West Savage Real Estate Blog

Weekly Market Activity Update for the Week of March 28

Our local REALTOR Association reports:

The week ending March 19 showed a 16.6 percent decline in Pending Sales from the same week last year and a 36.9 percent decline in New Listings.

With a little imagination, spring is in the air. Buyer activity has been gradually on the rise for most of 2011 as prospective buyers seem to prefer sporadic puddles   to insurmountable snowbanks. Compared to last year's incentive market, however, the year-over-year declines in purchase activity have been growing as well.

The number of Active Listings for Sale has remained remarkably stable thus far in 2011. In 2010, inventory levels had fluctuated by more than 6,000 units from the first of the year. That volatility has been tamped down below 1,000 units so far this year. With no additional purchase incentive in the pipeline, this should bring supply-side improvements and price stability as demand returns to historically reasonable levels.

This report outlines exactly what we are seeing on a local level as well -  buyer activity is occuring, in spurts.  Inventory remains low. 

Offer Pending! 1004 Morningside Way

OFFER PENDING on this 5BR 4BA home with 5 Car Garage (2 car detached.)  Hardwood floors, solid 6-panel doors, deck, open floor plan.  Needs some minor TLC.  HUD home.   

Are Banks REALLY Doing Their Due Diligence?

By Sara Huebener

This morning my father and I got in a lively debate.   It's something that invariably ends up happening after our small talk about the kids and Easter plans are over.  And while we usually end up debating topics like health care, welfare, the outsourcing of jobs overseas, the dealth penalty and political issues, today's debate turned to banks and real estate. 

Somewhere in the discussion, we got into the details of some of the actions banks are undertaking to dot i's and cross t's.  I have seen lenders check a buyer's employment the day before closing.  I have seen a lender ask for documentation from the parent of an adult borrower, asking the parent to issue a written statement for why a check for $76.23 was deposited into the borrower's checking account (the buyer did some grocery shopping for his mom and she wrote him a check to reimburse him for the amount, which he deposited in his checking account.)  

We talked about the catch-22 involved in this process.  I told my dad something to the effect of, "Banks are doing their due diligence, and at the same time are making it harder to sell real estate."  His reply of "Well, they got burned" was a perfect segue into my next statement of observation:   We all know that foreclosures are priced to move.  Banks do not want to hold onto these properties any longer than necessary.  But we are seeing some foreclosures hit our market that are easily priced $50,000 BELOW what would be an expected and significant discount for a distressed property. 

Case in point:  This weekend I took a family out looking for homes.  One of the homes on our list was a foreclosure here in Savage.  When it hit the market, I notified my buyers, saying the house was priced far lower than it's value.  The house had almost 3000 sqft and was full of maple and built-ins.  It was priced in the range of a townhouse.

Coincidentally, an open house was scheduled at the time of our planned showing.  When we got to the house Saturday morning, the agent was 20 minutes late for the open house, and the cars were lined all the way up and down the street. It was a spectacle.  Clearly, this house was so severely undervalued, that I questioned whether the bank holding this asset is even aware that this home was priced at $50,000 below (a discounted) market value. 

I told my dad that if the bank knowingly was dropping the value so low, all their due diligence being passed on current borrowers in cross-checking minor bank account deposits was counter-productive.   Why inquire about such minute charges as a $75 checking account deposit of a qualified buyer, when valuable homes are being fire-sold at market?   Of course, this conversation then morphed into who is managing these assets, and I will end my comments here.  

All told, it was an interesting discussion.  Banks need to cross check borrowers for credit worthiness.   But are (some) banks aware of the pricing strategies going on in our market?   Not all foreclosures are priced to drop the value out of a neighborhood.  But this one definitely was.  And if a bank really wants to "dump" a property, in this case, for example, they could have asked for tens of thousands of dollars more, and still had it promptly taken off the books.  

 

West Savage Inventory Still Low

West Savage is finally starting to see some pending inventory, with 7 pending listings as of today.  This is a very positive sign.  Five of the seven pending properties are distressed, meaning they are either foreclosures or short sales.   That said, traditional sellers have become more competitive as well.  Eight sellers have reduced their listing price in the past two weeks.  West Savage inventory is still low, sitting at about half normal spring levels. 

Financing continues to be a hot topic.   Appraisals remain conservative and lenders are dotting i’s and crossing t’s when approving a buyer.  Some sales fall through if the buyer is not grade A perfect or the home does not appraise.     
West Savage has seen two pending sales fall apart this month, returning both homes to the active market.  One was a foreclosure, one was traditional in nature.  Perhaps this is how it always should have been, but we still think the pendulum has swung a bit far in the other direction.  Sellers questioning their true value may want to have an appraisal before discussing going on the market, and should review a REALTOR®’s CMA (comparative market analysis) carefully before determining list price.

Those of you following the Workforce Housing Proposal regarding the 14 acre parcel of land behind Rainbow Foods probably know that the City Council rejected Ron Clark’s proposal for high-density housing.  But all is not over yet.  Mr. Clark has another new proposal in the works–a part residential/part commercial plan.   More on this new proposal will undoubtedly follow in the Savage Pacer.     

Single family/townhome inventory in Savage and Scott County is up slightly since last month.   Our West Savage absorption rate is 12.   That means if zero new homes come on the market, it will take 12 months to sell our existing inventory.  

Weekly Market Activity Update for the Week of March 21

Our local REALTOR Association reports:

Home sales in the Twin Cities metropolitan area continued to exhibit signs of divergence from last year’s incentive market. The 812 Pending Sales for the week ending March 12 were 20.9 percent fewer than the same week in 2010. Since this year’s weekly Pending Sales figures look more like a standard bell curve than last year’s railroad spike, we’ll continue to see declines through the end of April followed by gains during the summer months.

Sellers introduced 1,453 new homes or 31.1 percent fewer than the same week last year. Active Listings for Sale has been shrinking relative to last year and holding fairly steady at or below 22,000 units so far this year. As of March 21, the current inventory of 22,077 made for 10.0 percent fewer homes for buyers to choose from. This trend has helped the Months Supply of Inventory metric maintain at 7.5 months, just outside the five to six month balanced range.

Market Activity Update for the Week of March 14

Our local REALTOR Association reports:

For the week ending March 5, there were 717 signed purchase agreements, a decline of 11.4 percent from a year ago when the market was stimulated by the federal home-buyer tax credit. Over the last three months, there have been almost 900 fewer signed purchase agreements than during the same period a year prior.

On the supply side, sellers brought 1,845 new homes onto the market, or 19.0 percent fewer than the same week last year. The three-month average pace of listing activity was 16.6 percent slower than it was a year ago.

Despite the decline in supply, there are a few other metrics that indicate challenging conditions remain for sellers. The Average Days on Market Until Sale currently sits at 157, up 16.1 percent from a year ago. Similarly, the Percent of Original List Price Received is down to 88.2 from last year's mark of 93.2. 

In essence, in an environment where it takes homes longer to sell, sellers should be focused on proper pricing and preparation if they want a faster sale. Although there are fewer new listings, smart pricing and marketing are more important than ever.

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Market Activity Report for the Week of March 6, 2011

Our local REALTOR Association reports:

For the week ending February 26, home purchase activity in the Twin Cities diverged further away from last year's tax-credit-inspired market. There were 606 purchase agreements signed during the week, which made for a 30.2 percent decline from year-ago levels. On average, over the past three months, Twin Citizens made a less-distorted 9.5 percent fewer home purchases than they did during the same three-month period in 2010.

On the supply side, sellers brought 1,238 new homes onto the market, or 27.8 percent fewer than the same week last year. The three-month average pace of listing activity was 16.1 percent slower than it was last year.

Both the 2011 and 2010 inventory levels have begun to climb at this time of year, which is normal. Sellers were more likely to list their home at this time last year knowing that credit-motivated buyers were more determined to purchase. It seems as though sellers wanted to ensure their property appeared in preliminary MLS queries while buyers continued to shop around for the best value up until the deadline.

Just SOLD! Newly renovated 1910 Gem!

JUST SOLD!  Newly restored 1910 gem!    3BR, 2BA with new carpet, new flooring.  Over $4000  worth of granite in the kitchen, stainless appliances!  Slate bathroom, huge master suite with hardwood-floored walkin closet, clawfoot tub, sconce lighting and reading nook.  Main floor laundry, beveled windows, huge patio.  Fenced backyard even comes with a playset.   So much character.   All around WOW!     861 Bidwell Street.  Closed 3/3/11 using Dakota County Bond.  

Weekly Market Activity Report for the Week of Feb 28

Our local REALTOR Association reports:

The gap between current and year-ago listing activity continues to widen, as anticipated. Expect the supply-side numbers to show sizable year-over-year declines due to the high baseline set during the spring 2010 tax credit. It should be noted that we are now approaching a period where we’ll be comparing the 2011 non-tax credit market to the 2010 tax credit market at its peak level.

For the week ending February 19, there were 690 signed purchase agreements, which made for a 12.1 percent decline from the same week last year. There were 1,367 New Listings for the week, representing a 25.4 percent decline from a year ago. Active Listings, at 21,642, have been holding steady since the beginning of the year due to subdued seller activity coupled with fairly reliable sales volumes. That marked a 3.3 percent decline from year-ago inventory levels.

A more meaningful comparison is to look back at 2009 and 2008 and avoid tax credit stimulated activity. This week's 690 Pending Sales fall right in between 2008 and 2009 numbers. While that is less buyer activity than we would like, it does provide hope for the future.