Thursday, June 26, 2008

Declining Markets No Longer Penalized

In the past, home buyers who have wanted to purchase in declining markets were penalized for doing so. Usually, lenders required more funds for a down payment, some up to 5% more than homes bought in regular markets. Local lenders held the power to call an area "declining" so any buyer could find themselves paying more, even when local areas were doing well.

Sound unfair? Well, it is.

Thankfully, someone has finally figured this out, and surprisingly, it is Fannie Mae and Freddie Mac. Now, buyers will pay the same amount for down payments, no matter where the property is located. Both factions have suspended their loan penalties indefinitely.

Now there are still many lenders out there that refuse to lift their penalties, but if the loan if backed by Fannie Mae or Freddie Mace, relief is available now. For heaven's sake, how can you get a market out of decline if you make it harder for low income families to purchase a home?

By the way, buyers can also get funding through FHA which also does not have a declining market penalty for home purchases.

Wednesday, June 25, 2008

A Day Trip Through La Crescent, Minnesota

There is this little area of road near the Mississippi River just south of La Crescent in Southeast Minnesota that always captures my eye. If I had to describe peace, then this would be one of the first places I would think of. We drive though it every time I travel to Wisconsin to visit the in-laws. On one side is this old looking train bridge that sits just above a small tributary stream. On the other side is a water-marsh area that is always a nice bright green. Finally, after two years, I stopped to take some photos. Enjoy!

Monday, June 16, 2008

Fresh Off the Presses

A Snapshot of the Minneapolis Housing Market

The Minneapolis Association of Realtors has reported the following:

"Bringing our market back to balance involves a two-step process: supply needs to draw down, demand needs to bounce back up. It's as simple as that. So far, 2008 is proving to be the year that we can confidently check the first item off this list, as the number of homes for sale continues to dwindle relative to one year ago. There are currently 33,219 homes for sale in the Twin Cities region, down a hearty 4.9 percent from one year ago, a year-over-year figure which should continue to drop in the months ahead. New listings for the week ending June 7 were down 13.9 percent from a year ago, while pending sales declined by a smaller 5.3 percent for the same time period comparison.

All in all, we're halfway there: supply is coming down, but demand is only flattening, not coming back up just yet. Regardless, the signs are encouraging."

Saturday, June 14, 2008

My Photos Stink

Many real estate agents have a computer generated feedback system in place for their listings, so that when a home is shown, the agent can let the seller know what buyers think of their home. It is a great way to get honest feedback about price, condition, etc.

Today I received some feedback on one of my listings. I had to chuckle at this one. Apparently I have been asked to put new photos of the home on the Multiple Listing System because the home looks nothing like the photos. In fact, the home is too small. Hmmm...the home is only 1000 square feet, so what were you actually expecting when you walked in?

I can only presume that my photographs made the home look like it is 2000 square feet, and now I can understand why the buyer was upset. Of course, the room sizes are available as well, but I guess they missed that one too.

Bottom line is that I take really good photos for my clients which helps receive more traffic through the home. Not everyone will be happy with a home they see, but if my photos get them in the door, at least they will know if it works for them. By the way, I won't be changing the photos any time soon.

Wednesday, June 11, 2008

Let There be Hail

We had a series of rough storms roll through today, and nature decided to drop marble size hail onto my house. Haven't checked for damage yet, but maybe I can wish it away?!

Monday, June 9, 2008

Can You Get a Deal from a Short Sale?

Quite simply, the answer is yes. While some banks are still having trouble stomaching taking a huge loss, many others are realizing the necessity of getting homes off their books, or keeping them off there in the first place. I am seeing many more short sales sold at low prices.

Take, for example, a home that closed this past month at a price of $145,403. The original list price started out 138 days ago at $227,000. The owners had bought the home for $250,000. Instead of going into foreclosure, they were able to get the bank to agree to a short sale. And some short sale this was!

The buyers are now sitting on a home with instant equity because they bought it greatly under market value. If they hold the home for at least five years, there is a very good chance they would make a good resale profit on the home, should they sell in the distant future. The positive point to remember is that they made an offer to the sellers and were not embarrassed that is was low. I am sure the sellers were happy just to get an offer, and while difficult to swallow, the bank is probably happier that it won't have to deal with the home as a foreclosure.

If you are in the market to buy, don't be afraid to look at the short can get a great deal right now all over the Twin Cities for homes that are in excellent condition.

Saturday, June 7, 2008

Early Summer at the Minnesota Landscape Arboretum

The Minnesota Landscape Arboretum is a great place to take the family and enjoy hours of exploration. There are so many gardens to see and collections to visit that it you might actually run out of time and come another day to finish. It is also a wonderful place to host your wedding.

Friday, June 6, 2008

Just in Case You Want to Know

There is a lot of mis-information on how much real estate agents earn floating around the media, so I thought you might like to see the newest income stats for Brokers, agents, and Realtors. Remember, brokers run the business, all of us are agents, but only those who proscribe to a Code of Ethics can call themselves Realtors.

Thursday, June 5, 2008

How the Next President Could Effect Your Taxes

One of my financial advisors from Merrill Lynch sent this interesting article on how the two presidential candidates might effect your future pocketbook.

Two Candidates, Two Different Tax Plans

The next president will have much to say about taxes and investments. From the capital gains rate to the corporate tax rate, here’s what to expect after the election.

With the economy ranking No. 1 on voters’ list of concerns, the topic of taxes is coming up with increasing regularity in debates and on the campaign trail. It’s clear that the 44th president will greatly affect future tax policy and, by extension, your pocketbook and investment portfolio.

The parties have very different approaches, as evidenced by their candidates’ positions. Republican presidential candidate John McCain, for instance, proposes making President George W. Bush’s tax cuts permanent. He also wants to make it harder to raise taxes. His Democratic challenger, Barack Obama, is equally vocal about repealing those tax cuts for households earning more than $250,000.

Here’s where the candidates stand on these issues and how their proposed changes might affect you:

Wednesday, June 4, 2008

Minnesota Wildflowers - Columbine

This beautiful red-orange flower hangs upside-down and is usually found perched on rocks or on the edge of shady woodlands. From the Buttercup family, Columbine blooms in late spring and into summer.

Tuesday, June 3, 2008

Are Buyers Spoiled?

For the last few months, I have been working on and off again with several buyers, which is keeping me really busy. However it is proving difficult to find a home that each of them likes. Now, trust me, we are finding homes that are fantastic, but it seems buyers want the cake and to eat it too in the current real estate market. My question has to be, are buyers spoiled when it comes to amenities inside homes?

Over the last five years, with the increase in home "appreciation" equity, many home owners could afford to renovate their aging homes. Trying to make the home more modern, it was common to put granite counter tops in, hardwood floors, stainless steel appliances, and exotic wood cabinets. Builders jumped into the fray as well and offered all types of previous "upgraded" amenities as standard options.

Rehabbers that bought homes to fix and flip were making a killing on net profit, so to make their homes more appealing, they were putting in the best products. I remember watching one of the cable home improvement shows where a 900 square foot home was being rehabbed, which they priced moderately, but it had granite countertops and high end appliances. As a former rehabber myself, a few things you have to look at when considering what to out fit the home with are:

  • value of the home

  • type of buyer

  • location of home

If the home is not in a great area, or has a low value, then one should not over build the home with luxury amenities that are not supported by the surrounding homes. Unfortunately, I saw this happening time and time again over the last several years, and it looks like buyers are now used to top of the line, even in the smallest homes.

One new home buyer I represent has been looking at homes near Lake Nokomis in Minneapolis. They can only afford a certain amount of home, which means they cannot buy a home even a few blocks from the lake. Most of the homes we are looking at were built 30+ years ago, some need minor updating, while others may need a ton of work. Obviously, the less work to put into the home the better for my buyers.

What has surprised me most is that we have found a few homes that are PERFECT for them, being completely renovated. The only thing they don't have is granite countertops, high end appliances, etc. The buyers refuse to accept any house that doesn't have these amenities, I have come to learn. I have tried to explain to them that in their price range, these "luxury" items are hardly found, but they sadly refuse to believe it.

So my question is, have buyers, especially first time home buyers, been spoiled by the boom years? Growing up in a lower income family, one thing I learned was that sometimes you have to work your way up to what you really want. We bought a modest first home five years ago, and it took three years to finally get the money to tile the floors. After hard work, we were able to build a new, larger home, this last year.

But it seems to me that the new generation of buyers no longer want to work for things. They want it all, right now. With the market haven fallen the last two years, many buyers now expect to get everything for nothing. Sadly, I have to try and bring current buyers into reality, but it is no easy task. Buyers are even shunning homes that need a little updating via carpet or new vinyl because they don't want to do the work later. Sometimes, you just have to look past these minor flaws if your goal is to get into a home.

So what's an agent to do, when buyers just won't come to reason? Well, I guess just keep showing homes until it finally sinks in because, after all, this is just one more learning experience for the first time home buyer in Minneapolis.