Record low mortgage rates toss housing a lifeline

With the $500 of monthly savings Jim Hennessy of San Diego gained by cutting the rate on his $417,000 mortgage, he plans to rebuild his beaten-up retirement account and maybe even take a cruise.

This is the outcome the U.S. government was driving at when it said it would pump hundreds of billions of dollars into buying mortgage bonds, freeing up lenders to make new loans and lower-rate refinancings that spur consumer spending and the economy.

"Maybe there's a vacation in our future, maybe a cruise because those rates have come down so much," said Hennessy, managing director of a marketing firm.

The worst housing slump since the Great Depression has crippled top international banks and has tipped the world's biggest economies into recession.

Hennessy cut his mortgage rate by a full percentage point by refinancing 11 days ago into a 5-1/2 percent 30-year loan.

That will help to pay college tuition for his children, and "we'll probably put more into savings and try to have some semblance of a retirement," he said.

Hennessy is just one example of borrowers aiming to reduce their home loan payments or buy a home as a result of government actions to push mortgage rates to new lows.

The average 30-year U.S. mortgage fell more than 1/4 point in the week ended December 18, to 5.19 percent, the lowest since Freddie Mac started its weekly survey 37 years ago.

It was the seventh straight weekly decline and brought rates down from about 6-1/2 percent in October.

The decline was also the result of the Federal Reserve cutting its benchmark federal funds rate target to a record low this week.

"Being baby boomers, we're looking down the road at retirement, and are making every effort to be as debt free as possible," Hennessy said.

Deep stock market losses and two years of home price declines have shredded wealth for many homeowners who may be able to restore some of their losses with cheaper borrowing.

Rodney Anderson, managing partner of Rodney Anderson Lending Services, a unit of Supreme Lending, in Plano, Texas, said mortgage applications are starting to flood in.

"We're seeing pre-approvals in the amount comparable to 2003, and July 2003 was my biggest month ever in mortgage history," he said. "I closed 287 loans that month and we're already seeing closings occurring in December and our January pipelines are just starting to launch."

Swapping high-rate home loans for more affordable mortgages is driving most of the demand, but purchases are also starting to revive, he said.

"With current low gas prices and the amount of money people save on refinancing, this is an opportunity for the economy to start making moves in the right direction," Anderson said.

MULTIPLE CHOICES

An overabundance of unsold homes has been one of the biggest thorns in this housing crisis. In addition, much lending froze amid huge write-downs by banks on soured mortgages and record foreclosures.

The latest interest rate cuts may be enough to entice some buyers who were waiting for even lower prices. Borrowers with strong credit have plenty of homes from which to choose.

Keith Freeman, a director at a technology consulting firm who now rents in Atlanta, plans on moving to Miami and has made a bid on a house there. Despite some trepidation that rates could fall still further, he said, "Rates are historically low, let me just bite on something."

It makes it easier that he doesn't have to sell a home, a stumbling block for many buyers in a struggling market.

"I'm not concerned about myself," Freeman said. "I have phenomenal credit, money in the bank, a good-paying job, I can put 20 percent-plus as a down payment. I know I'm a candidate that lenders will probably drool over and I can close in a minimal amount of time."

But borrowers without pristine credit and easily documented income will have a harder time. Stringent lending standards could mean that at least a third of those who apply to refinance will fail to win approval, several analysts said.

Many owners also have mortgages that are higher than their homes' value, and won't be able to refinance.

"Don't count your chickens before they've hatched," advised John Murray of Realty Executives Prestige Properties in Boston.

"Historically speaking, if we saw a half-a-point rate drop we would expect a 10 percent rise in sales," he said. "There's a lot of desire, but we have yet to see if that yields fruit."

Weekly market activity update

As the holidays loom, activity in the the Twin Cities housing market that isn't lender-mediated (i.e. foreclosures and short sales) is quieting down quickly, while the lender-mediated market is plugging along with no discernable effect from the usual seasonal ebbs and flows.

For the week ending December 13 there were 1,240 total new listings and 556 pending sales, which are up 2.2 percent and 36.3 percent, respectively, from the same week in 2007. Of these new listings, 48.0 percent of them are lender-mediated, while a hearty 60.0 percent of pending sales are. The market share comprised of these lender-mediated homes has been growing steadily every week for the last several months and should either hold steady or continue to grow through the rest of 2008. Traditional sellers always pull back this time of year—banks do not.

Minnesota:Why Are Property Valuations Up?

In this economic downturn, with home prices down,then your taxes for next year should go down, right? Homeowners showing up at truth-in-taxation hearings around the state are finding that is not necessarily the case and grappling with the fact that their property taxes will actually go up in 2009! Last night's hearing in St. Paul got a little heated with Christopher Rocco of St. Paul asking for an explaination of his taxes. The county has assessed the value of his home at $120,000 but he says that seven of the 21 units in his complex are in foreclusure. "They're selling for $20,000 apiece, so if they're trying to tell me that they're going to tax me on a $120,000 home, I'm not going to stand for that." Homeowners who want to appeal their property valuations need to do so in the spring, not December. Last spring, about 3,000 people contested their home values in Ramsey County and that figure could double next year. Says Gordon Folkman who directs the property tax division for the state's Revenue Department, "The primary reason that taxes change is that it's a function of a budget decision by cities, counties and school districts.

Drop in mortgage rates leads to jump in affordability

Drop in mortgage rates leads to jump in affordability

Minneapolis, Minnesota (December 10, 2008) – According to the Minneapolis Area Association of REALTORS®
(MAAR) based on data from the Regional Multiple Listing Service of Minnesota, Inc., a combination of substantial
declines in mortgage rates and the continued downward movement of home prices is leading to an unusually
attractive affordability environment.
Mortgage rates declined well into the 5 percent range
in the last month—the best rates of 2008 and the most
attractive since 2003. Add November’s tantalizingly
low median sales price of $175,000—down 19.2
percent from the same time last year and the lowest
November showing since 2001—and you have
extremely healthy affordability.

It is absolutely ‘go time’ for anyone interested in
making an affordable home purchase,”said Kevin
Knudsen, MAAR President. “The current combination
of low prices and low rates is unprecedented.”

MAAR’s Housing Affordability Index (HAI) jumped 19 points in the last month, and currently sits at 180. This is up
27.7 percent from last December’s mark of 141 and is the highest recorded HAI since we began tracking the data in
1990.
Lender-mediated home sales, which accounted for 53.5 percent of pending sales and 47.3 percent of closed sales,
posted a November median price of $130,881. This is a drop of $5,000 from last month and a decline of 20.7
percent from last year. Traditional properties, which exclude foreclosures and short sales, had a November median
sales price of $225,420, a decrease of 2.0 percent from last year.
The stark differences in home prices between the lender-mediated market and the traditional sales market has led
to two very different market segments, each comprising roughly half of total market activity. Foreclosure and short
sale prices are falling fast as banks aggressively price their homes, while the traditional market is more effectively
maintaining its value as buyers appear willing to pay a fair-market price for “turnkey” properties that are closer to
move-in ready. The one thing each market segment has in common is a large increase in affordability thanks to the
recent drop in mortgage rates.
“Buyers are being rewarded by market conditions that have continued in their favor all year,” said MAAR President-
Elect, Steve Havig. “Mortgage rates haven’t been this good in five years.”

Nation: Mortgage Rates Dip For 4th Straight Week!

30-year mortgages fell below 6 percent and are heading lower due to the government's massive new effort to aid the U.S. housing market. The Fed's move to spend up to $600 billion buying mortgage-backed securities owned or guaranteed by Freddie Mac and Fannie Mae caused rates to drop immediately by one half-point. Rates on 30-year fixed-rate mortgages dropped to 5.97 percent down from 6.04 the week previous. Rates on the 30-year hit a high for 2008 of 6.63 percent in July.

Holiday Season Opportunity For Today's Sellers

Holiday Season Opportunity For Today's Sellers

If you're getting ready to sell your home, doing so this season offers some real advantages. Although spring is the traditional high season for home listings and sales, it isn't necessarily a better time to sell. By waiting until spring to list your home, you could face more competition from other sellers. In addition, interest rates could be higher by then, discouraging some would-be buyers.

Here are more great reasons to consider listing your home now:

Motivated buyers. With fewer buyers in the marketplace during fall and winter, home shoppers tend to be more serious about purchasing. Consider that many corporate moves are made during December and January. Transferees need to find new homes fast--perhaps in your neighborhood!


Fast start for kids. Some experts advise parents that the transition to a new home can be smoother for some kids when they are moved during the school year--rather than spending the summer "friend free." Starting at a new school immediately upon arrival in the area helps kids establish routines more quickly.


Seasonal charm. Selling your home during cooler weather or over the holidays heightens its "warm" appeal. Keep your home bright by turning on lights and opening curtains and shades.


Call us today

Metro: Market Gains Momentum

Driven by bargain hunters and first-time buyers, the local market is feeling an uptick. Joel Jordan was pleasantly surprised when the house he fell in love with in Stillwater, dropped in price by nearly $30,000 and making it affordable. He had looked at about 40 houses, mostly foreclosures and fixer-uppers. Despite an almost daily dose of dim economic news, the Twin Cities metro area is gaining some momentum. Pending home sales rose 6.9 percent during October from a year ago. It was the fourth consecutive month of year-over-year increases. Closed home sales for the year are still almost 5 percent behind last year, but rose 12 percent in October. A growing share of those sales were distressed sales which help drive down the median sale price and those prices are now approaching levels not seen since the beginning of the decade.

Nation: Rise In First-Time Buyers, Long-Term Plans

The 2008 National Association of Realtors Profile of Home Buyers and Sellers shows first-time buyers have risen and they plan to own their homes longer than buyers in the past. Lawrence Yun, NAR chief economist, "First-time buyers are more flexible in entering the market because they aren't concerned about selling an existing home. Given low home prices, plentiful supply and affordable interest rates, it's been an optimal time for entry-level buyers with a long term view. The number if first-time buyers rose to 41 percent from 39 percent of transactions last year and 36 percent in 2006. The median age of first-time buyers was 30, down from 31 in '07 and the median income was $60,000. The typical first-time buyer purchased a home costing $165,000 and plans to stay in that home for 10 years, up from seven years in 2007.

Metro: Housing Researcher Finds A Ray Of Sunshine

spotted some encouraging signs in residential construction trends. Closed sales of newly built homes in the Twin Cities came in with a 23 percent decline compared wit the previous 12-month period. The silver lining? It's one of the mildest year-over-year declines recorded since 2005 says Jones. Jones also noted that the inventory of finished vacant homes on the market dropped by a third to 2,377, during the third quarter of 2008. Homebuilders have been trying to work through that supply because these spec homes exert a downward pressure on overall prices. These bits of relatively good news in the MetroStudy report to build on some other positive signs for homebuilders. For example, the U.S. Commerce Department reported that new home sales unexpectedly rose to 2.7 percent in September, although median sale prices dropped too. The Minneapolis Area Association of Realtors reported a 42 percent increase in pending sales for September. Despite the silver lining, there's no denying the clouds; the financial crisis, more restrictive credit policies, the psychological affects of falling prices and foreclosures.

Today’s Market Commentary. Slightly higher rates today.

Commentary: The mortgage market was bounced around a little this morning by the Bank of England’s stunning 150 basis-point cut in short-term rates, well in excess of the most aggressive forecasts calling for a cut of 50 basis-points. .Short-term interest rates in Britain are now at their lowest level in more than 50 years.

The sudden swoon in mortgage prices this morning suggest that mortgage investors are beginning to believe that the massive effort by the world’s central bankers will ultimately prove to be effective in jump starting the global economic engine. Rate cuts are viewed as leading to a greater demand for capital which in-turn ultimately leads to higher interest rates.

Closer to home the Labor Department said initial jobless claims for the week ended November 1st fell by 4,000 drew nothing more than a passing glance from mortgage investors. In a separate report the Department said third-quarter Productivity grew at a very anemic 1.1% pace while unit labor costs climbed 3.6%. While the unit labor costs increase is a bit disconcerting, most analysts see virtually no reason to fear a resurgence in wage driven inflation pressures.

The media channels are full of text and talk regarding the recession – and some even talking about an extended recession. As usual these “talking heads” fail to provide much perspective in terms of the time this economic condition might prevail. I think it is worth noting that since the Great Depression, there have been six major recessions; the recession of 1953, 1957, the 1973 oil crisis recession, the 1980 recession following the Iranian Revolution, the 1990’s recession and the early 2000 recession brought on by the collapse of the dot-com bubble. Three of these recessions lasted two years – and the other three lasted one year – start to finish.

If, as many suggest, the current recession began in mid-2007 -- we should reach the point at which economic activity begins to show a notable and sustained improvement somewhere between March and June of 2009. We personally find it hard to believe that $10 trillion in stimulus provided by the world’s central banks -- together with massive cuts in short-term interest rates -- will fail to have its intended effect of freeing the economic pendulum from the current recessionary mire. If our assumption is accurate, look for the economic pendulum to get a very healthy push in the direction of accelerating growth as the largest amount of cash and cash equivalents the world has ever seen that is presently sitting on the sidelines gets deployed.

What, a Halloween that is not scaring the markets? Halloween may not be, but October 2008 will go down as the most volatile and scariest month ever in the world wide financial markets and we cannot wait for November to come. Oil in October dropped below $100 a barrel, than $90, than $80, than $70 and now is around $65 a barrel. Gas is now being reported in the Twin Cities as $1.99 a gallon. Dow tumbles to almost 8,000 and now back up over 9,000. What a month. History in the making but we have to be honest, we are glad the month is over.



So what’s gong on in the Markets on Halloween. Nothing scary right now. MBS prices are up +12/32 (FNMA 30-yr 6.0 at 100.10), which is slightly below where PHH priced this morning which was around +16/32nds. The 30-yr fixed FNMA required net yield (60 day) is now at 6.37%, up from 5.84% at the end of September. This morning, MBS markets have recovered some of the losses seen earlier in the week. Today's economic data had little impact. The Core PCE price index rose 2.4% from one year ago, matching expectations, and Personal Income also came in close to the consensus forecast. The Dow is up, but only 10 points. Chicago PMI and Consumer Sentiment will be released soon, and Bernanke will be speaking this afternoon and that could add one more round a volatility to this October 2008.
Happy Halloween

Minnesota: State Gets Cash Boost To Help With Selling And Rehabbing Of Homes

Three metro counties and the state of Minnesota will receive federal money through a new unit of the Department of Housing and Urban Development that aims to help communities hard hit by the foreclosure crisis. From the $57.8 million federal pot, the Minnesota Housing Finance Agency received $38.8 million, Minneapolis, $5.6 million, St. Paul, $4.3 million, Hennepin county $3.9 million, Dakota County, $2.8 million and Anoka county $2.4 million. Those communities were chosen based on the number and rate of subprime mortgages, delinquencies and defaults. The aid is funneled through HUD's new Neighborhood Stabilization Program and can be used to purchase foreclosed properties for rehab and sale and in some cases demolition. Homes that are sold through the program must be sold at or below the purchase price plus the rehab investment. The money can also be used to offer down-payment and closing cost assistance to buyers who are at or below 120 percent of the area's median income or to create land banks to stabilize neighborhoods and encourage development.

Save the Homeowner Program

Save the Homeowner Program
Save Your Home- Save Your Credit
*Foreclosure-Short Sale*

WE CAN HELP YOU!


 Assist in modifying your current mortgage so you can lower your payments and own your home
 Successfully sell your property even when there is no equity
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 Negotiate with bank
 We will help save your credit score and finances
 All these options—at no cost to you- zero selling commission (some restrictions apply)!



PLEASE CALL US TODAY TO SET UP A FREE CONSULTATION

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651-486-5628
Coldwell Banker Burnet
Ray@TheSinghalTeam.com



…AND START LIVING THE LIFE YOU WANT TOMORROW!

Big discounts push increase in September home sales

With the stock market skidding and the credit markets in disarray, Marissa McDonald and Travis Gehling are paying close attention to what's happening in the economy. None of that, however, will deter them from buying a house, McDonald said, as they drove to an inspection on a house they plan to buy in Cottage Grove.

The first-timers said that sellers were offering serious discounts on just about all of the 20 or so houses they looked at during the past couple of months, and they're hoping to get a 7.5 percent discount on the one they plan to buy.

Such discounts and a flood of clearance-priced foreclosures helped drive a 42 percent increase in pending home sales last month compared with a year ago, the third consecutive month of year-over-year increases, according to data released Friday by Twin Cities-area Realtors associations. Whether that translates into a long-term recovery against a backdrop of economic uncertainty remains to be seen.

Among sales that closed in September, the median sale price declined 15.6 percent, to $189,000.

Much of that decline was caused by a steady increase in foreclosures and "short sales" -- sales where lenders agree to a sale for less than what is owed on the mortgage -- that are moving through the market. Almost 42 percent of September pending sales were these lender-mediated transactions, up from 17.5 percent last year at this time, according to the Minneapolis Area Association of Realtors.

The distressed sales are putting tremendous downward pressure on sale prices across the board. The median sale price of lender-mediated transactions only was $146,000, 11.5 percent decline over 2007, and even the sale price of traditional homes fell 8.6 percent.

Such declines are an indication that sellers are offering steep discounts. During September, sellers on average received 92.2 percent of their asking price; just two years ago they got 96 percent.

The September spike in pending sales will help the market regain some ground after a very slow start to the year. So far this year, pending sales are now running neck-and-neck with last year.

Although a 42 percent increase sounds impressive, the 4,036 pending sales last month were less than the five-year September average of 4,138. The increase was due in part to a particularly slow September 2007, which was the slowest September in a decade.

Dogged by record numbers of distressed sales, the market is also getting a boost from a slowdown in listing activity. Last month the number of new listings to hit the market was 4.2 percent behind last year at this time and 13.2 percent below 2006. That's a trend that's been underway for most of the last half of this year; so far this year new listings are off 11.2 percent compared with last year.

While sellers are certainly cursing the market and the flood of bargain-priced foreclosures they're competing with, the fundamentals for buyers like Gehling and McDonald who have good credit and cash for a down payment remain strong. Mortgage interest rates have remained relatively stable and near 30-year lows, there are nearly 10 houses on the market for every buyer and the government is offering a $7,500 tax credit for first-time buyers. And that's why the housing affordability index rose to 159, its highest level since the spring of 2003.

With consumer confidence waning but discounts on the rise, the market is becoming increasingly nuanced as segments of the market improve while others decline. In Minneapolis, for example, there was nearly a 40 percent increase in the number of closed sales last month, but nearly a 24 percent decline in the median sale price.

Data were even more extreme in St. Paul, where the number of sales in September rose nearly 44 percent from 202 during 2007 to 290 last month with the median sale price falling 28 percent. The same was true in several suburbs, where there were fewer sales, but many striking examples of huge increases. The number of sales in Richfield, for one, doubled from 26 to 52.

Nation: Pending Homes Sales Increased 7.4% From July To August

The National Association of Realtors® released reports of the highest increase in pending home sales since June of 2007. The group said its seasonally adjusted index of pending sales for existing homes rose to 93.4 from an upwardly revised July reading of 87. Wall Street economists surveyed by Thomson/FR had predicted the index would fall to 84.9. The index had sunk to a record of of 83 in March.

Twin Cities: Signs Of Hope On The Housing Front

The Minneapolis Area Association of Realtors said that in the last seven weeks, 1500 more homes were sold than the same period last year and there are eight percent fewer homes on the market than a year ago. The translation: the bulk of homes for sale is beginning to ease. "We're seeing some buyer entry into the marketplace and that's really good news", said Kevin Knudsen, President of the association. However, many homeowners haven't seen evidence of the recovery because most of the movement is on homes priced below $200,000 and many of those foreclosures. The big question is how the events of this past week will affect what appears to be the beginning of a recovery. Some experts predict that home loans will be easier to get it the bailout passes.

Real Estate Outlook: Impacts of Bailout

The federal government's multi-billion-dollar bailout of bad mortgage debt could be a game-changer for home buyers, sellers and real estate professionals.

But how much may not be clear for months, maybe even a year.

In the short term, according to Jay Brinkmann, chief economist for the Mortgage Bankers Association, the government's plan to greatly expand purchases of mortgage backed securities by the Treasury, Fannie Mae and Freddie Mac, should "provide a signal to the market that there's going to be an underlying floor on (interest) rates."

That's because when the Treasury buys mortgage securities -- and it's pledging $10 billion for this month alone, plus lots more to come - it has the effect of pumping fresh capital into the mortgage market, allowing more home loans to be made at more favorable rates.

Now, although rates should remain low, currently they're close to 6 percent for 30-year fixed rate loans on average -- that doesn't mean it'll be easier to qualify for a home purchase if you've got damaged credit or an income too low to pay for what you want to buy.

Those days are over for years to come.

What about the larger economic impacts of the bailout plan? Again, we're at the earliest stages of this whole process, but if the plan brings a sense of stability to the financial markets, then, absolutely, the net effect should be to restore confidence.

And consumer confidence is an essential ingredient for a home buying recovery. People who are worried about the safety of their money market investments and bank deposits aren't good candidates for purchasing houses -- even at rock bottom prices.

But the reverse is true as well: Greater consumer confidence in the financial marketplace -- along with modest interest rates and attractive prices -- could kick the whole cycle into gear and get housing moving again.

There's another factor here too: Without the big bailout plan, hundreds of thousands of financially distressed homeowners were on a non-stop conveyor belt to foreclosure. But when the government takes over mortgage portfolios, it's likely there'll be at least temporary halts to foreclosures and massive efforts to "work out" the terms of delinquent loans to enable owners to make payments at levels they can afford.

For neighborhoods hard hit by foreclosures -- and the distressed owners themselves -- that will definitely be a game changer.

Nation: 30-Year Rates Fall To Five-Month Low Of 5.93%

The federal takeover of Fannie Mae and Freddie Mac increased industry confidence in their future. Rates dropped sharply this past week, falling to the lowest level in five months as the government's takeover of Fannie and Freddie had the desired effect. The decline pushed the 30-year rate below 6 percent for the first time since late May. The 30-year rate hit a 2008 high of 6.63 percent on July 24 and had been above 6 percent since late May.

Multiple Purchase Offers Can Work To Buyer's Advantage

During the housing boom, where demand was high compared to the inventory of homes for sale, it wasn't uncommon for a home seller to receive multiple offers from different buyers. Then, sellers were in the happy position of being able to pick the best offer that came in. Today, some buyers may find the best value by making multiple, simultaneous purchase offers on several different homes.

Normally, a buyer's purchase offer is valid during the offer period--the time stipulated for the seller to respond, say, 48 hours. If the seller signs the offer, a contract is created.

For a buyer to make several simultaneous offers on different homes, the offers should always include a special clause declaring the offer not valid until the seller approves--again, within a specified time frame. In this case, the offer is validated by the seller and returned to the buyer, but the contract only becomes ratified when the buyer approves it.

In this multiple-offer scenario, sellers compete for the buyer's contract, and the buyer gets to pick the best of the counteroffers that come back approved by the sellers.

Multiple purchase offers are not for everyone. Talk with us to find out whether a multiple-offer strategy could work for you in today's market.

Mortgages: More Documentation Required

The first time Jeff and Dana Prottas applied for a mortgage they weren't surprised that they might have to jump through a few hoops to get an OK from the bank, so they worked hard to improve their credit score.

So when they backed away from a complicated deal in which they tried to buy a house from a borrower who owed more than the house was worth, they thought that getting a mortgage on another, less-expensive house would be a breeze, as they had already been approved.

They were wrong. Between canceling that deal and finding a new house in Golden Valley, the mortgage markets continued to unravel, access to credit tightened and the lender who had approved them several months earlier was now asking for a bigger down payment and more detailed documentation, including photocopies of their Social Security cards.

"I was almost on my way to the doctor to get a finger pricked to give blood," Jeff Prottas said.

Though buying conditions are prime -- mortgage interest rates are still near historic lows and home prices are coming down at a steady clip -- coming changes resulting from the continuing credit crunch are going to make getting a mortgage more time-consuming and costly for some borrowers.

Tired of gloom and doom stories about the US real estate market? We are, too. So welcome to Happy Real Estate News.

In real estate it's important to remember: there isn't one market out there, there are hundreds of thousands. And the factors driving these markets vary from city to city, neighborhood to neighborhood, even from street to street.

There's no denying that the mortgage meltdown has meant tragedy for many home owners. But take a look around.

You'll see there's very positive activity in many vibrant markets throughout the US. By focusing on the good news and passing the message around, we can help speed up the market recovery.

Mortgages: More Documentation Required

With the fallout in the mortgage market, new requirements and higher costs will be part of equation for home buyers if they need a mortgage. However, with home prices where they are, the opportunity to buy at these lower prices may offset the effort and cost necessary to obtain a mortgage.

Arden Hills: TC Army Ammunition Plant Development To Get New Name

Before development begins on the 500-acre plot that sits east of 35W and south of County Rd. I, city officials want to give it a new name in hopes of changing the public's perception of the area. Formerly the site of weapons and equipment manufacturing during WWII, the property could house condos, shops, quaint streets, parks and be called, The Ridges at Arden Hills, or Capstone at Rice Creek or Arden Crest.

Minneapolis: 100 Boarded Up Houses May Fall To Wrecking Ball

After a news conference, a backhoe went to work on 2914 Dupont Ave. N, the first of scores of foreclosed houses in Minneapolis that will be razed with $1.25 million of aid from Hennepin County. The aim is to double the number of demolished and boarded properties to 100 this year and give some people hope to the patch of Minnesota most damaged by foreclosures."We need productive properties on the tax base, not shells," said Mike Opat, a Hennepin County commissioner, at the third news conference held on the block in less than five months. He pushed for the $1.25 million in aid the county is providing. The city is required to pay $875,000 back to the county by the end of 2010 for the average collection rate on demolition assessed against the properties and paid by the current or future owner.

How To Beat Your Neighbor To A Fast Sale

If you're getting ready to sell your home, news reports of foreclosures, a buyer's market or slower home sales may not sound encouraging. The good news? You're not really competing with the entire world—you're competing with your neighbors!

Remember: All real estate is local. What's happening nationally, in other regions or communities, has little relationship to your local real estate micromarket, which has a buyer demand, housing supply, location and amenities that are unique to your area. Even neighborhoods within larger markets can differ a lot in home prices and the pace of sales.

Also understand that buyers typically narrow their sites to a particular neighborhood; then they zero in on the best value among the homes for sale in that neighborhood. Value means more than price—it's a combination of amenities (location, size, style, condition, conveyances, etc.) and financial considerations (price and monthly payment, closing costs, utility bills, taxes and so on).

To sell quickly today at the best price, you must show buyers that your home offers better value than competing neighborhood homes. Accomplishing that in a buyer's market calls for a creative approach. Consider the following strategies.

Price Right From The Start

Many home sellers are tempted to start their home sale with the highest listing price they could hope to get. Unfortunately for sellers, today's buyers are more educated about home values than ever before—and they're comparison shopping. In a buyer's market, a creative strategy is setting your home's price at the lower end of its market-value range, maybe even below neighborhood comparables. This attracts pent-up buyer attention fast and generates competition that could result in a full-price (or higher) offer. We'll be happy to conduct a comparative market analysis (CMA) to determine the best listing price for your home.

Maximize Visual Appeal

We've discussed in previous newsletters how important it is to create curb appeal, clean everything, declutter, remove personal items, paint and recarpet, update fixtures and repair anything that's not working properly. Those are necessary basics to home selling in today's market. Here are some creative strategies to consider:

Hire a professional to “stage” your home. Using proven design techniques, “stagers” rearrange furnishings to best complement a home's unique features. The stager may ask you to place some of your furnishings and possessions in storage or might bring in furniture to create a particular look.


Add fresh flowers for scent and color in rooms throughout the home and, weather permitting, in flowerbeds and pots outside.


Decorate dining tables with beautiful cloths or placemats and full place-settings to emphasize the entertainment possibilities of the space.


Focus on first impressions. Pay special attention to the front-door area outside and the area a buyer first sees upon walking inside.


Get The Word Out

Having your agent include your home in the local multiple listing service is important, of course, but you can do other things yourself to turn up the volume on your home-sale announcement.
Make sure your home's property flyer highlights the unique and attractive aspects of your home: upgrades to structure or systems; new appliances; energy-saving features; landscaping; etc. Enlist a child to keep a brochure box filled. Consider a map showing proximity to amenities such as public transportation, parks, schools, supermarket and so on. Include a floorplan showing location and sizes of rooms, so buyers can plan how their furniture might fit.


Use your e-mail signature to promote your home sale. Even if recipients aren't interested, they may know someone who is.


Inform your most likely buyers (first-timers, young families, empty nesters, retirees, etc.) through organizations you and/or they may be involved with. Use bulletin boards, newsletters, websites, meetings, etc.

Metro: Yes Prices Are Down A Bit But Not Everywhere

Minnesota Association of Realtors CEO Christopher Galler suggests that market observers consider that in January 2001 the median house price in the Twin Cities was just $162,000. Prices soared until they peaked at $239,000 in 2006 and the current meading price of $205,000 is still considerably higher than prices 7 years ago. Re/Max's Greg Cecchetttini offers of few beams of sunlight for sellers as well as buyers, claiming that some local towns are actually enjoying a bit of a boom. For instance Bayport, on the St. Croix is sailing along just fine, with home prices up $20.5%. Average prices in posh North Oaks are reportedly up 32.3% and nearby Arden Hills can boast a 24.1% boost with a prime factor being Arden Hills' proximity to both downtowns. Not all realtors agree with such a rosy picture noting that condition of the home and the old rule of 'location, location, location' still matters in home prices

Nation: Homes Sales To Vary In Narrow Range, Then Rise In Second Half

The latest forecast by the National Association of Realtors is for modest near-term movement with a recovery in sales seen during the second half of the year. The Pending Home Sales Index, a forward-looking indicator based on contract signed in May, fell 4.7 percent and remains 14 percent below May 2007. NAR's chief economist Lawrence Yun, said some pullback after a sharp increase in the previous month was expected. "the overall decline in signings suggests we are not out of the woods by any means. The housing stimulus bill that is still in the Senate is critical to assure a healthy recovery in the housing market, jobs and the economy." Yn said that location has never mattered more than in the current market. "Some markets have seen a doubling in sales from a year ago while others are seeing signings cut in half. Price conditions vary, even within a locality, depending upon a neighborhood's exposure to subprime loans." NAR President Richard F. Gaylord, said the current market offers immediate benefits and long-term value for buyers. "Home buyers are getting a great deal right now." Existing-home sales are expected to grow from an annual pace of 5.01 million in the second quarter to 5.75 million in the fourth quarter. For all of 2008, existing-home sales should total 5.31 million and then increase 5.0 percent next year to 5.58 million.

Nation: May Existing-Home Sales Show Modest Gain

Existing-home sales increased in May with buyers responding to lower home prices, according to the National Association of Realtors. Existing-home sales, including single-family, townhomes, condos and co-ops, increased 2.0 percent. NAR President Richard F. Gaylord of Long Beach, CA said buyers are seeing value in the current market. "Homebuyers are starting to get off the fence and into the market, drawn by drops in prices in many areas and armed with greater access to affordable mortgages." "Today's buyer plans to stay in a home for 10 years, which is a good strategy for building long-term wealth." NAR chief economist Lawrence Yun, "The large supply of homes on the market clearly favors buyers and it should take several months to draw the inventory down," "Stabilization in prices can only occur with buyers returning to the market, so we are encouraged by rising sales, particularly in distressed markets." Although conditions remain mixed around the country, unpublished data shows a number of areas are experiencing much higher sales activity than May a year ago, including Sacramento, San Fernando Valley and Monterey County CA, Sarasota Florida and Battle Creek Michigan.

Nation: Boomers Buy Now, Retire Later!

A buyer's market and favorable tax laws are motivating more baby boomers to buy now and retire later. Where are the hot spots? Near Water and Mountains. Minneapolis CPA Ronald Kelner's retirement is about 15 years away but he and his wife are renting out their future retirement home near Palm Springs. The Kelners are reaping the tax benefits and getting a step up on their peers that will flood the market in years to come. While most second-home purchases are for use now, the National Association of Realtors' survey shows that those born between 1946 and 1964 are more active buyers than any other group, owning 57 percent of all vacation homes and 58 percent of rental properties. the second-home market got a boost when tax laws changed in 1997, allowing owners to sell and get a $500,000 exemption from capital gains (for couples), as long as they lived in the property for two of the five years before the sale.

Metro: Market Continues Road To Recovery

The Saint Paul Area Association of Realtors reports that there were 4,418 more pending home sales during the month of May compared to 4.208 in April. However, that is a decline of 7.59 percent from the pending sales of May 2007. At the end of May, there were 33,229 active single-family residential listings in the 13-county metro and at the same time one year ago, there were 35,236 active listings. The 'months-supply of inventory' peaked in December of 07 at 14 and is a measure of the number of months it would take to sell the supply of inventory at the current pace of sales. "This is a sign that the housing market in the Twin Cities continues to recover even with the challenging economic factors of high oil prices and instability in the markets," said Greg Bauman, president of SPAAR. "the market continues to perform as expected and we will see continued stabilization for the 2nd half of 2008 and into the beginning of next year."

Vadnais Heights: Council Oks Townhouses Instead Of Senior Condos

The western half of the planned Arcade Estates apartments and condos for seniors, will instead become townhouses open to all age ranges. At last week's City Council meeting, developer Pat Goff's request to build 14 six-unit townhouses on his 8.5-acre site was approved. That's instead of the two three-story, 48-unit senior condos that were originally approved in 2005 on the west side of Arcade Street, just south of City Hall. According to Goff, the townhouses will be about 1,000 square feet with two bedrooms and a single-vehicle attached garage. Market value will be between $140,000 and $150,000.

Vadnais Heights: Council Oks Townhouses Instead Of Senior Condos

The western half of the planned Arcade Estates apartments and condos for seniors, will instead become townhouses open to all age ranges. At last week's City Council meeting, developer Pat Goff's request to build 14 six-unit townhouses on his 8.5-acre site was approved. That's instead of the two three-story, 48-unit senior condos that were originally approved in 2005 on the west side of Arcade Street, just south of City Hall. According to Goff, the townhouses will be about 1,000 square feet with two bedrooms and a single-vehicle attached garage. Market value will be between $140,000 and $150,000.

North Shore: Residential Property Values Could Jump With Great Lakes Clean-Up

A new study by researchers with the Brookings Institute claims Great Lakes cities stand to gain billions in economic benefits through lake restoration. The study says the city of Duluth alone would see property values skyrocket by 200-300-million dollars if the Great Lakes region's water quality was restored. A recent follow-up to a study released in 2007 estimates that it will cost 20-billion dollars to restore the Lakes, but the region would reap benefits valued at ten times that amount. The two larges cities on the Lakes, Chicago and Detroit, would see property values soar by up to seven-billion dollars.

The Housing Crisis Is Over

The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.

How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won't happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor. . New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50% and, adjusted for population growth, are back to the trough levels of 1982.

Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what's going to stop the housing decline? Very simply, the same thing that caused the bust: affordability.

The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.

Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.

Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in.

The next question is: Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do.

In the past five major housing market corrections (and there were some big ones, such as in the early 1980s when home sales also fell by 50%-60% and prices fell 12%-15% in real terms), every time home sales bottomed, the pace of house-price declines halved within one or two months.

The explanation is that by the time home sales stop declining, inventories of unsold homes have usually already started falling in absolute terms and begin to peak out in "months of supply" terms. That's the case right now: New home inventories peaked at 598,000 homes in July 2006, and stand at 482,000 homes as of the end of March. This inventory is equivalent to 11 months of supply, a 25-year high – but it is similar to 1974, 1982 and 1991 levels, which saw a subsequent slowing in home-price declines within the next six months.

Inventories are declining because construction activity has been falling for such a long time that home completions are now just about undershooting new home sales. In a few months, completions of new homes for sale could be undershooting new home sales by 50,000-100,000 annually.

Inventories will drop even faster to 400,000 – or seven months of supply – by the end of 2008. This shift in inventories will have a significant impact on prices, although house prices won't stop falling entirely until inventories reach five months of supply sometime in 2009. A five-month supply has historically signaled tightness in the housing market.

Many pundits claim that house prices need to fall another 30% to bring them back in line with where they've been historically. This is usually based on an analysis of house prices adjusted for inflation: Real house prices are 30% above their 40-year, inflation-adjusted average, so they must fall 30%. This simplistic analysis is appealing on the surface, but is flawed for a variety of reasons.

Most importantly, it neglects the fact that a great majority of Americans buy their houses with mortgages. And if one buys a house with a mortgage, the most important factor in deciding what to pay for the house is how much of one's income is required to be able to make the mortgage payments on the house. Today the rate on a 30-year, fixed-rate mortgage is 5.7%. Back in 1981, the rate hit 18.5%. Comparing today's house prices to the 1970s or 1980s, when mortgage rates were stratospheric, is misguided and misleading.

This is all good news for the broader economy. The housing bust has been subtracting a full percentage point from GDP for almost two years now, which is very large for a sector that represents less than 5% of economic activity.

When the rate of house-price declines halves, there will be a wholesale shift in markets' perceptions. All of a sudden, the expected value of the collateral (i.e. houses) for much of the lending that went on for the past decade will change. Right now, when valuing the collateral, market participants including banks are extrapolating the current pace of house price declines for another two to three years; this has a significant impact on the amount of delinquencies, foreclosures and credit losses that lenders are expected to face.

More home sales and smaller price declines means fewer homeowners will be underwater on their mortgages. They will thus have less incentive to walk away and opt for foreclosure.

A milder house-price decline scenario could lead to increases in the market value of a lot of the securitized mortgages that have been responsible for $300 billion of write-downs in the past year. Even if write-backs do not occur, stabilizing collateral values will have a huge impact on the markets' perception of risk related to housing, the financial system, and the economy.

We are of course experiencing a serious housing bust, with serious economic consequences that are still unfolding. The odds are that the reverberations will lead to subtrend growth for a couple of years. Nonetheless, housing led us into this credit crisis and this recession. It is likely to lead us out. And that process is underway, right now.

Twin Cities: April's Home Sales Stats Offered Some Measure Of Comfort

Here's the good news: the huge inventory of homes for sale in the Twin Cities appears to be stabilizing. The total number (which excludes new construction) grew just 1.5 percent last month, its smallest year-over-year increase in at least three years, as more sellers pulled back. New listings fell by double digits for the second month in a row, the steepest declines in many years. Plus, the pace at which pending and closed sales have been declining from last year, slowed in April and have even picked up in recent months. With 32,368 homes on the market, there is still a 10.2 month supply of homes, double the 5-month supply that's considered a balanced market. Hope springs eternal among agents. "Buyers are coming back into the market because they can see the boom and opportunity is now," says Greg Bauman, president of the St. Paul Area Association of Realtors. Kevin Knudsen president of the Minneapolis Area Association, called the drop in seller activity "A sign of hope for market recovery.

Twin Cities: April's Home Sales Stats Offered Some Measure Of Comfort

Here's the good news: the huge inventory of homes for sale in the Twin Cities appears to be stabilizing. The total number (which excludes new construction) grew just 1.5 percent last month, its smallest year-over-year increase in at least three years, as more sellers pulled back. New listings fell by double digits for the second month in a row, the steepest declines in many years. Plus, the pace at which pending and closed sales have been declining from last year, slowed in April and have even picked up in recent months. With 32,368 homes on the market, there is still a 10.2 month supply of homes, double the 5-month supply that's considered a balanced market. Hope springs eternal among agents. "Buyers are coming back into the market because they can see the boom and opportunity is now," says Greg Bauman, president of the St. Paul Area Association of Realtors. Kevin Knudsen president of the Minneapolis Area Association, called the drop in seller activity "A sign of hope for market recovery.

Afton: Neighbors Oppose 'Pine Tree' Radio Tower

Even if it does look like a pine tree, neighbors don't want to be next to a public-safety transmitter Washington County wants to put on a 1.6 acre plot in their neighborhood. Residents Frank and Susan Sando asked Washington County commissioners to tour the spot where the sheriff's office wants to construct a tower. "Nine other property owners turned it down and now we've got it in our back yard," Frank Sando said. Last month, the sheriff's office, which had previously proposed a 190-foot tower at a different Afton site, submitted plans to build a shorter tower designed to look like a pine tree. The tower is one of 14 planned for the regional digital radio system. Washington County will spend $12 million on the system to dedicate a single frequency to police, fire and medical personnel. The County Board voted this week to extend the deadline for environmental review

Blaine: New City Manager Sees Bright Future

Blaine: New City Manager Sees Bright Future
Crookston native Clark Arneson was stunned to learn that in one of Minnesota's fastest-growing communities, you can still hunt deer and ride snowmobiles! After working 20 years in Bloomington, Arneson comes to the Anoka County suburb that seems to have it all: established commodities in the National Sports Center and TPC golf course, open land, close proximity to the cities and an airport that's undergoing a $35 million refurbishing. Once considered the future home of the new Vikings stadium and the $1.6 billion Northern Lights complex, Blaine is moving in a new direction.

Curb Appeal: 17 Ways to Get Buyers Inside the Home

We all have had that experience where you drive up to a house and don’t even want to go inside. It’s an immediate “un-appeal.” In today’s market where lots of choices in housing are available, why should they?
Here are some easy, inexpensive fixes that will help create that outside appeal and get you one, giant step further to a sale.

1. Paint or stain the front and garage doors, especially if they show any weathering. These are the first visuals where a potential buyer focuses. If garage doors are metal and dented, they may need to be replaced.
2. Any old, basically abandoned sheds or small structures, must be removed, the area graded and the grass replaced.
3. Change any dated, outside light fixtures.
4. Fix that driveway. If it is blacktop, make sure cracks and crumbling areas are dug out and filled and then the whole driveway sealed. If it is cement, have large cracks filled and repaired professionally. The buyer must at least feel they can drive the moving truck in confidently!
5. Make sure landscaping bricks are in their proper placement. Mowing, weed-whipping sometimes moves them and this is something the homeowner rarely notices, but makes the property look unsightly.
6. Fill in bare dirt under large shade trees. Plant shade-tolerant plants in defined planters or groundcover. Landscape properly for that area.
7. All landscaping beds should be cleaned out and updated for the time of year it is in your region. Place new bedding material down.
8. Have trees and bushes pruned and trimmed. If a bush or tree is looking old or about to expire, remove it and replace it with a similar size and type if you can. If there is a tree limb(s) over the roof, have them removed.
9. If the house needs painting and a full paint job is not in the cards; have it touched up professionally in the worst, most visible spots. Paint shutters and fix them if they are hanging crooked. At least this may help get your client in the front door, even if they negotiate a full paint job into the sale later.
10. If the house is sided, have it power-washed and have gutters and windows cleaned. Window cleaning inside and out makes the house feel updated and fresh, rather than old and dingy.
11. Make sure grass is in good shape, weeds are removed, trimming done regularly. So many sellers fall down on this job the minute the house is listed, and this is critical to selling a house quickly, especially one where the owners have already moved out. In snowy climates, removal must be done regularly too. If owners have moved out, make sure you have an HWA Home Warranty to re-assure buyers.
12. Keep garbage and recycle containers inside the garage, along with all toys and equipment. Make sure the garage is neat and organized. Painted walls and floors also go a long way in this area and are inexpensive to do.
13. Decks should be washed and repainted or re-sealed; plantings around them cleaned, weed-free and looking good. Patio furniture should be in excellent condition. Even though it is in the backyard, this is the area where the family can envision enjoying the warm days and the new yard.
14. If the roof has missing shingles and they can be replaced inexpensively, suggest this be done as it may save negotiation over a completely new roof. Roof repair needs and costs should be minor or the homeowner might as well replace the entire roof.
15. If the homeowner wants to do a bit more, suggest solar lights lining the driveway or installing a more attractive front door with lead glass inserts and replacing plain doorknobs with something more custom.
16. If you have an evening showing, make sure lights are on outside and inside the house. This is warm and inviting.
17. If it’s a holiday season, by all means decorate the home! Just like sugar cookies or vanilla scent on the inside of the house, this really says “it’s a home” and I can see myself enjoying life here! In the least, always have some greenery or flowers for the season on the front step or porch; even a birdbath with a little garden around it says home.

Remember, most home buyers cannot visualize even these simple changes and clean ups in a house and the ones who can, will be looking for a reduced price. So to sell the house at top dollar and quickly, make it “appeal” to the many who will be seeing it rather than the few who are looking for a “fixer upper.” These people know what they want, go after it and need less assistance.

Finally, have neighbors or friends look at the finished results to see if you or the home owner has missed anything key that would be quick and easy to do. Use this article in your listing presentations so they can get started right away on these easy, inexpensive fixes and adapt the ideas to their home. When that home looks fabulous, update that picture on the Internet! This is especially important if the season has changed too and it’s a reward to your client too!

Metro: Development And Defiance On Metro's Final Frontier

Julie Zignego is one of thousands of landowners caught in a growth boom along I94 from 494 to Hudson, wondering whether she should sell her land to developers. The rural suburbs thought they would never be as congested as 'another Woodbury', but by 2030, Washington county is expected to have 165,000 new residents--which is like three Woodburys! while most farmland in the area sells for about $9,000 an acre, farmland near the freeway is now worth 10 times that. Zignego's neighbor sold his 121 acre farm to a developer for $8 million that he had bought five years ago for $250,000. The growth is spreading millions of dollars unevenly, creating jealousy and anger. It is turning sleepy towns into battlegrounds for developers and preservationists. Neighbors are pitted against neighbors, builders against farmers and towns against their oldest residents, who's way of life was set in the 1800's.

Current Housing Market Favors Buyers

Happy Spring!
The Minneapolis Area Association of REALTORS® (MAAR) just reported that the Housing Affordability Index jumped to 155 in early April, a 10.9 percent increase over April 2007. This means that home ownership is well within the means of the average home buyer in the Twin Cities metro area.
Interest rates are still at historic lows, which is giving consumers more buying power. Fixed-rate conforming loans with no points are being offered by local lenders with rates in the high 5 percent range for 30-year loans and in the low-5 percent range for 15-year loans.
The recent interest rate cuts and subsequent reductions in mortgage rates are significantly improving prospective homebuyers’ ability to afford a home, and are allowing them to purchase more amenities in a home than they thought possible. For example, with a 1.5 percent reduction in interest rates on a $250,000 home, a buyer could purchase a home that costs 14.5 percent more (with 80 percent financing and using the same down payment).
Another positive development is the economic stimulus package that will give consumers a welcome rebate and that raises the FHA loan limits on homes bought through the end of the year. In the 13-county metro area, the FHA limit for one unit was increased from $271,050 to $365,000, in Cook County (Minnesota) it was increased to $296,250, and in other parts of the state it was increased to $271,050. FHA loans are a great alternative to sub-prime loans, and the higher limits should provide more options for consumers and allow even more first-time homebuyers to enter the market.
Our area also has a large supply of homes for sale, which is giving buyers more choice. The inventory levels are the strongest for starter homes, which is great news for first-time home buyers. According to MAAR, in early April compared to April 2007 there were 150.3 percent more homes priced under $120,000, 55.8 percent more homes prices from $120,001 to $150,000, and 21.2 percent more homes priced from $150,001 to $190,000.
A recent issue of Time magazine included a story entitled “Ignore the Headlines” by Dan Kadlec that confirmed that now is an ideal time to purchase a home. The author referred to the renowned money manager Peter Lynch and noted that in Lynch’s view, “A top reason to not buy stocks is if you don’t already own a home—in which case that should be your first investment, since an owner-occupied home is nearly always profitable.” The article noted, “Let’s say you are emotionally ready to be a homeowner. You have good credit, plan to stay put for five years and have been waiting for the perfect entry point. It’s time to get serious—before an inevitable rise in interest rates wipes out your advantage.”
So the message to prospective homebuyers is clear. There is a plentiful supply of homes for sale, financing is available at attractive rates, homes in our area are affordable, and higher loan limits are giving buyers even more options including the ability to purchase a higher priced home. Buyers need to act now so they will be able to enjoy the best of all possible circumstances.

Metro Area: Surplus Sales Boost Housing Market

What Buyers are finding is a lot of choices and lots of room for negotiation! Plus, interest rates are still low so what has changed? Falling homes prices, and several houses on the market for every buyer, not the other way around. Stricter mortgage standards mean that lenders are verifying borrowing power. A year ago, no downpayment? No Problem! Today? Not so simple! MN Mortgage Association President Tom Bendel said 100 percent financing has all but disappeared. He advises borrowers with good credit seeking a conventional loan to come to the table with a 5 percent down payment. borrowers with credit scords below 700 may need a down payment in two figures. Where even poor credit could get you a house a year ago, buyers may need an FHA loan, with loan limits having been increased through the end of the year in the Metro to $365,000 (with the rest of the state at a $271,000 limit). A year ago, buyers could make an offer that sellers couldn't refuse. Today? Buyers take their time and offer 10 percent less but they need to count on their financials being thoroughly checked out. Buyers in today's market can afford to be conservative and buy smart.

Metro Area: Surplus Sales Boost Housing Market

What Buyers are finding is a lot of choices and lots of room for negotiation! Plus, interest rates are still low so what has changed? Falling homes prices, and several houses on the market for every buyer, not the other way around. Stricter mortgage standards mean that lenders are verifying borrowing power. A year ago, no downpayment? No Problem! Today? Not so simple! MN Mortgage Association President Tom Bendel said 100 percent financing has all but disappeared. He advises borrowers with good credit seeking a conventional loan to come to the table with a 5 percent down payment. borrowers with credit scords below 700 may need a down payment in two figures. Where even poor credit could get you a house a year ago, buyers may need an FHA loan, with loan limits having been increased through the end of the year in the Metro to $365,000 (with the rest of the state at a $271,000 limit). A year ago, buyers could make an offer that sellers couldn't refuse. Today? Buyers take their time and offer 10 percent less but they need to count on their financials being thoroughly checked out. Buyers in today's market can afford to be conservative and buy smart.

Minnesota: Home Sales Rise 2 Percent In January

There is good economic news on the housing front. Nationally home sales rose 2.9 percent from January to February and Minnesota also saw its first real sign that real estate may be on the rebound. Seller, Molly Evans of Lakeville, put her home on the market for a while but took it off recently. She then put it back on after a $25,000 price drop. Her Realtor also created a personalized Website just for her home. Since then showings have skyrocketed. Greg Bauman, president of the the St. Paul Area Association of Realtors, said sellers have a lot to celebrate. "Our numbers are actually higher on the rebound when you look nationally right now. Pendings are up three to four percent nationally compared to the Twin Cities, which are up 20 percent. That's a significant change or difference from the total nation.

Minneapolis: Developers Preaching Patience With Condo Projects

Tom Lohmann of Pinehurst Properties has big plans for his condo project in SW Minneapolis at 3500 50th st W. Lohmann has been pitching the site as the future home of The Bancroft Condominiums, a high-end project just a few blocks from Edina. Bancroft LLC paid $3.5 million for the 1.6-acre site in December 2005. Lohmann isn't expecting to get much traction until next year at the earliest. " We don't want to make the mistake of going ahead with a project in a market that's just limping along...We're just biding time and hoping for a resurgence in the market." Lohmann has sold 8 of the planned 52 units and deposits have been refunded to some buyers who couldn't wait for an uncertain delivery date. Unit prices at The Bancroft with pricing at $510 per square foot range from $583,000 to more than $2 million for a penthouse. Downtown projects, the Nicollet and the Penfield are still on the drawing board until the market tides turn.

Nation: NAR Campaign Relates Long-Term Investment Value Of Real Estate

Beginning this year, the National Association of Realtors is reaching out to consumers with the facts about homeownership and the value of real estate as a long-term investment. The new advertising campaign will provide current, relevant housing data to help prospective buyers make informed decisions. Over the past 30 years, the median price of existing homes has increased an average of more than 6 percent every year and home values double nearly every 10 years. A Federal Reserve study has shown that the average homeowner's net worth is 46 times the net worth of the average renter. Despite positive research reports, some potential buyers are being kept on the sidelines as they react to national media reports about the market. "Nobody buys a home in the national real estate market," said NAR President Dick Gaylord. "All real estate markets are local and buyers and sellers who are thinking about making a move should consult with a Realtor in their local market." According to NAR's most recent forecast, existing-home sales are likely to total 5.66 million in 2007, the fifth highest on record, rising to 5.70 million in 2008 and 5.91 million in 2009. Existing-home prices are likely to be down 1.9 percent in 2008, hold steady in 2008 and rise 3.1 percent in 2009.

New Brighton: City Seeks 'Plan B' For Northwest Quadrant

The project is about $12 million in the red and New Brighton is concerned about the future of 100 acres of land at the NW corner of Interstates 35W and 694. The plan is to turn old industrial sites into offices, hundreds of new homes, stores and parks. So far, $85 million has been spent on the project but spiraling environmental costs and and the recent pullout of a major housing developer have raised concerns among some officials. Newly elected Council Member David Phillips wrote a resolution in January recommending a task force to study the situation but Council Member Mary Burg thinks the focus should be on attracting developers instead of analyzing finances. Mayor Steve Larson declined to voice his opinion on the task force. Cleanup of contaminated areas has already cost the city millions and questions remain as to the land being safe for building homes.

Attention all buyers:

The housing market will continue its downward spiral, forecasts say, and that means opportunities for buyers. But waiting for the market bottom may not be the smartest strategy. Here are 5 reasons to buy now
5 REASONS TO BUY

1. Prices in the neighborhood you are interested in are relatively stable. Either they are holding their own or increasing, or the pace of decline is slowing significantly. If you have to move and don't like apartments, the small penalty you pay for missing the bottom may not mean much.



2. You plan to stay in the home for more than five years. If you can stick it out that long before selling, economists say you’ll probably ride out any downturn and come out ahead on price.



3. Your rent rivals a mortgage payment. If you can afford to buy, it can give you one bonus that renting can't: the mortgage-interest deduction on your taxes.



4. You've found the right house in the right area for you. The schools are great. You love the area and know it would be hard to find another house like the one you have your eye on. In a better market, you would most likely have much more competition for that home.



5. You've built equity in your house and are moving to a place where homes are cheaper. In your new market, your money will go a lot further.

Best Home Selection. Ever.

Forget the negative hype about the housing market. There is an excellent inventory of homes for sale. If you are wondering whether you should purchase a home, consider these facts:

• As of Dec. 3, 2007 there were 33,146 homes for sale in the Twin Cities metropolitan area compared to only 30,183 homes for sale at this same time last year, according to the Minneapolis Area Association of REALTORS®. That’s 9.8 percent more choice for home buyers!

• There is a wide variety of high quality homes available in all price ranges and communities in the Twin Cities. You can choose from new construction, existing homes, starter homes, luxury properties, condominiums, co-ops, townhomes, and lofts.

• The greatest opportunities are with single-family detached homes. In November of this year, there were 12.9 percent more single-family homes for sale than in November 2006.

• First-time homebuyers looking for a great starter home will be pleased with the numerous choices. This November compared to last November, there were 100.4 percent more homes priced under $120,000, 47.5 percent more homes priced from $120,001 to $150,000, and 19.7 percent more homes priced from $150,001 to $190,000.

• The inventory of homes priced at $1 million and above was 18.5 percent more this November than last November. This provides tremendous opportunities for consumers interested in purchasing upper-bracket homes.

• Real estate is one of the best and safest long-term investments. Over 10 years, a $10,000 investment in the stock market at a normal 10 percent market rate of return would yield nearly $16,000. Compare that to a 5 percent ($10,000) down payment on a $200,000 home at a normal appreciation rate of 5 percent over the same 10 year period. Through the power of leverage, your return would be $125,000—nearly eight times the stock market return.

• Homeowners benefit from favorable tax laws, including deductions on mortgage interest and property taxes and up to $500,000 in capital gains tax exemptions on personal residences at the time of sale.

With the best home selection ever, you’ll wish you bought today.

Nation: Structured Sales Provide Alternative To 1031 Exchanges

A 1031 exchange is a way of deferring capital gains tax on investment property by 'exchanging' it for another investment property with the exchange going through the hands of a qualified intermediary and not your own hands). If that lake cabin doesn't qualify as an investment property under the IRS regulations or if your gains on an apartment building are more than your new property is worth, or if you don't want your money in real estate again, what can you do? "Structured sales are not for everyone but it's a tremendous strategy for people with highly appreciated properties" says Niel Friedman of Investment Property Exchange Services Inc. Patterned after structured settlements that are common in liability law, both are ways to break a large lump-sum payment into an annuity or installment payments over several years or a lifetime. The option has been around for a few years but it is just being introduced into the local market. Friedman says that a classic situation for a structured sale is one in which someone may have owned a lake property for 21 years but it doesn't qualify as an investment property under the 1031 exchange rules. The couple might sell the cabin and create annuities for themselves and their children. The result is to earn a return, spread out the tax burden and lock in payments to their children.

Ignore the Headlines! Except this one

Let's say you are emotionally ready to be a homeowner. You have good credit, plan to stay put for five years and have been waiting for the perfect entry point. It's time to get serious--before an inevitable rise in interest rates wipes out your advantage...Risks always seem most acute when the headlines give you ulcers. But that's exactly when you should think long term--and get off your thumbs.Contact us today to gain your advantage!

Homes Are More Affordable Now Than Ever!

Forget the negative hype about the housing market. Homes in the Twin Cities metropolitan area are more affordable than ever. If you are wondering whether you should purchase a home, consider these facts:

• The Minneapolis Area Association of REALTORS® (MAAR) recently reported that we are experiencing a “massive upswing in housing affordability” in our area. The MAAR Housing Affordability Index grew seven points in November to 138, the highest November mark since 2004.

• Forbes magazine recently ranked Minneapolis the number one “Most Affordable Place to Live Well” out of the 50 largest metropolitan areas in the country. The ranking was based on housing affordability; cost of living; access to arts and leisure activities; and a quality of life index that measures the strength of the schools, quality of health care, and crime and poverty rates. Forbes noted that the most important criteria in the number one ranking was housing affordability. In the last quarter, 61 percent of the area’s homes that were sold were available to the median household earner, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index. Compare that to one of the least affordable cities San Francisco where only 5.7 percent of the area’s homes are available to the median income earner.

• One important factor contributing to housing affordability is the historically low interest rate, which was 6.X percent as of (Date).

• In addition, home prices in the Twin Cities metropolitan area are moderating, with more and more motivated sellers willing to make positive adjustments to their original asking prices.

• Rents are increasing, and first-time homebuyers’ mortgage payments may be only slightly more than their apartment rent after considering tax advantages. In addition, studies show that homeowners accumulate significantly more wealth than renters. A study by the Federal Reserve found that homeowners had a median net worth of $184,400 compared to renters’ median net worth of $4,000 in 2004.

• Real estate is one of the best and safest long-term investments. Over 10 years, a $10,000 investment in the stock market at a normal 10 percent market rate of return would yield nearly $16,000. Compare that to a 5 percent ($10,000) down payment on a $200,000 home at a normal appreciation rate of 5 percent over the same 10 year period. Through the power of leverage, your return would be $125,000—nearly eight times the stock market return.

• In addition, homeowners benefit from favorable tax laws, including deductions on mortgage interest and property taxes and up to $500,000 in capital gains tax exemptions on personal residences at the time of sale.

• There is a wide variety of high quality homes available in all price ranges and communities in the Twin Cities. You can choose from new construction, existing homes, starter homes, move-up homes, luxury properties, condominiums, co-ops, townhomes, and lofts.

Don’t miss this real estate window of opportunity.

Your opportunity is now.

Forget the negative hype about the housing industry. If you’re waiting to purchase your first home or to move up to an even nicer home, you should note that all of the conditions are favorable now. Consider these facts:

• Kenneth R. Harney, who writes a nationally syndicated newspaper column on housing, said, “Despite the impressions you might get from the network news, the U.S. economy continues to churn out solid, even encouraging, numbers—and that’s important for anyone interested in real estate. Last week the federal government reported retail sales up by 1.2 percent in the past month, and strong growth in new jobs, exports and household incomes. These are the very economic fundamentals that create an underlying base for a national recovery in housing and real estate.”

• David Blitzer, chairman of the S&P Index Committee, said, “People willing to hold properties for a long time could be well served by starting to look at potential purchases now, because over the long term, home appreciation usually pays off.”

• Housing affordability in the Twin Cities metropolitan area has recently experienced a “massive upswing,” according to the Minneapolis Area Association of REALTORS® (MAAR). The MAAR Housing Affordability Index (HAI) increased to 141, the highest rate in nearly three years and the healthiest December HAI figure since 2003.

• Forbes magazine recently ranked our area the number one “Most Affordable Place to Live well” in the country. Forbes noted that the most important criteria in the number one ranking was our housing affordability.

• As of Dec. 26, there were 28,651 homes for sale in the Twin Cities metro area compared to 25,020 at this same time last year, according to MAAR. That’s 14.5 percent more choice for home buyers!

• There is a wide variety of well-priced, quality homes for sale in all communities of the Twin Cities. You can choose from new construction, existing homes, starter homes, luxury properties, condominiums, co-ops, townhomes, and lofts. No matter what type of house you’re looking for or what your budget is, you’re sure to find a home to fit your needs.

• Interest rates on fixed-rate mortgages are at historic lows. Fixed-rate conforming home loans with no points are being offered by area lenders with rates near 6 percent for 30-year loans and in the mid-5 percent range for 15-year loans. Compare that to what the previous generation faced—an average interest rate of 9 percent in the 1970s and 13 percent in the 1980s.

• Home prices are moderating in our area, which is good news for prospective buyers. Home sellers have a better understanding of the changing housing market and are being realistic with their original asking prices, as well as making positive adjustments to their original prices when necessary. Buyers who are interested in a house should make an offer and negotiate with the seller, or they may be disappointed to learn that the house was sold to another buyer.

With all of these favorable conditions, it’s clear that your opportunity to purchase a great home is now.

St. Paul: $4 Million Set Aside To Revive Six Neighborhoods

The Housing and Redevelopment Authority approved more than $4 million for strategic purchases of vacant buildings in need of rehab in six areas. The hope is that by focusing on a few blocks and removing blighted properties, or fixing them up so people can move in, other neighbors will be encouraged to improve their houses. The money comes from the Invest St. Paul program, a $25 million initiative to improve four struggling neighborhoods Frogtown, North End, Lower East Side and Dayton's Bluff. The recent $4 million will be used to improve Frogtown, North End, Lower East Side and Dayton's Bluff, Payne-Phalen, North End, Thomas Dale/Summit University, West Seventh and the West Side.

Minneapolis: New Homes For Hightest Bidder!

Home builders hope to have successful sales of about 200 new homes at the Convention Center the weekend of January 26-27. Between 2003 and 2006, new and foreclosed home auctions have seen the largest percentage growth in the industry. In '03, gross sales receipts for auctioned homes were $11.5 billion and in '06, $16 billion. Norman Mitchel International, one of the partners in the event will tack on an 8 percent fee onto the selling price. The auction at the Mpls Convention Center is unique because it features new homes and not foreclosed homes. All bidders must have a cashier's check to get a bidding number. Bringing the homes to the auction block means significant discounts, often ranging from 25-75 percent.

Best Home Selection. Ever. The Time To Buy Is Now!

2007 real estate in the Twin Cities showed a definite shift to a buyers market. It is a great time to buy a home with interest rates hovering around 6% and a good inventory to choose from in every price range.

-Low interest rates, why wait?
-Peak of affordabilty is now
-Best home selection -ever
-You will wish you had bought today

Call us to get started on your future!

Housing Supply Outlook

The highest growth in inventory from one year ago is occurring in previously owned single-family detached homes- up 18.8 percent from this time in 2006. The lion's share of that inventory increase can be found in that cost below $190,000. In most upper-bracket price ranges, the supply of homes for sale is actually decreasing.

The biggest decline in price per square foot can be found in new construction properties- down 4.7 percent comparing sales from the last twelve months to the twelve months before that. New condominiums especially are being sold at a relative discount price compared to last year, with a drop of 7.1 percent in price per square foot.

Not surprisingly, new construction home sales have declined substantially from the heights of the past few years. Sales of new single- family detached homes have declined the least of all new construction properties.

Affordable housing from unexpected places

In the midst of the mortgage industry credit crunch, we have been starved of upbeat stories about generosity and successful first time home buying experiences. However, this week The Seattle Times featured a story on how the Runberg Architecture Group came up with an unconventional way to help their employees find affordable housing. The owner, Brian Runberg, is helping architects at his firm design and build their own houses. Brian bought land on which his employees can design and build houses, and once the houses are built, employees can purchase the homes at cost. It’s an incredibly ingenious way to help out employees at firm that specializes in affordable housing. We thought some upbeat real estate news is in order and look forward to a great real estate market in the year to come!

St. Paul: Rival Developers Unveil Plans For Riverfront Site

Minnetonka-based Opus Corp. and Wingfield Corp. of Brussels, Belgium, released competing plans for the former jail site. Opus proposed to develop a 23-floor office building along with a nine-floor hotel and 100 condo units. The Wingfield plan would include three towers; an office building, a 45-story residential tower, a boutique hotel as well as restaurants and retail.