Minnesota Foreclosures in Q3 2011 Down 32% from Q3 2010

November 4, 2011 By 2 Comments

This just in from HousingLink:

There were 4,935 foreclosures in Minnesota in Q3 of 2011, down 32% from Q3 2010. Q3 2011 marks four consecutive quarters with fewer than 6,000 statewide foreclosures.  While this follows four quarters in which the statewide count exceeded that number, the Q3 2011 figure of 4,935 still far exceeds the 1,618 foreclosures averaged in 2005, the first year sheriff sale records were totaled for the state of Minnesota.

Below is a chart from their very detailed report:

While this in no way means we are out of the foreclosure mess, it is another sign that foreclosure activity continues to run well below the peaks of 2010.  Fewer sheriff sales today means fewer bank owned (REO) homes for sale 6-9 months from now.  Don’t get too optimistic though as the Minnesota Home Ownership Center’s data shows that pre-foreclosure activity did tick up in the most recent quarter.

Filed Under: Community Issues, Foreclosures and Short Sales, Info for Buyers, Info for Sellers, Market Stats Tagged With: ,

Twin Cities Real Estate Market Update – October 30, 2011

October 30, 2011 By Leave a Comment

Halloween marks the beginning of the significant seasonal slowdown in real estate activity that we see each year.  As days get shorter and the weather gets colder, many home buyers and sellers settle in where they are for the winter. Buyer activity and homes for sale have both seen about a 10% decline in the last 3 months but the most significant drops for the whole year come in November and December.

By the end of the year I am predicting that we’ll be down to home inventory levels we haven’t seen since 2005… yes, that is six years ago.  Home buyer activity today though is far lower than it was in 2005 so while this is great news, it doesn’t mean we are out of the woods yet.

One trend I have noticed this year is that more buyers are having a difficult time locating what they want.  Yes, there are still a lot of homes for sale, but for certain price points and in certain areas, the inventory is extremely low.  This has lead some buyers to raise their price ranges a little to find more options, for others it has meant months of searching or in some cases putting their home search on hold.

We are by no means into recovery mode in the Twin Cities but each month it seems like the fundamentals of supply and demand are coming closer into line.  What makes this even more reassuring is that this is all happening during what is the toughest economic period in decades.  As supply continues to drop and buyer demand finds a fundamental bottom (I believe it already has) we should see prices start to stabilize.  Even price stability would be a huge win for our market!

When will we see prices stabilize?  Well is some pockets and price points I think they already have.  For most of the Twin Cities though it remains more questionable.  Ultimately the economy will have the final say over housing – until there is real job growth there will remain pressure on housing prices. When we do see economic growth, the interest rate increases that will come along with it will keep prices from climbing quickly.

The housing news in the next few months will be mostly negative as a result of our seasonal real estate cycle but it is far more important to look at the long term trends versus the month-to-month information.  When you look at the big picture, I think housing isn’t as scary as it was a few years ago.

Filed Under: Crystal Ball Projections, Info for Buyers, Info for Sellers, Market Stats, Opinion

3 Home Buyer Financing Lies

September 21, 2011 By 1 Comment

#1 – Buyers need 20% cash down to buy a home

Did you know that some buyers can still buy a home with NO DOWN PAYMENT?  The USDA Rural Development and Department of Veterans Affairs loan programs both offer 0% down payment options.  In the case of the USDA, it is income and location restricted.  For VA loans, active military and veterans are often eligible based on their time, type and years of service.  There can also be some smaller local programs with very specific criteria that can get you close to no down payment too – the Minnesota Home Ownership Center has a great list of affordable loan programs.

For those that do not qualify for one of the programs above, there’s good old-fashioned FHA financing.  For years this program was forgotten but with the tighter lending standards of today, FHA has come back into vogue big time.  In the Twin Cities, loans amounts up to $318,550 can be financed with only 3.5% down payment through the FHA.  Loan limits for other areas are available here.

One more thing to keep in mind is that FHA & VA loans may be assumable by the next borrower (with qualifying) and thus if rates are 7% five years from now and a homeowner can offer the remainder of their loan at 4%, buyers will be lining up to take advantage of that deal!

#2 – Buyers have to have perfect credit

Today people need to be able to demonstrate a history of managing their credit well – i.e. making payments on time, having other loans/credit cards, etc.  They also need to have a stable career, which typically means 2 years of job history in their current line of work (schooling is taken into account for recent grads) and have a few bucks in the bank for unexpected surprises.

From my conversations with several different lender friends, today’s lending requirements are still less strict than they were in the 1990′s.  So in the greater context of home financing in the last couple decades, it is still easy to get a loan if you are actually equipped to handle such a responsibility.

What has really made life tougher is that now each loan has no margin for error.  Each loan application is being reviewed, re-reviewed and reviewed again.  The underwriting department will often come up with what seems like crazy requests for documenting every last item of your credit and income.  Unless you lied or “forgot” to mention something on your credit app, nearly all buyers are still making it to the closing table.

#3 – Banks are not lending money

Banks are lending tons of money.  If banks wanted to lend less money they would simply raise the interest rates they offer to decrease the number of loans people request – simply not lending money doesn’t make sense.  Even though mortgage rates are around 4% on a 30 year fixed rate loan, banks are only paying people .25% for their deposits – there is still money to be made!  Further, many loans are sold off to others and thus free up the bank to re-lend that money again.

If you are qualified buyer (see #2) and are having trouble getting a loan, I’ve got a bunch of lender friends that would be happy to help you!

Filed Under: city grants, General, Info for Buyers, Media, Opinion, special financing

The Home Buyer Financing Fallacy

September 6, 2011 By 2 Comments

For many months I’ve been hearing via almost every media channel out there that today’s home buyers are struggling to get financing – that banks have too high of standards and that many people are not able to get a loan. Funny thing is, that’s totally untrue.

Buying a home is not only a big emotional step, but it is a huge financial step as well.  You’re taking on a fixed location and a fixed set of costs for many, many years to come.  For most people, their home is their largest single asset.  For quite a few years we found that some lenders (certainly not all) would offer almost any amount of loan to almost anyone.  I swear at the peak of the housing market, a gerbil could have been approved for a “NINJA” loan.

So after years of crazy loans and billions in losses, banks have now become so hesitant to give out a loan that you have to have perfect credit and a huge down payment to buy a home, right?  Wrong…. WAY wrong.

Today people need to be able to demonstrate a history of managing their credit well – i.e. making payments on time, having other loans/credit cards, etc.  They also need to have a stable career, which typically means 2 years of job history in their current line of work (schooling is taken into account for recent grads).  Finally, they have to have 3.5% down payment money, most of which can be gifted to them from a family member if necessary.  Does that sound crazy to you?

From my conversations with several different lender friends, today’s lending requirements are still less strict than they were in the 1990′s.  So in the greater context of home financing in the last couple decades, it is still easy to get a loan if you are actually equipped to handle such a responsibility.

What has really made life tougher is that now each loan has no margin for error.  Each loan application is being reviewed, re-reviewed and reviewed again.  The underwriting department will often come up with what seems like crazy requests for documenting every last item of your credit and income.  While this can seem very overblown, they are doing so because they don’t want to go through a single new foreclosure if they can help it.  Unless you lied or “forgot” to mention something on your credit app, almost all buyers are still making it to the closing table… though sometimes a few days later than planned.

So if you’ve paid your bills on time and have some job stability, I highly encourage you to talk to a mortgage broker – I bet you’ll be pleasantly surprised.  If you question whether you would get approved, I’d suggest you still talk to a mortgage broker to understand your current situation and then reach out to the Minnesota Home Ownership Center to get credit counseling and/or home buying advice. The right efforts started today will put you on a path to home ownership in the not-to-distant future.

Filed Under: Info for Buyers, Media, Mortgage Rates
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