Feds Moving To Economic Recovery With Housing Market First
The annual convention for the National Association of Realtors (NAR) was held in Orlando this past week. I was unable to make it, but did hear from John Smaby, our broker/manager at Edina Realty - 50th and France, who was able to attend. John stated that of all the pertinent news and attention given to the housing market, the primary method the federal reserve intends to utilize in leading us out of the economic slump, is by doing everything they can to stimulate the housing market.
As we know, the housing market was the focal point that helped largely to bring about our economic difficulties in the first place (personal opinion: without going into the creation of, and problems with Fannie Mae and Freddie Mac, the serious repercussions - both pros and cons - of the Equal Housing Opportunity Act on lending standards, the tech bubble and crash of latter 1990’s and of course September 11th, 2001, all of which brought about the necessary massaging of housing interest rates, which largely drove skyrocketing real estate prices).
One of the proposals is the purchasing of distressed loans. Other methods will be for banks to reset interest rates on Adjustable Rate Mortgages (ARM’s) coming to term and moving large sums of money from the $700 billion bailout to banks (about a quarter billion of it).
Perhaps the most heartening news is that banks who have short-sale and foreclosure properties listed (and are notoriously slow or non-existent in replying to offers) are in the process of increasing manpower in order to deal with this entirely separate (and now quite large) class of distressed loans. The banks are now getting the picture and many intend to respond quickly to offers. This will certainly expedite the process of clearing short-sale and foreclosure properties from the market (they will never disappear altogether, as they have always - in smaller numbers - existed).
Clearing the majority of distressed properties from the market (locally and nationally) will be the largest step toward a housing market recovery.
ATTENTION: POSSIBLE FREE MONEY ALERT! Also, there is much speculation that they may make the first-time homebuyer (no purchase in the past 3 years) $7,500 tax credit (cash in pocket) a non-returnable credit. E.G., in it’s first form you had to pay it back over a period of 15 years, from your future tax returns (but with zero interest) at a rate of $500 per year. Now the speculation is that there will be NO PAYBACK.
Lastly, there is now further speculation of serious lowering of interest rates over the course of the next year.
I really think this next year will be very interesting within the Minneapolis metro real estate market, as well as nationally. Many areas will continue to decline, many will be flat, but some (Southwest Minneapolis, Lakes area of Minneapolis, Edina and especially East Edina) will be on for a moderate, solid year (historically speaking). In these prime areas, decent homes priced under the $600K price-point will do quite well. I believe homes above that price range (especially $750K and above) will have yet another tough year.
No matter how you look at it, the opportunites for great purchases at low prices with low interest rates will be fantastic. Now is a great time to be a first-time home-buyer, an investor, or a 2nd or 3rd-time home-buyer, looking to upsize your home.
S&P/Case-Schiller Home Indicices For The Minneapolis Housing Market
Click here to view the data from the S&P/Case-Schiller Index for a 20-year composite look of the average pricing of major housing markets, which included the Minneapolis St. Paul market. From the data available, it appears that Minneapolis has pulled back in pricing from the peak of 2006. I.E. it is off by about 13%.
The average pricing in the Minneapolis area as of August, 2008 is very similar to that of June, 2003.
This (and much more) must really be factored in when pricing your home for sale. This is not a hard-fast rule, as there are micro-markets, within the Minneapolis/St. Paul macro-market that are still holding strong, and some that are projected to reduce in value even further yet.
The key to pricing, is meet with your professional realtor, one who does this full-time and knows your neighborhood. When selling your home, pricing is by far the most important factor in a market like this. Getting this right will make or break a sale. It can mean the difference between being on the market for one month, or 15 months (or sometimes more).
I know it is tough to do for many, but this is one area that if one will successfully sell their home, one will have to use their head instead of emotions: What one wants their home to be worth is often very different from what the comp and market data say it will sell for.
Financial Times.com Cites Unexpected Rise In New Home Sales
Interesting that new home sales are up for the latter part of the year. Of course this was largely unexpected by many. Read this article from the Financial Times.
This being said, it has been apparent to some that now is a great time to buy: Low interest rates, and low prices on homes. It may get a little better (especially in some areas) but by and large many are making cautious speculative calls that we are at or near bottom in many areas of the housing market.
It is very unfortunate the economic sector - primarily in it’s financial malaise due to the housing market - is not showing any signs of slowing.
It also appears that nobody really has a firm idea as to when and how our financial markets will stabilize.
Lake Calhoun Condo Just Listed : 3131 Excelsior Blvd #509
Beautiful Lake Calhoun area condo on the 5th floor, with beautiful panoramic views from the wonderful balcony. This home features all new kitchen and bath updates, indoor pool, sauna, 2nd guest room and separate full-bath. Price: $269,999. This is the best deal and location on the market today. Search zebhaney.com to compare with all others on the market.
Just Listed: 3806 Victoria Street, Minnetonka, MN
This is a great, solid home across from Evergreen park in Minnetonka. It is also right near all of the prime biking, walking and hiking trails.
This home offers .44 (almost 1/2 acre) secluded lot. It is a 3 Bedroom, 2 Full-Bath, 2,200 finished square-foot home with a finished basement, 4-season porch, new carpet, wood floors, updated kitchen with center wood-block island, all for under $300K!
Midwest Fall Home & Garden Show Minneapolis
Today I am speaking at the Minneapolis Convention Center on a real estate panel at the Minneapolis Midwest Fall Home and Garden Show. The real estate panel will be addressing such subjects as lending, the state of the macro-market, optimal areas to be purchasing in our current market, which areas to stay away from and what micro-markets within our Minneapolis and Edina metro market are the smartest places to renovate, or purchase a turn-key home. I’ll be the realtor on-tap.
The dates are Friday October 3rd, Saturday the 4th and Sunday the 5th, at the Minneapolis Convention Center, dowtown Minneapolis. For more information and tickets for the Minneapolis Midwest Fall Home & Garden Show, please click here.