The following article was one we recently compiled for The Pointe Neighborhood's Association newsletter. It was published in December 2009.
Winter in Minnesota is often associated with a slowdown in the housing market. It’s no secret that most prospective sellers wait to enter the real estate market during the spring and summer months. The fall and winter months in real estate can be interesting in their own right, and present some unique opportunities for sellers. For those not moving, winter is a great time to evaluate what happened during the year we recently experienced, and which factors might give us an indication of what the future holds.
Prospective Pointe sellers should be aware that the most important positive attribute of a winter market is inventory is at its lowest, and low inventory equates to less competition for sellers. Most of the month of October saw only one Pointe home on the market. In a neighborhood of this size, this is a fascinating statistic, particularly given the typical fall/winter inventory of 5-6 Pointe homes. (Currently there are 3 homes on the market.) It is also interesting to note that about 30% of the homes on the market in our West Savage marketplace have no FOR SALE sign in the yard. It is a new trend, and was not often seen when the market was at its peak.
And while the buyers looking for homes in the wintertime might not be as plentiful, they certainly tend to be more serious. Few people look at houses for fun during a Minnesota winter. Additionally, the nature of the winter buyer tends to vary a bit. Ramblers and homes with floor plans that often attract families with older children and/or adult-only habitants tend to see fewer decreases in showing activity during the winter, because timing the disruption of moving with the start and end of the school year is typically not as important.
What happened in The Pointe throughout 2009? The latter part of 2008 and early 2009 saw high inventory in The Pointe and surrounding West Savage neighborhoods. To generalize, the market weighed more heavily with foreclosures, short sales, and traditional sellers who needed to sell (relocation, for example). Meanwhile most sellers who wanted to sell found that due to pricing declines, it was difficult to compete, and many simply decided to stay put. Fortunately in the end, 2009 proved to be a better year for real estate in The Pointe, compared to 2008.
In 2009, five Pointe homes fell into the short sale/foreclosure category. Fortunately, four of them have been absorbed as of the date of this article, in the form of either closed transactions or pending purchase agreements waiting to close. These four sales made up 36% of the year-to-date total sales in The Pointe in 2009. Although these sales may not have fetched values Pointe homeowners are accustomed to seeing, the fact that these homes have moved off the market and are occupied by residents ultimately will reflect more positively on home values, than if they remained vacant and were actively listed among the competition.
The $8000 First Time Homebuyer Tax Credit did not affect most Pointe sellers directly, though it did reach them through the “trickle-up” effect it created when entry-level homeowners could sell their properties to first time buyers. The controversy on the necessity and overall success of this program remains. Yet one look at what was going on in the under $150,000 price point during early 2009 had serious implications for traditional sellers in The Pointe seeking move-up buyers for their properties. The entry-level market was saturated with foreclosures and short sales, leaving traditional sellers in the entry-level price point unable to compete with pricing. The flurry of first time homebuyers racing to meet the November 30, 2009 deadline helped move this inventory, thereby allowing the sellers of those transactions to “buy up”.
2009 also brought an added complexity to the market with the implementation of the Home Valuation Code of Conduct. Well intentioned, its impact on appraisals (and consequently, home sales) has resulted in it being accused of hampering market recovery. More on this topic can be found at www.WestSavageBlog.com.
What can Pointe homeowners expect as we move into 2010? Watch for an “early spring” as people push to take advantage of a new $6,500 tax credit for existing homeowners who have lived in their current home for at least five (consecutive) of the past eight years, and opt to purchase a new primary residence. Purchase agreements must be finalized by April 30, 2010, with closing occurring by June 30, 2010. This might provide a helpful boost for sellers who need to remain in line with current market pricing.
In summary, 2009 was a better year than 2008, and we are hopeful that 2010 will be better still. While loan modification programs for troubled borrowers remain controversial, we can be certain that these programs have helped to reduce the amount of foreclosures and short sales that are hitting our market. All told, the reduced foreclosure and short sale inventory helps traditional sellers immensely. We can expect that 2010, like 2009, will be a step towards market recovery.
We are avid trackers of the market, particularly in West Savage and The Pointe. If you wish to receive our monthly market update on The Pointe and West Savage, sign up at www.ThePointeHomePrices.com.
Chad and Sara Huebener are full-time REALTORS® with Coldwell Banker Burnet, and reside in West Savage.