Monday, September 25, 2006

Minneapolis Real Estate Activity Declining

Decline in Buyer Activity a Matter of Affordability

With the local real estate market officially a Buyer's Market, many are wondering why. Some point to the excessive amount of homes and condos on the market. While this is a very important cause, it is not the underlying reason. Experienced agents realize that when listing and selling a home, the most basic reason a home sells over a neighbors home is the list price. If the price is too high, then buyers will look elsewhere.

As everyone has heard in the last week, the Twin Cities Real Estate Market is considered "overvalued". I particularly do not like the term "overvalued" because during the last few years of market activity, buyers were willing to pay the price for the home they wanted. Homes were priced accordingly to buyer demand. Now that things have slowed, sellers are beginning to realize that 2006-2007 prices are going to have to be a lot lower than 2004-2005 list prices. The best way to define the new market is to say it is in a "state of correction". Now that homes are not being snatched up in record numbers, it doesn't mean that homes are going to decline in value to prices pre-2004.

While home appreciation values will hold some of their value, the real problem facing the current Minneapolis real estate market is its affordability. Price growth has been outpacing income growth for the last decade. Statistics from the Minneapolis Association of Realtors show that in 1992, the median home price in our region was $87,700. It has now risen to $228,900 - a 161% increase in 14 years. During the same period, the median household income for a family of four has grown from $51,000 to $77,500 - an increase of only 51%.

Many think that the saving grace for home buyers would be the record low interest rates of the past few years, compared to the 8-10% interest rates of the 1990's. This was true in 2000, but now home values have reached a point beyond what declining interests can mitigate. Until household incomes catch up, the Twin Cities real estate market is going to be in a state of flux, including a slow down of home appreciation.

It is important to understand that the current slowdown due to housing affordability and record supply is normal and natural. There is just no way the market could continue on as it has and remain stable. The ups and downs in real estate are expected and make for a healthy, long term market. If you have any questions on what your specific area is doing in regards to pricing, please feel free to contact me!

Thursday, August 31, 2006

Minneapolis Market Update

Minneapolis Real Estate Weekly Market Report

Nationwide the real estate market is turning in favor of the buyer, and the Twin Cities is no exception. The summer slow down is in full swing with new listings only 3% above the same period last year...the fifth consecutive week of single-digit growth after months of double-digit growth. On the flip side, home sales are also in decline as more buyers are waiting to see what the market does in the next few months. Pending sales are down 23% from the same time in 2005.

A simple reason for the shift is the approaching winter season, which always sees a decline in home sales, but also the amount of homes on the market and their affordability to buyers is a growing concern among market experts. Other points of interest for the Minneapolis market are the amount of days it takes a home to currently sell. While each home is different and has factors that might make is sell quickly or sit on the market for a long time, the current DOM (days on the market) statistic is between 65-70 days. Concerning Supply vs. Demand, there are 6.36 active listings for every buyer currently looking for Twin Cities real estate.

One of the most important statistics to understand is the current Housing Supply Index. A real estate market is considered to be balanced between sellers and buyers if there is a 5 month supply of homes available for purchase. Currently Minneapolis has a supply of 7.4 months.

Monday, August 7, 2006

Top 5 Mistakes Real Estate Agents Make

The Minneapolis real estate market has not only seen an influx of buyer activity the past three years, but there has also been a significant increase in the number of people seeking to obtain their real estate license to grab "a piece of the pie". The National Association of Realtors reports that over the past 5 years, membership in NAR has increased 65%. What does this mean in terms of service to home sellers? For one, an increase in lack of experience and knowledge for what it takes to sell a home.

I find myself aggravated every now and then by the lack of customer service I see in the industry, so I decided to compile the top 5 mistakes real estate agents make.

1) Failure to educate sellers - the Minneapolis metro area has become a big buyer's market. More homes are being listed everyday, but fewer homes are being sold. I repeatedly see, however, homes being listed at prices of a year ago. Agents are not properly educating sellers that the market has shifted and one can no longer list high. Sellers need to understand that your home could possibly be worth $100,000 less than a year ago!

2) Lack of Photos - I cannot tell you how aggravating it is to me, let alone my buyers, when I see a home that looks interesting online, only to find the listing agent has taken no other photos except a front shot of the home. They write in the remarks, however, how beautiful the home is inside. Another failure I have witnessed is photos taken, but the pictures are crooked or poorly lit. This example does not add to the beauty of the home either and will quickly be passed over by internet buyers.

3) Not enhancing listings on the most searched real estate website, Realtor.com -
for only a small yearly fee, Realtors can "enhance" their listings by adding multiple photos, showcasing the homes, and writing detailed descriptions for the public to read. Realtor.com reports that listings on their website with multiple photos are viewed 300% more often than those without.

4) Lack of a Marketing Plan - repeatedly I enter a listing presentation in which the sellers have interviewed other agents and find I am the only agent with an actual written marketing plan. I have asked sellers in the past what the other agents are offering, but they cannot recall any details. A marketing plan not only spells out to sellers exactly what you do to sell a home, but shows that you are true professional in the field.

5) Not Returning Phone Calls or Emails - with our technology driven world and need for immediate answers, I am constantly amazed at the lack of response from fellow real estate agents. I hear repeatedly from buyers and sellers contacting me via phone or email, that I am usually the only agent out of four that has returned their message. I make it a rule to respond the same day and no more than 24 hours later. Clients are not alone...I, too, call agents that have shown my listings (in order to receive helpful feedback on the buyers thoughts) and only have about 20% of the agents return my phone call.

Please remember that these are mistakes I have seen other agents make over the last few years. Not all agents are perfect, but there are more inexperienced agents in the business than ever before and it is good to be cautious when choosing a Realtor to market your home. Also, please remember, number of years in the business has nothing to do with experience level. An agent that has sold homes for only 5 years might have more transactions under her belt than an agent that has 20 years "experience".

Tuesday, July 25, 2006

Minneapolis Metro Area Market Report

Weekly Minneapolis Real Estate Update July 24

The market has been witnessing record seller listings and lower buyer demand for the Twin Cities. The last week showed an 19% increase of seller listings, but a 23% decrease in pending home sales (compared to statistics this same week in 2005). There are approximately 31,500 single family homes for sale in the Minneapolis Metro area. With Fall rapidly approaching, sellers will slow the pace for listing homes as it is usually more difficult to sell a home during the winter months. Buyers as well will continue to slow the purchase rate until spring time. However buyer's should understand that purchasing a home in the winter months could be a great deal, as sellers are more likely to lower their price, negotiate closing costs, and offer larger concessions.

Saturday, July 22, 2006

This is my First Blog


Welcome to the Minneapolis Real Estate Blog

I hope to post here at least once a week with current real estate market conditions for Minneapolis and the surrounding metro areas. I find many times so called "experts" are commenting on real estate related events, who have never been a Realtor, and that it's time for a true professional in the field to voice her first hand knowledge. Enjoy!