Archive for January, 2013
Comments Off on Minneapolis Duplex Sellers Catching On
Minneapolis and St Paul duplex sellers – you got the hint!
For the week ending January 19, 2013, there were 30 new duplex listings that came on the market. The majority of these, (53.3 percent) are being sold by traditional sellers.
For the same week last year, there were just 19 new listings. Just less than half belonged to people with equity in their properties.
Nineteen duplex and fourplex owners accepted offers during the week. Just 36.8 percent of them did not require a bank’s signatures in order to agree to sell. The average price theses duplexes left the market at was $146,195.
In 2012, just 27.3 percent of the 22 duplex sellers who accepted offers could say the same. On average, these investment properties sold for $106,389.
While pending single family home sales increased 17.4 percent for the week, the number of new listings declined 1.6 percent. To date, there is just a three month supply of inventory on the market.
In other words, if nobody else lists their duplex or house, we will have nothing left to sell in 90 days.
Comments Off on Duplex Sales: There Are Simply Too Few To Sell
Minneapolis Duplex Inventory Near 10 Year Low
According to a report issued today by the National Association of Realtors (NAR), pending home and duplex sales declined in December, but have stayed above levels from the year before for 20 consecutive months.
So if sales are up, why did fewer homes and duplexes sell in December than had in November?
Because there’s no inventory on the shelves.
According to Lawrence Yun, NAR’s chief economist, “The supply limitation appears to be the main factor holding back contract signings in the last month.”
He added that shortages of available inventory are hampering sales in some areas, adding that, “We expect a seasonal rise of inventory in the spring to help, but a seller’s market may be developing.”
Minneapolis duplex owners are already in a sellers market.
When looking at the number of active listings on the Minneapolis and St Paul real estate market by month and by year over the last decade, it’s clear the number of duplexes available for people to purchase hasn’t been this low since June of 2003.
In fact, it appears we’re down 75 percent in inventory fromthe market’s peak in June of 2007.
Again, it’s a great time to sell a Minneapolis duplex!
Comments Off on Save Thousands: Hire A Duplex Expert
A recent duplex listing of mine received four offers within 24 hours of being put on the market.
Of the offers the seller received, not a single one of them asked him to assign the rights to the leases or the security deposits to the new owner.
Since it isn’t in the purchase agreement (contract), theoretically, the seller doesn’t have to turn them over.
Imagine the chaos that would cause if the tenants asked for a security deposit refund when they move out, only to discover it no longer exists.
My seller will do the right thing, and turn those over anyway. However, it’s important to note that not every Realtor has experience with duplexes or investment property. Using an agent whose experience is limited to single family homes could well have cost these buyers thousands of dollars.
It’s a good reminder as to the importance of using a specialist when you buy an investment property.
Comments Off on Duplex Sellers Love Shortages
Want to know how short we are on duplexes for people to buy?
According to the Minneapolis Area Association of Realtors, in 2012 there were 1212 duplexes sold in the metro area. On average, they sold for $127,950.
Compare that to 2009, when there were 2064 duplexes, triplexes and four unit buildings sold in the Twin Cities at an average price of $83,900.
That represents a 41 percent decline in inventory in just two years.
While we haven’t seen the kind of influx of new listings to the marketplace we so desperately need, new listings were up 20.8 percent for the week ending January 12 over last year.
While 44.8 percent of these duplexes for sale were brought to the market by traditional sellers, one year ago just 29.2 percent were.
Meanwhile, 35.7 percent of the duplex owners who accepted offers on their properties actually had equity in them. In 2012, just seven percent of the 14 owners who accepted offers could say the same.
As always, the presence of traditional sellers usually translates into higher average sales prices, and it was true here, with the 2013 listings leaving the market at an average final list price of $121,121, compared with the 2012 solds, which averaged $82,261.
The single family home market continued to be a sellers dream, with just 2.9 months of inventory on the shelves. (A balanced market is when there are 5-6 months of inventory.)
Pending sales increased for the week 4.3 percent, while new listings decreased eight percent. Year over year, there are 31.7 percent fewer homes for people to buy.
It continues to be a great time to be a Minneapolis duplex seller.
Comments Off on Distressed Duplex Owners Wishes Granted
Every now and then, Minneapolis duplex owners facing foreclosure get a wish granted.
Like Cinderella, they’re always skeptical at best.
What’s the miracle? For some unknown reason, their lender decided to bid less than the amount of their loan at the Sheriff’s Sale and that new number is now the amount they owe on their first mortgage.
In other words, if they can come up with that amount during the six months the state of Minnesota allows as a Redemption Period, they can either keep their property or sell it for a profit.
Before you get too excited, know that it doesn’t happen very often. I watch this pretty closely and while I haven’t kept count, my guess it’s maybe one out of every 30 duplexes that go to auction at the Sheriff’s office.
For the duplex owners who hear me out, this can completely turn everything around. One owner I helped pocketed $85,000, another $45,oo0.
It sounds too good to be true. And most Realtors don’t know about it. I love that. It means I get to play Fairy Godmother.
Comments Off on Will Duplex Prices Rise When Interest Rates Do?
One thing many prospective Minneapolis duplex owners don’t consider when thinking about selling their duplex is the impact interest rates could have on the value of their property.
Right now, many are thinking they’ll wait to sell until the market is even better. For some, that is defined as 2005 values.
The problem with that rationale is right now, mortgage interest rates for both duplex owner occupants and investors are at historic lows. Many are getting 30 year fixed rates in the range of 3.5-4 percent.
In the single family home market, conventional wisdom states that a one percent rise in interest rates impacts a buyer’s ability to borrow by $10,000. So, if the rates rise by one percent, a buyer who may have qualified to purchase a $200,000 duplex can now only afford to pay $190,000.
This impact, in my opinion, is even greater on duplex buyers.
The reason is a one percent rise in interest rates on a $200,000 loan will reduce cash flow on that property by $2000 a year.
That makes many properties less attractive to the buyers in today’s market, because the return on their investment dollar isn’t as great.
With interest rates predicted to remain low through the end of the year, it’s a great time to be both a Minneapolis duplex seller and a duplex buyer!
Comments Off on Minneapolis Duplex Prices Double
Okay, it’s a fluke, but according to the most recent Minneapolis market statistics for the week ending January 5, 2013, duplex prices have more than doubled since last year.
The average final list price a Minneapolis or St Paul duplex, triplex or fourplex left the market at was $232,455. Granted, this average was helped by one sale of $747,500, but it is nonetheless, refreshing news. Without that sale, the market average was still a healthier $168,705.
After all, last year’s average sold price was a measely $98,977.
Of the week’s pending sales, 66.7 percent belonged to sellers with equity, who don’t need to consult with a financial institution in order to make the decision to sell.
Just 23.1 percent of the week’s sellers last year were in the same position.
There were just 17 new listings for the week, with 64.7 percent of them coming to the market with equity. Last year, just 48.3 percent of new duplex listings didn’t involve a bank in the negotiations of the list or sale price.
In the single family home market, pending sales continued their rise, going up 12.7 percent. Meanwhile, there were 34.6 percent fewer new listings that came on the market. Combined, this helped drop total inventory 31.1 percentt.
It continues to be a great time to be a Minneapolis duplex seller, as there is very little on the market to buy.
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It’s once again that wonderful time of year when Minnesota duplex owners and landlords are required to fill out Certificates of Rent Paid (CRPs) for each of their tenants.
Fun. I know.
Landlords must complete and give one CRP to each married couple or unmarried adult who lived in the rental property. In the case of unmarried adults, you must give a tenant a CRP; even if his or her name isn’t on the lease.
You are not responsible for figuring out how much each tenant paid. The state says you must show that each paid the same amount of rent, regardless of what was actually paid.
If you bought or sold the property at some point in 2012, you must issue CRPs for your period of ownership.
CRPs must be completed and delivered to tenants no later than January 31, 2013.
Failure to do so may result in a penalty of $100 for each instance. For example, failing to give four tenants CRPs would result in $400 in fines.
Comments Off on Duplex Sellers Given Caution Sign
One of my biggest concerns for duplex sellers as we head into 2013 is what’s been driving rising prices in our market recovery.
Prices are up thanks to two factors: low interest rates and scarce inventory. If either of these variables change significantly, so too will the market.
Fitch Ratings agrees. According to a recent report, they have seen housing and duplex prices rise at their greatest pace since 2005. They believe this is the result of technical factors (supply and interest rates), rather than fundamentals like employment and wage growth.
The reporting agency also believes market stabilization is contingent upon the pace of distressed sales and foreclosure liquidations. The slower the pace of foreclosures, the longer it will take for a real estate market to be sustainable.
For some states, the foreclosure process can take as little as 90 days (Texas) and for others, an average of 1,019 days (New York).
If banks continue to sell off inventory at their current pace, it is estimated it would still take 34 months before they cleared their backlog of delinquencies.
Sellers should celebrate a rebounding market, but know there may be a wave of inventory on its way from both banks and other traditional sellers anxious to make a change in their life.
Of course, increased inventory may have a negative impact on price; especially since the economy has yet to experience the kind of job growth necessary for a complete recovery.
In other words, it’s a great time to sell, but it may or may not be three months from now.
Comments Off on Duplex Listings Fly Downhill
If you look at a graph of the number of new Minneapolis and St Paul duplex and single family home listings over the last year, it looks like the best sliding hill you’ve ever seen; not too steep, and not so gentle as to cause your sled to go slow.
That would be a great thing; if we had more snow, and of course, if you could toboggan your way down a graph.
The trouble is, however, we’re talking about the number of duplexes and investment properties available for people to buy.
There aren’t very many.
For the week ending December 29, for example, there were only four new listings. None of these were either bank owned or short sales.
For the same week in 2011, there were 14 new listings. Of these, just three were brought to the market by traditional sellers.
The current investment property market is extremely strong. And yet, there were just eight duplexes, triplexes or four unit buildings that sold during the week. The average price they were last listed before pending was $182,013.
For the week in 2011, there were 17 duplex owners who accepted offers. Six were traditional sellers with equity in their duplexes. However, the average sold price for these properties was $159,198; 12.5 percent lower than one year ago.
The single family home market saw the number of new listings to the market drop 40.1 percent from the week in 2011, overall inventory drop 30 percent, and pending sales decrease 12.6 percent.
If you’re considering selling your Minneapolis duplex, it’s a great time to do so. With such a serious lack of competition, yours may well be the only sled on the hill!