West Savage Real Estate Blog

"The Skinny" - March 2010

Home sales are rising in the metro, with low mortgage rates and tax credit incentives creating the perfect storm for buying a home in the market. The tax credit is expiring soon, so sellers should be sure to position themselves well to attract buyers NOW.

Two Sunday Open Houses!

Join us for TWO Open Houses on Sunday, March 28.    Click on the photos below for more details descriptions on these homes. 

12Noon - 2PM    -    8678 Carriage Hill Road - Savage   (The POINTE)

This full brick front home offers four bedrooms on one level, a light, bright, spacious open floor plan, and an unfinished lower level for future equity. Competitively priced at $309,900.  

 

 

 

 

 

2:30PM  - 4:30PM   -    9320 134th Street - Savage   (OAK HILLS)

This full brick front home offers four bedrooms on one level, a cherry and granite kitchen, finished lower level with built ins, two fireplaces, and a wooded lot on a quiet, dead-end street.   Offered at $384,700.

More on HAFA....

By Sara Huebener

Just a few more notes on HAFA.... we continue to learn new information on this each day.   Many are skeptical that the lending world will be ready to implement HAFA by April 5, as a huge multi-office-wide discussion this morning uncovered.   We shall see.   Here are a few more tidbits about HAFA.....     

The program is up to the lender's discretion on whether or not it chooses to participate. 

Why would a lender choose to participate?  Some might not.  Those that do opt to participate might do so because it is a chance to collect the financial incentive to accept the short sale and "be done with it", no matter how insignificant that compensation might be.  A first lien-holder can collect up to $1000 in compensation for participating in HAFA.   Secondary lien holders can only collect from an aggregate pool of $3000 total.  On a large, outstanding loan, this is not much.  

If a lender opts to participate in HAFA on any given transaction, it waives its right to come after the borrower in the form of a deficiency judgement.   That said, some lenders might elect NOT to participate in HAFA and attempt to go after the borrower down the road.   Of course, if the borrower later files for bankruptcy, the lender cannot collect on any deficiency judgement  it might have won.

Borrowers will have tax consequences for any financial gain on the short sale - referring to the $1500 relocation assistance.  They should be consulting with a tax accountant as they go through the short sale process as other portions of the short sale debt relief may be taxed as income, depending on individual situations.

Investment properties going through a short sale ARE subject to debt forgiveness being taxed as income in the form of a 1099.  

NOTE ** The borrower relocation assistance has been increased to $3000.

Obama Program for Troubled Borrowers Starts April 5

By Chad Huebener

With short sales and foreclosures consuming about 50% of our marketplace, and the short sale process being a lengthy, tedious process, the Obama Administration released a couple programs under its Making Home Affordable Program.  

The first piece, the Home Affordable Modification Program (HAMP) took effect in March 2009 and was designed to help borrowers avoid foreclosure by modifying loans to a level that is affordable and sustainable for the long term.   Some troubled borrowers could not qualify under the modification program, and found themselves facing foreclosure or having to sell “short”.  

 

 

 

 

 

The hurdle with selling short was lender responsiveness.  Short sale pricing can be deceiving because the price on a short sale is not necessarily the price the lender is willing to accept, and in most cases, the price a lender is willing to accept is unknown until an offer is submitted.  The process can easily take four months or longer as buyers await lender response on offers. 

A new program called HAFA (Home Affordable Foreclosure Alternatives Program) goes into effect on April 5, which provides incentives in connection with short sales and deeds-in-lieu of foreclosure and has the goal to speed the short sale process.  In a nutshell, it puts the short sale process on a tight timeline.   

HAFA is designed to assist those who are eligible for HAMP but nevertheless unable to keep their home.   It uses the borrower and financial hardship documentation already collected under HAMP and allows borrowers to receive pre-approved short sale terms before listing the property. This takes the “unknown” out of short sale pricing. 

HAFA requires borrowers be fully released from future liability for the first mortgage debt and, in cases, from subordinate mortgage debt as well.  It also provides financial incentives including covering up to $1500 for borrower moving assistance. 

The program sunsets on December 31, 2012. 

Who is eligible for HAFA?

· Principal residence

· First lien originated prior to 2009

· Mortgage delinquent or default is reasonably foreseeable

· Unpaid principal balance of no more than $729,750

· Borrower’s total monthly payment exceeds 31% of gross income

Other pertinent details

· The deal must be “arms length”.  Borrowers cannot list the property or sell it to a relative or someone with a close personal or business relationship.

· The amount of forgiven debt might be treated as income for tax purposes.

· The lender will report to credit agencies that the mortgage was settled for less than full payment, so credit scores will be impacted.

· Buyers cannot reconvey the property for 90 days. 

As with all of assistance programs, controversy is eminent.   And as always, the impact (good or bad) on the US economy will be unknown until these programs are well underway, if not expired completely.  

 

READ MORE ON HAFA....

West Savage Market is Waking Up

We all know from last month that the inventory has grown, and rapidly so.  The most notable activity took place in The Pointe neighborhood, which saw nine houses hit the market in the past 60 days.   The Oak Hills neighborhood also has seen some significant activity, including new listings, a short sale and a foreclosure hitting the market, and some price reductions.    

 

We are seeing a trickling of sales begin, with three new pended sales.  These are the first West Savage has seen since November of 2009.  Our sleepy winter period is starting to (hopefully) rouse.     

 

Short sales are about to get more interesting on April 5.  A new program called HAFA (Home Affordable Foreclosure Alternatives) is being put into place to provide incentives to sellers to sell short and prevent foreclosures.  This program will pay out up to $1,500 for relocation assistance, to help “short” sellers move out of homes.   There are 43 pages of guidelines regarding the program and much is yet to be learned.   More on WestSavageBlog.com about this later…..   

 

Our West Savage absorption rate is 10.47.   That means if zero new homes come on the market, it will take 10.47 months to sell our existing inventory.    It has trended upward due to the rapid rise in inventory, but we are expecting a drop in time.  

New Buyer Segment - Moving in with Mom??

In the wake of the current economy, one of the new housing trends being noticed is the acummulation of extended families in one single-family unit.   

Are we seeing it in Savage?   You bet. 

Is is very common?  Not really. But it is not unheard of either.  

This brief video provides a glimpse into this emerging trend.

Just Listed!

This updated home offers 4 bedrooms on one level and four bathrooms, with all three levels fully finished!  With a full-brick front, this home offers fantastic curb appeal! 

The main floor boasts oak hardwood floors in the foyer and kitchen.  The foyer has a new, custom-designed front door.   The Den and Formal Living Room flank the foyer.  The Formal Dining Room is adjoined with the Kitchen.  

The Kitchen offers stunning granite countertops, stainless appliances, and a custom backsplash.  Walk out from the Dinette to a huge stamped concrete patio with fire pit.   A main floor laundry room lies off the Kitchen.    The vaulted Great Room has a floor-to-ceiling fireplace and walks out to a vaulted screen porch perfect for entertaining and relaxing!

The second floor offers four bedrooms, including a private Master Suite with French doors, his-and-hers sinks and whirlpool tub.   Another full bath lies on the second floor.

The lower level was recently completed, and offers an exercise area, a cherry bar with granite countertops and blown-glass pendants, and a corner stone fireplace.   The amusement room is the perfect place to entertain!   A full bathroom lies just off the amusement room.

The home boasts new windows, custom window treatments, and a new water heater and water softener.  And the backyard is incredible, with a flat lot, mature trees, and that amazing screen porch and patio!

Offered at $349,700

VIEW OUR ONLINE FLYER for 5696 RIVER OAK DRIVE.

We're Doing a DOUBLE OPEN HOUSE in The Pointe

Join us for TWO Open Houses in The Pointe this Sunday, March 14 from 11:00am - 2:00pm.  Click on the photos below to link to online flyers for these properties!

8650 Carriage Hill Court

Offered at $349,700 and boasting 4 BR on one level, sunken family room with gas fireplace, formal dining and formal living room with built-ins, all on a great cul de sac lot!

 

8415 Carriage Hill Road

Hardwood floors on 1st and 2nd floors, three fireplaces, silestone countertops, 42" raised panel cabinetry.  Finished lower level, stunning backyard with deck and gazebo!    Offered at $387,700.

Just Listed!

Wow, there is room for the entire family to spread out!

This updated 5BR 4BA 3 car garage home has over 3600 finsqft of living space! The home boasts formal living and dining rooms, a main floor family room with gas fireplace, and a kitchen that walks out to a huge, maintenance free deck overlooking a nature area.

The upper level offers a loft, four bedrooms including a private, vaulted master suite with full bathroom, and another full bath.

The finished, walkout lower level offers a huge family room with gas fireplace, bar, and another bedroom. A paver patio lies off the lower level. The home gets plenty of light from Southern exposure and offers an in ground sprinkler system.

Offered at $309,000

View our ONLINE FLYER on this Home at 6768 Carlisle Curve. 

Summary of Home Buyers and Sellers in 2009

Every year we take a good, hard look at the demographics of buyers and sellers in our Minnesota marketplace from the previous year, and compare it to how Minnesota's buyers and sellers compare to the market on a national scale.    Every year, the demographics shift and change.  It helps complete the picture about what we are seeing in our local marketplace.   

Here is a brief breakdown of what 2009's BUYERS looked like:

• 49% were first-time homebuyers (compared to 47% nationally.)
• The average first-time buyer was 28 years old, and the average repeat buyer was 44 years old.  Minnesota's buyers in 2009 were younger than the national average of 30 and 48, respectively.
• The median household income of buyers was $73,900.  It was about the same nationally.
• 23% of buyers were single females.   10% were single males.

Here is a breakdown of the HOMES PURCHASED, FINANCING OBTRAINED, and other MISC details:

• New construction purchases were at the lowest level in eight years.  Only 13% of Minnesota home purchases were new.
• The typical Minnesota home purchased was 1,880 sqft. and was built in 1984.
• 20% of Minnesota buyers bought homes in foreclosure - this is double the national rate.
• 74% of buyers purchased a detached, single-family home.
• The cost of commuting was a substantial criterion in a home purchase for 2009 buyers.
• 93% of buyers financed their home purchase.
• The typical buyer financed 94% of their home. 
• Over 30% of buyers found the pre-approval process to be difficult.

Here is a brief breakdown regarding 2009's SELLERS:

• 87% of sellers used a REALTOR to sell their home.
• 59% of sellers had to reduce the price of their home at least once. 
• 32% of sellers offered additonal incentives to buyers such as paying closing costs and financing home warranties.
• The share of For Sale By Owners in Minnesota continues to fall, and is lower than the national average of 11%. 
• More than half of For Sale By Owners personally knew the buyer they sold their home to.

In summary, it appears that first-time buyers are making up (at least in 2009) almost half of the market.   They are younger and are buying foreclosures at a faster rate than buyers on a national scale.   They are buying smaller homes, financing more, and sacrificing luxuries to get into homes.  

Maybe this is the way it was always supposed to be.  Start small.  Sacrifice and save.   And work your way up to bigger and better.  

The Pointe   Oak Hills  Woodhill   Summit Ponds   Heatherton Ridge   Hamilton Hills   Hamilton Hylands