Nation: Improved Mortgage Market Bodes Well For Housing In '08

Lawrence Yun, National Association of Realtors, senior economist, notes that widening credit availability will help turn around homes sales. "Conforming loans are abundantly available at historically favorable mortgage rates. Pricing has steadily improved on jumbo mortgages since the August credit crunch and FHA loans are replacing subprime mortgages." Existing home sales are expected to total 5.78 million in 2007 and then rise to 6.12 next year, down from 1.05 million in '06. "A cutback in housing construction is a positive sign for the market because it will help lower inventory and firm up home prices," Yun said

Metro: 10,630 New Condo Units On Market And 11,000 More Proposed

The numbers come from a quick third-quarter overview of the market from the Plymouth office of MetroStudy. Not surprisingly, just under half of the actively selling new condos (4,647) are in Minneapolis and only about 14 percent (1,441), are in St. Paul. The study does not include nearly the nearly 11,000 proposed condo units such as Bridges of St. Paul development. As of the third Quarter, about 75 percent of the 10,630 units were under construction and slightly more than half were reported as presold but not closed

The Top Ten Reasons It's a Great Time To Buy Real Estate!

1. Selection, Selection, selection, selection. Regardless of the price range a buyer desires, there are plenty of houses from which to choose. Just a few years ago the resale inventory dropped below 5,000 units. A buyer was forced to make compromises if they were going to locate the home of their dreams. There is a great selection of attached homes, condos, and townhouses. You can find large lots, small lots, and a lot that will accommodate your boat or RV. There are lots of options in this market.


2. No Bidding Wars. In 2005 we had one client that made an offer on ten homes. They lost the first nine to the 'feeding frenzy' that existed. Other buyers bid the properties up substantially from the original listing price. There were escalation clauses where buyers authorized their agents to outbid other offers by thousands of dollars. There is no competitive bidding in this buyer's market.


3. You can make an offer. A few years ago when you made an offer, the only question was how high above the list price could the buyer reach in hopes of being the best offer on the table. Today the sell price list vs. price ration is about 96%. A seller will not be insulted if you 'make them an offer they can't refuse'.


4. Patience is tolerated. In the hot seller's market that existed everything was rushed. Find a house before other buyers did. Hurry up and make the offer. Today a buyer can take their time. Look at several homes and think about your decision for a few hours.


5. Due diligence is welcomed. In this market a buyer is encouraged to obtain a home inspection, termite inspection, and appraisal. In 2005 many buyers waived these contingencies in order gain an advantage with multiple offers.


6. There are plenty of specs. In the not too distant past buyer had to 'play games' if they wanted a new home. There were lotteries and waiting lists in order to obtain new construction. Some buyers slept in their cars in order to get to the head of the lines. R.L. Brown estimates that builders have thousands of specs ready for immediate occupancy.


7. Repair requests are welcomed. After a buyer completes a home inspection, they are allowed to submit a repair request to the seller. In the past a seller might insist the home was sold 'as is'. Many times, there were back-up buyers waiting for a primary buyer to upset the seller whose home was increasing in value almost daily.


8. Few, if any investors. It is estimated that one third of all sales in 2005 were to investors. These non-owner occupied buyer caused the market to inflate and affordability to decline. Mortgage fraud became commonplace. It's a great time to buy without having to compete with hundreds of prospective landlords.


9. Location, location, location. Today's buyers can find homes closer to work. In the past buyers flocked to Maricopa and Queen Creek in order to find affordable homes. In this market, reasonably priced homes are within biking or walking distance to schools, rapid transit lines, and relatives.


10. Real Financing is available. The 'wink, wink' zero down, no doc, adjustable, sub-prime loans are gone. Fixed rates are back. FHA financing, first time homeowner bond programs, special loans for teachers, and police officers are back in business. It's a great time to buy real estate!

Housing supply outlook

Builders have dramatically decreased production in response to changing market conditions. Total new construction inventory has fallen by 15.3 percent when compared to this time last year.

The average price per square foot of all new construction units is down 7.9 percent, confirming that builders are reducing prices to sell their excess inventory.

Condos have the highest month's supply of any property type. This growing imbalance is almost entirely due to a large drop off in sales of new construction condos, down 37.4 percent from this time last year.

Single-family detached homes are holding their value better than other property types. Their current supply in months is the lowest, the sales rate has declined the least, and their average sales price is down only 0.7 percent from this time last year.

Massive inventory growth is taking place in the lowest price ranges, possibly due to the role of subprime foreclosures.

Information gathered from the Minneapolis Area Association of Realtors