Wednesday, November 26, 2008

Morning Sunrise in Minnesota

I happened to wake up the other day to a beautiful sunrise. It was crisp and chilly and the colors were perfect. Grabbing my camera and running outside in bare feet, I was able to capture the shot just in time. Five minutes later, and it was gone.

Sunday, November 23, 2008

The Failure of Home Builders in the Twin Cities

For the last few months, it seems every week I hear of another local builder closing its door, or filing for bankruptcy. The first big one to go down this year was MW Johnson, the 11th largest builder in the state, who filed for Chapter 11 bankruptcy in June of this year. Even though their doors are still open, their website now only has contact information for current home owners and the media.

When we were house shopping two years ago, MW Johnson had developments everywhere, and they were still asking for buyers to over pay for their homes, which in my opinion, were mediocre at best. So it is no surprise to me for them to restructure their business. They followed the model of most home builders in Minnesota: they failed to see the writing on the wall and continued to over build the Twin Cities housing market.

Now it seems another large builder who has been around since 1968 has closed its doors, literally. Just two days before they won the right to build in Eagan, MN on the Carriage Hills golf course, Wennsmann Homes closed its doors November 7th and is not answering its phones. No one knows for sure what has happened as there has been no response from Wennsmann. Maybe the money it took to win the four year legal battle drained them dry. Who knows. But what I do know, is that when viewing their developments in Prior Lake two years ago, I wasn't impressed. Homes were overpriced for the falling housing market and Prior Lake was becoming over-built.

Many small time builders have also gone out of business, which is really no surprise. The Twin Cities builders that are staying afloat are doing so by cutting jobs. Centex homes has laid off many of its employees, contractors, and real estate agents. Other builders are laying off their designers, and some are not keeping their model homes open, but rather rely on "by appointment only" showings. To take a step further, I have heard some builders are cutting back the number of floor plans they offer to potential clients, and no longer allow upgrades at the time of build. Cutting costs and overhead is the only way to stay alive in this depressed real estate market.

But my main point is this, could it be that home builders in general didn't have a business plan in place for after the boom? They reaped the financial rewards for five years. Now many of them are in trouble because they failed to prepare for the bad times. Did they spend all their profit, waste it away in new developments, waste it away in fancy advertising? I honestly don't know.

I am not a genius. But I did see the hand writing on the wall in 2004 and took measures to make sure I would be OK when the market started to decline. I am staying afloat right now because of making a plan four years ago. But like many local builders, many real estate agents have been forced out of the business. So the questions is, if builders and agents had been honest with themselves and planned for the future that was inevitable, would they be closing their doors or filing for bankruptcy? Let me know your thoughts!

Tuesday, November 11, 2008

Minneapolis Downtown Condo Update

The area in Minneapolis which has the most single listings is by far downtown Minneapolis. With the inventory largely condominiums, it is easier to break down the data, separating out the houses (only six for sale currently) from the condos. Below is a break down of what has happened so far this year when compared to 2007 for downtown Minneapolis condominiums:

              • Average Days on the Market (DOM) : it is taking on average 108 days for a Minneapolis condo unit to sell, up an amazing 28% from this same time last year!

              • Inventory : the good news is that the number of condos for sale in downtown has decreased by 28%. This means there is less competition compared to 2007, and because of this inventory decrease, the Average Price for condos has increased by 5.6%. The only downside is that the number of closings so far in 2008 is pretty much the same as that in 2007.

              • Foreclosure Rate: So far this year, of the 571 closed sales, between 7-8.5% of them have been foreclosures or short sale properties. I don't know about you, but that is a pretty low portion of condo sales. When compared to the average Twin Cities real estate market, which is at 35% rate of foreclosure, it is really quite good.
              So the bottom line is this, if you own a condominium in downtown Minneapolis, keep your chin up. While times are tough, if you stay positive and have patience, your condo will most likely sell. Just remember to keep your asking price realistic, and possibly ahead of the market. With current listings receiving 96% of the asking price, pricing it right from the start is imperative. Before you know it, Spring will be here and a new wave of home buying will begin!

              Monday, November 10, 2008

              It's Winter Hazard Week in Minnesota

              Winter Hazard Week — November 10-14

              My friends in Florida would have you believe that living in the north during winter is like living in hell. Funny how I feel the same way about Miami in the middle of summer. At least in winter, you can put multiple layers of clothing on to keep you warm; however, in the hottest summer (with lots of humidity) you can strip down to nothing and still be roasting hot.

              So for those of you new to Minnesota this year, or for those of you thinking of moving to our beautiful state, this week is Winter Hazard tips week. For the cliff notes version of winter survival, check out these quick tips.

              Today it is Winter Weather Overview, where you can learn the basic winter terms like Lake Effect Snow and such. With 10,000+ lakes, it is very common to have white outs on one side of a lake. To make the rest of the safety information easy for you to find, follow the links below for each days winter weather tips:

              Remember, winter in Minnesota is beautiful. One thing unique about the north is that people don't let the cold weather keep them indoors. Everyday you can find people around Minneapolis and Saint Paul enjoying a walk down the street, or taking a jog around the lake. To my friends in Florida, while I do miss the Gulf of Mexico, there is something to enjoy about Minnesota when you can actually have four seasons.

              Friday, November 7, 2008

              First Day of Snow in the Twin Cities

              Not all of the corn has been taken in quite yet. It was very pretty to see the snow clinging to the stalks this morning in Dakota County.

              Saturday, November 1, 2008

              Gopher Hockey

              Tonight I get to enjoy some early season hockey at the Xcel. If you move to Minnesota, you're sure to become a hockey fan!
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