Archive for February, 2012
Comments Off on Duplex Chick Needs Your Help!
I’m hoping I can count on you to help me out with a competition I’m in at my office. Several other Realtors and I are racing to be the first person to speak with 100 people today and ask them a real estate related question.
And, well, since I don’t have any of your telephone numbers, I need you to call me.
I promise I won’t sell you a duplex (unless you want me to), make you buy a duplex (again, unless you want me to), enroll you in anything, or put you on some sort of SPAM mailing list.
It would be GREAT to trounce the Realtors in my office who sell single family homes.
So, please call. My number’s in the upper right hand corner of this web site, or you can dial six one two, two nine zero, five nine nine eight. (Sorry for writing it out, I’m trying to avoid the spambots or whatever they’re called.)
Thank you in advance!
Comments Off on Are Minneapolis Duplex Sellers A Hoax?
If you’re a Minneapolis or St Paul duplex owner who’s thinking of selling, it might be a very good time to put your duplex on the market.
You see, there seem to be more sightings of Bigfoot around Lake Harriet than there are new duplexes for sale.
The number of new Minneapolis duplex listings for the week ending February 18, 2012, was just 26. That represents a drop in new inventory from the same week in 2011 of 41.7 percent.
The number of Minneapolis and St Paul duplex sellers who already had their properties up for sale, and both received and accepted offers during the week, however, was up 34.6 percent over last year.
Of these sellers, 46.2 percent were not in a distressed situation. Compare this to last year, when just 5.9 percent of the Twin Cities duplex sellers didn’t have to receive permission from a banking institution to sell.
If Minneapolis duplex investors were in search of Sasquatch, then single family home buyers were just as busy looking for the Loch Ness monster. In that market, new listings were down 7.1 percent.
Pending sales, meanwhile, were up 28.6 percent.
And, overall inventory decreased 23.2 percent.
Seems to me it might be a great time to sell.
Just don’t ask your duplex Realtor to don a gorilla suit and walk through the woods.
Comments Off on Are You A Duplex Equity Hostage?
If you’re waiting until the real estate market rebounds to sell your duplex, do you feel a little stuck?
Many duplex sellers I visit with do.
In most cases, one of three things happened:
- They made a large down payment when they bought their Minneapolis duplex, only to see that money disappear as duplex values continued to decline.
- They watched the value of their duplex rise by tens, if not hundreds of thousands of dollars on paper, only to those gains disappear with the crash of the market.
- They refinanced their duplex at the moment is was worth so much more than what they paid for it in order to buy another duplex, pay off debt, or make improvements to the property and now owe far more than the duplex is worth.
These duplex owners cling to the belief the market will rebound soon; that if only they hang on a year or two or three, the money they lost will be found and they can continue on with the plans they had for their lives.
The trouble is, the market isn’t going to bounce back next year, or the year after.
And with today’s incredibly low vacancy rates, rents are sure to rise. When they do, and it becomes more expensive for people to buy a house than rent, vacancy rates will rise, and rents will fall.
Granted, lending standards are tight right now, and it seems most people don’t qualify for a loan. Remember, however, that many of the foreclosure crisis’ earliest casualties have been renting for several years now.
Many of them have been working on repairing their credit.
So the question for duplex owners is this…is the hope of regaining the money you “lost” worth any other plans and dreams you might have had for the next decade that didn’t involve duplex ownership?
There are very few Minneapolis duplexes for sale right now. Thanks to low interest rates and demand from both owner occupants and investors, it remains a great time to sell.
No, you won’t get what you paid for it in 2005…or, what you lost on it in 2007.
But if you had other plans for the next decade of your life, remember, you will be free.
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Reading news about the duplex and single family home sales makes my head spin.
Today alone I read the following headlines:
“Overdue Mortgages Number 6,082,000”.
“Report Reveals Delinquency and Foreclosure rates Down for 4th Quarter”.
“January Homes Sales Up Again”, which was immediately followed by “Experts Respond to January Homes Sales Report”.
It makes it difficult to know what, exactly, is going on in the market.
Having read all four articles, I can tell you this:
Last month, total foreclosure inventory was 4.15 percent. This was up 1.1 percent over December 2011, but just 0.1 percent lower than it was in January of 2011. (In other words, we haven’t gained much ground over 2011).
There were 2,084,000 properties counted as part of last month’s national foreclosure inventory.
This figure does not include the 3,9998,000 properties with mortgages more than 30 days late. Of these, 1,772,000 nationally are more than 90 days late with their mortgage payments (but have yet to be foreclosed on.)
Data from RealtyTrac shows a slight increase in foreclosure filings in January, which may mean banks are starting to process foreclosures.
Yes, single family, duplex, triplex and four unit building sales were up in January.
However, 35 percent of these sales were distressed properties — either short sales or foreclosures. This market share is up from 32 percent in December, but down from 37 percent in January 2011.
Of the 4.57 million one to four unit properties that sold in January, 31 percent of them sold for cash.
In other words, it’s likely investors were responsible for nearly one-third of all real estate sales in January.
Perhaps the best summary of all came from the Mortgage Bankers Association. Their chief economist, Jay Brinkman, said we are about halfway to the pre-recession days.
Yes, things are getting better…and, we still have a ways to go.
Comments Off on Minneapolis Duplex Sales Are Boring
The week ending February 11, 2012, brought more of the same to the Minneapolis duplex market.
In fact, compared to the wild ride we’ve experienced the last several years, the market’s almost downright boring.
Pending sales were up over the same week in 2011; with 22 active listing owners receiving and accepting offers compared with last year’s 20.
Of these duplex sellers, 36.4 percent did not need a bank’s permission to sell their duplex. This is up a hair from the 35 percent market share traditional duplex owners had in 2011.
On average, these duplexes left the market at a list price of $151,444. While this is slightly higher than the sold price of $145,004 for the same week in 2011, it’s important to remember on average, properties on today’s market are selling for 91.2 percent of their original list price.
In other words, in all likelihood, the average sold price of a duplex is about the same as last year.
The amount of newly listed Minneapolis and St Paul duplexes for sale continued to drop with 23 new listings coming on to the market compared with last year’s 28. In 2011, 39.3 percent of these sellers had equity in their duplex. This year, traditional seller market share for new inventory was 39.1 percent.
The single family home market continued to see fewer new listings as well, down .4 percent from the same week in 2011, with overall inventory dropping 23.5 percent.
Meanwhile, pending sales increased 28.9 percent.
This continued pattern may well be a sign we’re bumping along the bottom of the market; a place I imagine we’re going to be for a while.
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Minneapolis duplex and apartment vacancy rates saw a slight increase in the fourth quarter of 2011, according to Marquette Advisors.
(The report doesn’t measure duplexes specifically, but lumps everything into “apartments”.)
At year’s end, the Twin Cities saw an apartment vacancy rate of 2.8 percent. While this is unbelievably low, it nonetheless represents an increase from the 2.3 percent vacancy rate we experienced during the third quarter of 2011.
The figure represents an average of every neighborhood in the Twin Cities metro area. It’s interesting to note downtown Minneapolis saw vacancy rates rise from 1 percent to 1.9 percent from the third quarter to the fourth.
Uptown also saw an increase, finishing the year at a 2.2 percent vacancy rate, rather than the 1.8 percent it saw in the third quarter.
The Minneapolis-St Paul area, still has one of the lowest vacancy rates in the country. Reis Inc. reports it is third lowest in the country; trailing only New York and New Haven, Conn.
In fact, the national average vacancy rate is 5.2 percent– almost double that of the Twin Cities at 2.5 percent.
This low vacancy rate has continues to put upward pressure on rent, with the average apartment now going for $927 a month; up 2.1 percent from 2010.
Vacant units charging more than $1500 a month, however, have a 3.7 percent vacancy rate. This is down from the 4.9 percent vacancy rate these units were at in 2010.
To put things in proper perspective, a vacancy rate of 5 percent is considered balanced; where it neither favors the tenant nor the landlord. Anything less than that, and it’s and the landlords have the advantage. And of course, when the vacancy rates are above five, the tenants have the upper hand.
Duplex owners should bear in mind at some point in the not too distant future, there will be a tipping point at which it makes far more economic sense for tenants to buy a duplex or house than continue renting.
Comments Off on Minneapolis Duplex Sales Jump 36 Percent
In what is unofficially considered the last week of the winter Minneapolis duplex market, pre-Super Bowl duplex sales and new listings continued to behave as they have for months.
In other words, pending sales were up 36 percent over the number of duplexes sold during the same week last year.
As has been the trend, the number of newly listed duplexes dropped again, this time by 23 percent.
Equity duplex owners continued to gain market share on distressed properties, contributing 36 percent of the pended transactions compared to last year’s 14 percent.
And while these days the amount a duplex actually sold for tends to be less than the price it was on the market for, the average pending number of $157,031 should easily exceed last year’s sold average for the week of $96,793.
Meanwhile, single family homes continued to follow their almost predictable patterns as well.
New listings decreased over the same week last year by 6.7 percent. This helped the total amount of available inventory drop 23.2 percent.
Pending sales were up a whopping 35.8 percent.
A cautionary note, however: in January, the median sales price of a single family home dropped 3.4 percent to $140,000.
Now that the robo-signing scandal has started to clear, it should prove to be an interesting spring.
Comments Off on Keller Forecasts Long Road To Real Estate Recovery
Forgive my recent infrequent blogging. I am currently at the annual national Keller Williams convention in Florida; soaking up everything I can learn about the real estate market.
Yesterday, company co-founder Gary Keller shared with us his interpretation of the current real estate market, and the data that supports his position.
Keller believes in order for the economy to heal enough for us to regain housing values we saw in the mid 2000’s, the nation needs to solve our unemployment problem.
While the recent drop in unemployment figures to 9 percent is encouraging, Keller maintains we need to create somewhere between 356,000 and 360,000 new jobs a month, in addition to the 150,000 a month we’re currently adding, for three years in order to get back on track.
That’s an average of 4000 additional new jobs per month per state, on top of the growth we’re already experiencing.
What does this have to do with duplexes?
In short, while Keller believes we have reached the bottom in the housing market, he also doesn’t see rapid appreciation in duplex or home values any time soon.
Rather, he believes we’ll bump along the bottom for 8-9 years at best.
I hope to get a full copy of his report in the coming days, and will share more of his forecasts for the real estate market in the coming months and years.
Comments Off on Minneapolis Duplex Sales Follow Pattern
OK, it’s official. The Minneapolis and St Paul duplex market is following a pattern.
As in, becoming constant and predictable. Like the graphic they used to show when a TV station signed off for the night.
For the week ending January 28, the number of new duplex listings to the market continued its downward spiral, with just 24 owners announcing to the world their duplexes are for sale.
During the same week last year, 43 Minneapolis duplex owners raised their hands to announce they were looking for a buyer.
Of this year’s sellers, 29 percent are people with equity in their property. Last year, 35 percent of the sellers were people, not banking corporations.
Weekly sales continued on pace with last year, with 21 property owners accepting purchase agreements this year, compared with 22 for the week last year.
Of this year’s weekly sellers, 28.6 percent didn’t need a bank’s permission to agree to sell their duplex. Last year, 31.8 percent were able to make the same decision on their own.
On average, the week’s pending sales left the market at an average list price of $144,000. This will likely result in a sales price just below the average for the week in 2011, which was $136,860.
Perhaps in an effort to be just as hip as their multi-family cousins, single family homes saw 17.5 percent new listings for the week. Meanwhile, pending sales rose 22.9 percent. This market shift resulted in an overall decrease in housing market inventory of 23.5 percent.
As a result, if you’re thinking of selling your Minneapolis duplex, remember, right now, inventory is limited. It’s a great time to sell.
1 Comment »
Many duplex investors who are upside down on their property believe a short sale isn’t an option for them.
Nothing could be further from the truth.
So I asked Morgan Kavanaugh, an attorney with Wilkerson & Hegna P.L.L.P, who specializes in negotiating short sales for duplex owners, to write the following guest blog.
Often you will hear people say, “You won’t qualify for a short sale, so don’t bother.”
Is that sound advice?
Unless that person is the bank president or investor on that particular loan, I’m not sure that advice is based on any facts whatsoever.
There isn’t a uniform, mathematical formula to determine if someone qualifies for a short sale. Every short sale is different, given the circumstances of the property owner and the particular investor or lender on the loan.
In the investment property context, rental properties may be underwater with negative cash flow. The owner of the duplex may be in sound financial shape, but the annual loss on the property is starting to take its toll.
Could that investor do a short sale on their duplex?
The answer is almost always “maybe”.
It’s important to understand there is no legal right to do a short sale. You agreed to repay the debt, regardless of the value of the property, and the bank did not promise your duplex would increase in value.
However, when it comes to making a sound business decision, it might make sense to do a short sale on an investment property.
Lawyers have been doing what are known as “loan workouts” on large commercial deals for decades. Short sale is simply another term for a smaller scale “loan workout”.
A bank will certainly take a hard look at a sound buyer for a duplex, and it is possible they will consider settling the accounts with the duplex investor-seller. If the duplex owner has some available cash, or is willing to sign a promissory note for a percentage of the deficiency balance on the loan, there is a greater likelihood the bank and seller will come to terms.
How will you know if your lender will work with you?
First, you have to start the process by listing the duplex and letting your Realtor market it to find a good buyer.
Given the complex nature of these deals, getting an attorney and law firm on your side is always a good idea too.