Twin Cities Real Estate Blog

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The Star Tribune had an article today discussing how the Metropolitan Council is pushing all cities to encourage water conservation.  The paper profiles Minnetonka and their efforts to curb usage by dramatically increasing water rates for excessive usage.  While an “overconsumption tax” will certainly help curb usage, there are many other ways to promote conservation:

• Get a FREE low flow shower head from Centerpoint Energy (must be a customer)
• Install new low flow toilets if your toilets are from the 1980’s or earlier
• Have a lawn analysis and sprinkler head adjustment completed by a lawn irrigation company
• Raise the cutting height of your lawn mower – longer grass holds in more moisture
• Water your lawn deeply 1-2 times per week versus short watering 3-5 times a week

While increasing the cost of water for high-volume users will help curtail their consumption, we can all reduce water usage with the above tips and while it isn’t a huge financial windfall, over time the savings really do add up.

Suggestion to cities: why offer a partial rebate to homeowners (or businesses) that take any of the above actions?  The City of Austin gives its residents up to 3 FREE toilets!  While I don’t believe we need to go that far, these types of incentives will encourage far more conservation than simply taxing overly excessive usage.

Jim Cramer on Tuesday’s show stated that we’re at a housing market bottom nationally (article).  Below is the video of this segment.

While time will tell if Jim Cramer is right, on a local level I’m not ready to call a housing market bottom.  I do believe however that foreclosures have price-bottomed in our market.  Unfortunately I also believe that the typical Traditional Seller has further to fall.

The Minnesota Association of REALTORS (MNAR) has put together a video overviewing the ethics complaint process.  Take a peek.  If you’d like to file a complaint against an agent, please click here for the form and more information.

In the last two weeks we’ve seen interest rates on 30 year fixed mortgages move from 4.5% to 5.5% (or higher) that’s a big OUCH.  This full interest rate point swing has meant that almost overnight, buyers lost well over 10% of their buying power.  Another way to look at it is housing just got 10% more expensive.

While everyone was thrilled to see 4.5% interest rates, myself included, from the very outset I had concern about what this means for housing long term.

The short term benefits are large and obvious:

• Huge surge in refinancing and purchases
• Large demand for housing has helped stabilize housing (to some extent)
• Housing affordability hit new highs
• Buyers and refinancers locked in phenomenal rates (and most did 30yr fixed mortgages)

The long term drawbacks are also large and ominous:

• We may have set an artificial price floor on housing: now that it is suddenly so much more “expensive” from a payment basis, will there be even further pressure on prices?
• Buyers who didn’t lock (I know several personally) got hit over the side of the head by the huge (and quick) run-up in rates
• A lot of buyers will sit on the fence hoping that rates fall down again (which they may or may not)
• Homeowners who locked in a 4.5% rate will never want to move. ever.  I predict that many of these homeowners will be far more hesitant to move in the future, thus lowering housing sales in the years to come.
• Sub-5% now becomes the magic number which buyers think they can get (or should get) since it was available for a few months.  This means historical rates in the 6% & 7% range will look horrible.  They won’t remember that these record low rates were during the worst economic downturn since the Great Depression… they’ll just remember that they were available.

Who knows what tomorrow will bring, but I will be interested to see what happens to our Pending Sales numbers in the weeks & months to come.

Over 40% of the sales in the Twin Cities currently occurring are foreclosures or short sales, what we at MAAR call “lender mediated sales.”

The RMLS of Minnesota recently revised their fields regarding foreclosures and short sales (after a year of much confusion over the old fields) and we now have separate fields for in foreclosure, short sale and “lender owned.”  This is great, but one place it really falls down is the 3rd option allowed for these fields… “not disclosed.”

In Foreclosure
To be honest, I don’t care if the house is in foreclosure if the seller can accept a full-price offer without getting approval from any 3rd party (bank).  Consequently that field doesn’t matter to me no matter how it is marked.

Potential Short Sale
This field is a lot more important as short sale homes are often Liar Listings.  If the list price is enough to pay off the mortgage and closing costs in full, then it is not a short sale and I don’t have an issue.  If the price is not enough to pay in full and the seller will need to get 3rd party approval (which 99% of the time has not been secured yet) then you should have to disclose that no matter what.  Not disclosing it in my opinion is not representing a true and accurate picture of the property and therefore the agent is breaking the Code of Ethics.

Lender Owned
Whether a property is lender owned or not isn’t absolutely critical to know since the listing is truly available for the price and terms listed on the MLS.  I don’t mind the Not Disclosed field.

What Does “Not Disclosed” Mean?
Given that the options are Yes, No and Not Disclosed, my assumption is that when Not Disclosed is the selection that it really means Yes.  If the answer for those questions was “no” most agents would select that since that is most likely the preferable situation.  Hence, Not Disclosed is like saying: “it is Yes, but I’m not allowed to disclose to you that it is Yes.”

Received this info today.  Application is here.

HGTV’s hit TV series, House Hunters, is coming to the Twin Cities and surrounding areas this summer and we’re looking for homebuyers and real estate agents who want to appear on the show! House Hunters follows buyers and their agents on the hunt as they find just the right house for them – and every story is different. If you’re an energetic and outgoing homebuyer currently working with a real estate agent, we’d love to hear from you.

We are currently looking for homebuyers who are:
• Closing within the next 1-2 months, this includes buyers who are actively bidding on a home or newly under contract
• Fun, enthusiastic, and have a great story to tell
• Purchasing within a 90 minute drive of downtown Minneapolis – St. Paul

 
House Hunters airs weeknights at 9/8c on HGTV and is produced by High Noon Entertainment. To learn more about the show visit HGTV.com/HouseHunters

To apply contact Heather Domko, Associate Producer at (303)712-3209 or hdomko@highnoonentertainment.com

Betsysoderlund wants the emotional roller coaster that is the Minneapolis real estate market to be less like the cork screw and more like the flume. – @betsysoderlund

This Twitter post last night sums up what many people in the real estate market are feeling right now.  Things seem to be going up, down, left, right and twisting all at the same time.  This is a list of the items I currently see as affecting everyone’s psychological health in the real estate market today:

REO’s/REO Brokers

• I’ve talked at length about this here… ’nuff said

Appraisals/Appraisers

• Fewer appraisers today than in year’s past
• Large refinancing boom creating huge demand
• Appraisals can take 1-3 weeks to complete
• New appraisal rules add another layer of bureaucracy to the process
• Appraisers are required to be much more detailed and precise in their appraisals, causing them to take much longer.
• Some appraisals come in too low… often because the appraiser uses foreclosures and short sales as comps but makes very little adjustment for condition and sale distress, making apples and oranges look all like oranges on an appraisal.

Underwriters/Mortgage Companies

• Underwriters were also trimmed in recent years
• Underwriting guidelines continually are changing
• Underwriters look at everything with a fine toothed comb
• Underwriting can take a week longer than in the past
• Underwriters sometimes come up with more requests a few days (or hours) before the closing

Title Work/Title Companies

• Nearly all title companies reduced staff in the last 48 months to take into account the significantly lowered demand.  Now that closings are up 20% over last year, many find themselves overworked.
• Title companies that sprung up during the “boom years” didn’t always do a good job on the paperwork (filing payoffs, clearing title) and consequently the current title company has to clean up their mess.

Buyers/Sellers

• There seems to be more emotion on both sides of the table
• Buyers are stressed about rates & qualifying
• Buyers don’t want to “overpay” and are seeing/reading/hearing a lot of different things and can’t extract the gold from the ore

Competition

• On the sell side, there are so many different types of sellers with so many different motivations: traditional, short sale, foreclosure, relocation, investor, etc
• On the buy side, there’s increased competition for far fewer homes than last year
• The best priced houses get an offer in the first 60 days on market

Interest Rates

• Rates have been bouncing around like crazy in the last week or two.  I’ve seen quotes for 4.5% and 5.5% in the span of one week for the same loan type!

The Media

• We’ve got local numbers, national numbers, numbers tracking the same thing but reported differently by 2-3 groups
• Some say the bottom is here, some say the bottom is near, some say the bottom is far ahead… yet none of them agree on what a bottom is defined as.

It’s an interesting time in the real estate market today… don’t you think?