West Savage Real Estate Blog

Are Home Prices Going Up?

By Sara Huebener

"Are home prices going up?  I  heard it on the news."   We are asked this all the time.  Our local REALTOR Association posted a few recent reports on the metro-wide housing market.  Among them was a map of the south metro outlining the 2010 first-half sales and median prices for existing single-family homes, townhouses and condos.  The chart is below, and you can print it using the printer icon at the top left side of the PDF frame, or you can zoom in for easier viewing by entering a higher percentage in the top of the PDF frame. 

Savage and Shakopee are noteworthy in that that in both cases, both pending sales and median sales price increased.  We think there are are a number of reasons for increases in these areas for first-half 2010.

1.   The First-Time Homebuyer Tax Credit and Existing Homebuyer Tax Credit pushed a lot of sales that would have otherwise occurred in summer into the spring months.   The month of May was testament to that fact, as May activity was incredibly slow for spring market. 

2.   Sales prices on the chart show an increase.   However, they are not increasing in the sense that sellers are hoping.   We are not seeing appreciation at this time.  

The increase in sales price can be attributed to a number of factors.  First, we have fewer foreclosures on the market than we did in 2009.  Foreclosures brought closed home sales prices down considerably, and traditonal sellers needing to compete had to drop their prices considerably as well.   Since foreclosures have declined a bit, home prices are stabilizing a bit as well.  

Second, we are seeing many sellers who tapped their equity for various reasons (or sellers who bought their home during the peak with little-to-no downpayment) needing to bring checks to the closing table to pay off the loan(s).  In these cases, we often need to go back to the buyer during offer negotiations and inform them that in a scenario such as this, the seller has no more cash to bring to closing.  Therefore many buyers are bringing their offer prices up  above market price to bridge the gap between offer price and what a seller can feasibly sell the home for.   However, appraisals continue to be a hurdle in getting these transactions closed.  

We'll briefly touch on Shakopee and Prior Lake as well.  Shakopee continues to be a hotbed for growth (relatively speaking) with new construction, particularly with the availability of all the foreclosed lots in recent months.  So it's growth was expected.  Prior Lake continues to ride the roller coaster of home prices.  Acreage and upscale homes have taken a hit as buyers want smaller, maintenance-free and cheaper housing units.  The final numbers on this city are no surprise. 

Finally, our metro housing report for the week indicates that with the increase in inventory, there are now 7.44 homes on the market for every buyer.   This serves as a reminder that sellers need to remain competitive to participate in the market.  Condition, location, amenities and price are all essential to attract a buyer.  In some cases, seller's can try to sweeten the pot by offering a bonus to incent the buyer's agent to be more likely to point out the pros of purchasing their property. 

OAK HILLS   THE POINTE  SUMMIT PONDS   WOODHILL   HAMILTON HILLS   HEATHERTON RIDGE

"The Skinny" - July 2010

We think this month's SKINNY sums it up pretty well, as our previous posts outlining our experiences in the local marketplace have attested. Interest rates are phenomenal for buyers and despite what is going on in the market, this IS the peak season.

West Savage Showing Activity Summary

By Chad & Sara Huebener

 

West Savage inventory has declined a bit.  Showing activity for July is up since June, but it is predominantly occurring in the under-$300K price point, thus West Savage pending activity is quiet compared to this time last year.   Even with 5 homes on the market per buyer, it is still possible to compete in the market.  Patience is important.  Interest rates are around 4.5% for a 30-year fixed.  If you are staying in your home and your interest rate is in the “5”’s or higher, you may want to contact a loan officer regarding refinancing options. 

The Fannie Mae changes we’ve been hinting at are now known.  Some of them are listed below.  See a more complete list and our two cents on the implications of some of these changes at www.WestSavageBlog.com.  

1. After July 1 lenders are requiring that a second credit check be run on all borrowers prior to closing.   This might have a BIG effect on a seller in the process of moving out of a home. 
2. Borrowers with no credit (not bad credit) can continue to get pre-approved with some lenders. 
3. Both conventional and VA loans are requiring the seller be in title at least 90 days.  (Affects flipping)
4. People with common names (Susan Jones, John Smith, e.g.) need to allow more time for closings when using FHA-financing, as these names are crossed checked against borrower restricted lists, and persons with these names might require more documentation for clarification purposes.
5. MHFA is working on a new program coming out soon, with a 100% - 105% loan to value, no mortgage insurance, minimum 680 credit score, income limits (not yet released), and a minimum of $1,000 of the borrower's own funds to be invested into the transaction that cannot be in the form of gift funds. 

Inventory in Savage and Scott County has declined very slightly.   Our West Savage absorption rate is 7.26.   That means if zero new homes come on the market, it will take 7.26 months to sell our existing inventory.    

Metrowide Housing Report for the Week Ending July 3

Our local REALTOR Association reports:

As the summer progresses, the Twin Cities housing market continues a remarkably similar week-to-week pattern —tepid new listings, extremely weak buyer demand and a total supply of available homes that slowly increases.

New listings for the week ending July 3 were 5.6 percent below last year, but the drop in pending sales was much more dramatic. The 611 signed agreements for the week ending July 3rd represented a 38.2 percent drop from last year’s figures. Because the decline in demand is stronger than the decline in supply, the number of total active listings is up 3.8 percent from a year ago.

On the upside, Days on Market until Sale has dropped considerably over the last year. At 121 days in June this is 14 percent below the 140 days it took to sell a house last year. Percent of Original List Price has also increased, in related news. However, these metrics tend to lag a few months behind the true supply-demand picture, so it is unlikely that these positive trends will continue.

Our quick 2-cents on this report..... Price is key.  Price MUST be competitive and condition must be stellar in order to compete in the market.   If condition cannot be stellar for varying factors, price must be reflective of that.  

SOLD IN 90 DAYS in The POINTE!

Here is a fantastic opportunity to own a meticulously maintained 4 bedroom home in The Pointe! With a huge open kitchen and four bedrooms on one level, this home is perfect for someone looking for a great home in a family-friendly neighborhood, close to numerous parks and walking trails!

The main floor boasts a mud room and foyer with open staircase. A formal dining room with glass-paned French doors lies off the foyer and kitchen. The formal dining room could also be used as a Den if the buyer chooses.

The Kitchen is enormous and offers raised panel, arched cabinetry with pull-out shelves, two lazy Susans, a large pantry cabinet, a center island, gas stove, built-in microwave and bright window. The dinette walks out to a 20x20 patio and flat, grass lawn. A tumbled paver raised flower bed is perfect for adding color to the landscape!

The family room lies off the dinette and has a corner gas fireplace with stone surround and view of the backyard. With brand new carpet and paint, this room is clean, fresh, and neutral!

The second floor has four bedrooms, including a huge master suite with French doors, walk-in closet, new carpet, and private bathroom with tile floors. The hallway is extra-wide, and offes a linen closet easily accessible by all four bedrooms. The second floor has another full bath with bright window.

The lower level is unfinished and offers an opportunity for future equity. With 9' ceilings, a rough-in bath, and two egress windows, the lower level provides numerous opportunities for future layout. The laundry is currently in the lower level, but has the capability to be moved to the main floor if the buyer chooses. Both washer and dryer will stay with the home.

In addition to a 20x20 patio, this home offers gardens, established trees, and an in-ground sprinkler system. It is just a short walk to Summit Pointe Park, Woodhill Park, and Hamilton Hills park, as well as a Tot Park and a walking trail around the neighborhood perimeter.

This home has brand new carpet and fresh paint, and is move-in ready! The opportunity to own a 4BR (Up) home in The Pointe just does not get any better than this!

View our VIRTUAL TOUR or ONLINE FLYER for this home at 8678 Carriage Hill Road!

Earley Lakeshore! SOLD IN 13 DAYS!

SOLD IN 13 DAYS!

This remarkable townhome is located in the tucked-away Summit Shores community, you’ll be “wowed” with breathtaking views of Earley Lake from floor-to-ceiling windows in the two-story Great Room!    The adjoining kitchen offers gleaming hardwood floors, an abundance of countertop space, and a balcony overlooking the lake and walking trail. 

The second floor has two bedrooms including a large master suite with lake views, his-and-hers closets, heated bathroom floors and a whirlpool tub.   The second floor also offers another full bathroom and a loft.

The walkout lower level is finished and has a wet bar with built-in wine rack, amusement room, and ¾ bath with huge steam shower for unwinding.  The entire house is wired with surround sound.    A dock for launching your canoe lies just down the walking trail!

View our ONLINE FLYER for 1431 Summit Shores Drive!

24-Hour Recorded Message

1-800-605-6994  Ext. 591

 

 

SOLD IN 40 DAYS! 1769 Switchgrass Circle

Modernly elegant!   The entire main floor of this two-story home shines with pristine 3.5” plank maple hardwood floors.  The kitchen boasts Whirlpool Gold stainless appliances, 42” maple cabinets with cherry stain, and a wraparound breakfast bar with pendant lighting.   A deck lies off the kitchen and dining room.  The family room has a gas fireplace with maple surround.   The main floor also offers a 16x16 deck, a half bath and mud room with laundry.  

Climb the maple staircase to the second floor, with three bedrooms and two full bathrooms, including a private master suite with French doors, walk-in closet, and full bath with garden tub, separate shower, and dual sink vanity.   

The lookout lower level is unfinished for future equity.   This home is outfitted with solid 6-panel hemlock doors, tile and maple flooring, elongated stools, 36” maple vanity cabinets, and an in-ground sprinkler system with drip line.   Enjoy the community pool!

 

24 Hour Recorded Message   1-800-605-6994  Ext.  589

View our VIRTUAL TOUR and ONLINE FLYER for 1769 Switchgrass Circle!

SOLD IN 40 DAYS!

The "New Normal" in Real Estate

By Sara Huebener

The Minnesota Association of REALTORS just published, in our monthly real estate publication, a few thoughts regarding the "new normal" for both life as Minnesotans, and life in the world of real estate.  Here is a summary of the real estate portion of this article in italics, with our personal findings in non-italics.

1.  Smaller, less-maintenance housing units. 

As households continue to shrink (less kids, more singles) the consumer will have less time or desire to maintain a large housing structure. Instead they will seek smaller, maintenance-free housing units.  Think about the substantial growth in the Minneapolis Condo market.  Smaller units, no maintenance, nice amenities, privacy.  Some folks challenge the privacy statement....

This is interesting, especially considering the larger-than-usual inventory of ramblers on the market in West Savage right now.  Once thought to soon be the new hot-button for our retiring Baby Boomers, the new demand seems to be simplify simplify simplify.   More and more Boomers are seeking townhomes or maintenance-free housing units.  At a low cost.  With no yard work.

2.   Townhomes/patiohomes and perhaps variations will also become popular. 

Some will be established for people who want the best elements found in a single family home - without most of the work.  

3.   More single-family home remodeling to accommodate adult children unable to secure employment opportunities in the "New Normal". 

Career jobs available to young people with high school diplomas or less are slowly being eliminated in America.   Instead, there is a more fundamental shift in the work force.  With more and more people pursuing community college and older workers re-entering the workforce, employers seeking laborers have a large pool of trained/experienced candidates to choose from.  This places the potential worker with less education/no experience at a significant disadvantage.   ... this makes living on their own a real challenge. 

We briefly hinted to this emerging trend on West Savage Blog earlier this year.  We are just beginning to see the trend of homes being completed with separate living quarters for grown children residing with parents and/or aging parents. 

4.  Fewer new homes will be constructed as population growth slows and an over abundance of existing homes reduces demand.  

That does not mean there will  not be some new construction, just nothing like we became accustomed to during the late 1990's and early part of this decade.  Remodeling will pick up some of the slack for the building trades, but the cost of remodeling and the added regulatory barriers that are triggered when pulling a building permit will cause many to attempt a "fixer upper" project.

We are in a unique position in West Savage, in that our local marketplace borders an area in Shakopee rife with foreclosed and short-saled vacant lots, just to the West off County 16/Eagle Creek.  For almost half of West Savage located in school district 720, buyers are having the choice of buying a home in Shakopee schools where they can build a newer home closer to schools for less money than buying an existing home.   This has been a huge driving factor for much West Savage inventory.  The good news is these lots are fast-disappearing and so we expect this trend to phase out in the fairly-near future. 

5.  Leasing will increase as consumers want less personal responsibility - not more.

Think about the lack of maintenance in homes...today.  Think about this phrase - buy it, use it, wear it out, throw it out.   Does that describe today's consumer?   Why wouldn't consumers - especially with the significant increase in single-person households - begin to look at housing as an expendable item?   Is that not what they do with cars?   Lease a nice auto, drive it for 2-4 years, then  get rid of it for something new and more exciting.

This is definitely a trend we are seeing.  We are still seeing homeowners walking away from homes.  Of course, many of these have fallen on hardships.  But, we are also seeing many of them tell us straight-out that they just don't want the house anymore, even though they can make the payments.   They just want something different.  On a couple of occasions, we have offers come in on listings from buyers who are letting their current homes slip into foreclosure, and want to buy a new house before the late payments begin showing up on their credit reports.  No doubt about it...there are people out there working the system.  We are seeing homes badly abused, with doors and countertops, appliances and furnaces ripped out, trim and carpet removed, and holes in the walls.   People are packing up and buying - or building.  Consumers ARE treating housing as expendable.  Pride in the home, while still very much alive in many communities, is not what it used to be. 

6.   Time shares could be a tremendous alternative for time-starved consumers

unwilling to spend their weekends doing yard work and building maintenance on a second home.   It is hardly a vacation when you spend a significant amount of your free time mowing and maintaining your "vacation home". 

Lake homes in the northern part of the state are taking a large hit, as consumers are not wanting to spend the time, money and effort to drive to a home to do the labor on the house, lot, dock and boat.   This is a trend we will be watching more closely in the future.    For those into that sort of thing, now is a good time to start looking for a lake home.

THE POINTE    OAK HILLS    WOODHILL    HAMILTON HILLS   SUMMIT PONDS    ST. CLAIR BLUFFS

Tax Credit Deadline TO CLOSE has been EXTENDED

By Sara Huebener

This just out....

The deadline for first time homebuyers to CLOSE on their properties in order to receive the $8000 tax credit has been extended to September 30.   This does not mean that the tax credit is available to buyers who have not yet bought a home.  

Previously, the tax credit deadline was April 30, 2010 to have purchcase agreements written and finalized, and June 30, 2010 to close.   But the backlog of closings in the month of June would disqualify many otherwise qualified buyers from receiving the tax credit, through no fault of their own.   The title and mortgage companies were literally swamped and maxed out with closings. 

The extension of the closing date for the tax credit will allow many people who have already met the April 30, 2010 deadline to now close and receive the tax credit.   Many buyers had indicated they would back out of their purchase agreements if the extension did not pass, which would put a flood of houses back onto the market. 

We personally have some buyers who wanted to buy their first homes and are renting, and had planned to use their tax credit dollars to buy out the remainder of their lease and get into a home.   If the tax credit was not extended and the lender could not get them closed by June 30, they would need to back out based on the lack of funds to pay for two residences at the same time.  This extension will allow them to still buy a home and get out of their lease.