 percent. The median sales price of a home in Edina is down 14 percent from last year, and is now at $371,500.

Absorption rates improved in the Twin Cities as the months’ supply of inventory came down to 7.6 months, meaning it would take 7.6 months for all of the properties currently on the market to sell at the current rate of sales. A supply of around five to six months is considered a balanced market.

“In real estate, we are always operating in one of three market types: a buyer’s market, a seller’s market, or a balanced market,” said Bob Peltier, president and CEO of Edina Realty Home Services. “We’ve been in a buyer’s market for the past six years, when sellers tend to make more concessions, cut prices, and so on. We finally appear to be trending toward a more balanced market where buyers and sellers will find themselves on a more level playing field.

“While it’s hard to make predictions about the market, this could very well be the year that people look to as the low point, and the best time to buy.”

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Edina Realty, a subsidiary of HomeServices of America, is one of the nation’s largest real estate companies with approximately 60 real estate offices throughout Minnesota, North Dakota and Western Wisconsin and 2,100 REALTORS®. Edina Realty’s family of companies includes Edina Realty, Edina Realty Title and Edina Realty Mortgage. Edina Realty handled nearly 25,000 transactions and $5.3 billion in sales volume in 2010.

Labels: Edina Housing Market, Good Real Estate News

There have been numerous stories recently about the tightening supply of rental housing in the Twin Cities. The latest story from Star Tribune details the struggles some renters have had in finding a place to rent and reveals to us that the apartment vacancy rate in the Twin Cities is now at an astoundingly low 2.4%.

The housing boom created strong demand for condo conversions, which ate up a lot of rental housing. Then the housing bust killed demand, financing and developer interest in building more apartments. Now we find ourselves in a tight supply market, which will definitely put added pressure on rent prices, which I suspect will rise further in the coming year.

The strong demand for apartments has also spilled over into rentals of single family homes as well. Craigslist is bustling with listings for rental homes and it seems that most of theses listings do not last long. Just under a year ago Twin Cities Realtors got into the rental game in a big way. In the first 11 months of operation, our local MLS”s rental section shows over 1300 units rented – with nearly all of them being houses, townhouses or condos. That represents just a tiny fraction of rental units in the Twin Cities but because of the detailed nature of MLS listings, we will soon have far better insight into the single family rental market than we’ve ever had before.

With the huge investor activity currently occurring in our housing market, I believe much of the current shortage of apartment units will be met by investors buying up properties (mostly foreclosures) and renting them out as apartment alternatives.

As posted by: Aaron Dickensen

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Despite the anxiety on Wall Street, home buyers on Main Street continued along their merry way. Twin Citizens entered into 1,029 purchase agreements, up 49.1 percent from the 690 seen during the same week in 2010. Sellers, conversely, introduced only 1,323 new properties to the market for a 15.8 percent decline from last year.

For buyers, that marks 12 consecutive weeks of double-digit increases in activity. For sellers, it marks eight consecutive weeks of declines in activity. Relatively strong sales coupled with subdued new listings has drawn down the inventory of actively marketed properties to 24,734. That’s a 17.9 percent decrease from last year at this time, the largest decline since November 2008.

Stay tuned for a flurry of media attention regarding July’s numbers to be released this week. Competitive pricing, low interest rates and high affordability continue to support a favorable purchase environment for buyers; while strong sales and declining supply should eventually translate into fewer and less dramatic seller concessions. These trends will bring a greater sense of balance and normalcy to the marketplace.
-MAAR

Edina Realty and Tara OBrien have a 1 bedroom condo for rent in the Loring Park neighborhood. This central building is within walking distance to the Walker Art Center. Across the street from Loring Park and faces the city. Great unit with a competitive monthly rent of $1100. Available October 1st and comes with a garage and balcony. Owner pays everything except the electric, this even comes with basic cable. Community rooms, sauna, hot tub, huge deck and more. A must see at this price.
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Edina Realty and Tara OBrien have this great bungalow with all the original character for sale. We have just reduced the price by $10,000 to secure a quick sale. Updated kitchen, hardwood floors, 4 huge bedrooms, 2 bathrooms, room to grow in the basement. There is a workshop for the craftsman, tons of storage and two blocks off the parkway in the Camden Neighborhood. A must see at this new $130,000 price. Call today for a showing.
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Labels: homes for sale in minneapolis, minneapolis homes for sale., Minneapolis Neighborhoods

Updated and clean home coming soon in Howe neighborhood of Longfellow, Minneapolis. 3BD, 2BA, corner lot charmer. Character fills this one and a half story bungalow. Loads of storage, finished basement, great yard, open floor plan, hardwood floors, coved ceilings, skylights, huge front porch, walk-in closets and more. 1/2 blk to the River View Theater. Click the link to see a photo of this home on the market soon. Call if you wish to see it sooner and beat the crowd. Priced to sell under $200,000.

New Listing Here

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Labels: homes for sale in minneapolis, minneapolis homes for sale., Minneapolis Neighborhoods, minneapolis real estate, powderhorn minneapolis

For the week ending July 23, Twin Cities home-buying activity increased 54.3 percent while home-listing activity declined 13.2 percent compared to the same week in 2010. Buyers entered into 1,040 purchase agreements while sellers brought 1,380 new properties onto the market.
Sales are up, listings are down. We've heard it all summer. What else is new? Well, inventory levels are down 17.0 percent from 2010, which is the largest decline in 80 weeks or since January 2010. Buyers now have 24,897 properties from which to choose.
Let's visit some monthly numbers as well. The average amount that sellers receive on their asking price declined 2.1 percent in June to 91.4. Market times were up 17.7 percent to 140 days, prices were down 9.3 percent to $165,000. Each decrease or increase was the smallest in several months. Meanwhile, months supply of inventory shrunk 0.1 percent to 8.1, the first small yet measurable decline in 12 months.
-MAAR

If you would like more information on this or any article you see here, please contact me I would be happy to send you the full report.