Archive for December, 2013

Minneapolis Duplex Sellers Work Through The Holidays

said on December 17th, 2013 categorized under: Twin Cities Real Est

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duplex owner celebrating While many people are busy with holiday preparations, the Minneapolis and St Paul duplex market kept working.

In the week ending December 7, 16 duplex, triplex and fourplex owners accepted offers on their properties. More than half, at 56.3 percent, were traditional sellers, who will take a check home from closing.

On average, the final list price for these pended properties was $183,982.

During the same week in 2012, 27 duplex sellers accepted offers. It’s important to note that the vast majority of these sales (70.4 percent)  involved negotiations with a lender prior to the close of the sale. As a result, those investment properties sold for an average of just $131,827.

New inventory for the first week of December totaled 26 new listings. A whopping 76.9 percent of these duplexes, however, are being offered for sale by traditional sellers. Compare this just 56.7 percent of last year’s 30 new sellers who had equity in their properties.

The single family home market saw a slowing during the week. New listings were down 5.7 percent from the same week one year ago. Pending sales, meanwhile, increased .9 percent. In all, total inventory continues to be down 5.6 percent.

For the month of November, the market finished with a Median Sales Price of $195,000; which is 13.4 percent higher than November 2012. Inventory remains tight, with most sellers averaging 75 days on the market and receiving 95.4 percent of their list price.

There is just a 3.2 month supply of inventory on the market. A balanced market is occurs when there is a 5 to 6 month supply. In other words, Minneapolis duplex sellers are in charge this holiday season.

FHA Changes Duplex Loans

said on December 16th, 2013 categorized under: Financing

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duplex loanWhether it’s a sign of an improving economy, or less risk tolerance, FHA loan limits for duplexes will be reduced as of January 1, 2014.

For much of the housing market recovery, the government sponsored insurance program increased the size of duplex mortgages it insured.

FHA insured limits vary by area and county. Higher priced regions like southern California,  for example, had and have higher loan limits than more rural regions in the midwest.

Through much of the housing crisis, duplex borrowers in the Twin Cities could obtain FHA mortgages up to $467,250. Triplex borrowers could obtain FHA backed financing up to $564,800, and four unit building buyers could owner occupy properties with loans up to $701,900.

After the first of the year, however, those amounts will be reduced. Duplex loans will be limited to $407,800, triplex loans to $492,950 and fourplex loans will drop to $612,600.

Of course, it’s important to note that for many borrowers, FHA’s recent increase in mortgage insurance rates make it a less attractive financing option for many borrowers anyway. And, as always, FHA loans are available only to owner occupants.

Conforming loan limits appear more favorable. For duplexes in the seven county metro area they stand at $533,850, triplexes are at $645,300 and fourplexes at $801,950.

These loans may have higher down payment requirements than their FHA counterparts, but come with less expensive monthly mortgage insurance fees.

If you’re thinking of buying a duplex in the near future, feel free to contact me for a referral to a loan officer who understands multifamily financing.

Duplex Sales Take Holiday Nap

said on December 11th, 2013 categorized under: Twin Cities Real Est

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duplex sales eat turkeyWhile Thanksgiving came “late” this year, the Minneapolis and St Paul duplex market apparently took a nap after eating too much turkey.

There were 13 small multifamily property owners who accepted offers during the week. Of these, 53.8 percent had equity in their properties. On average, the final MLS list price for these Twin Cities duplexes was $214,931.

While this traditional seller market share is down slightly from 57.1 percent at the end of last November, it isn’t down significantly. The number of sales for the week in 2012, however, was significantly larger at 21. However, the Thanksgiving holiday also landed earlier in the month in 2012. On average, these properties sold for $177,605.

New  listings suffered a post turkey slump as well, with just 14 new duplex listings coming on the market. The majority of these, at 64.3 percent, were listed by equity sellers. Last year there were 22 new sellers for the week, and exactly half did not have to consult a bank to sell.

The single family home market saw new listings fall 47 percent for the week and pending sales drop 38.5 percent. Inventory also dropped; down 4.5 percent from the same week in 2012.

Thanksgiving falls late once again in 2014, so look for a more equitable week-over-week comparison.

Mortgage Delinquencies Lowest in Five Years

said on December 9th, 2013 categorized under: Short Sales/Foreclosure

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foreclosure declineAccording to a report from the real estate data company CoreLogic, the rate of serious mortgage delinquency in the U.S. was at its lowest level in October since November, 2008.

There were 48,000 foreclosures completed nationally in October. This represents a 30 percent drop from the 68,000 completed foreclosures during the same month in 2012.

To put this in perspective, there were “just” 879,000 homes in the U.S. in October. Last year, there were 1.3 million properties in some stage of foreclosure.

These declines are great news for duplex owners who have been longing to sell, but found themselves underwater. As the volume of distressed properties in the marketplace declines, and in the event interest rates remain low, we should see continued price gains.

However, it’s important to remember prior to the housing crisis, the average number of completed foreclosures per month was around 21,000; less than half the current rate.

In other words, while things are better, we’re far from done.

Minneapolis Duplex Sellers Pretend It’s Spring

said on December 3rd, 2013 categorized under: Twin Cities Real Est

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duplex chick outfitWinter has officially arrived in Minnesota when the ground freezes. It could be said, however, that the Twin Cities duplex, triplex and fourplex market declares winter’s arrival when the number of new listings every week drop.

It may be cold outside, but it in the duplex market, it’s apparently spring.

There were 21 new listings that came on the market the week ending November 23. And while banks were responsible for the majority of these opportunities, 47.6 percent are being sold by equity sellers.

During the same week in 2012, there were just 10 new listings for the week. Only 30 percent of these properties were put on the market by traditional sellers.

There were 9 small multifamily property owners who accepted offers during the week. A majority– 55.6 percent, are not distressed. Compare this to the 27.6 percent of last year’s 11 sellers who could say the same.

Of course, more sellers with equity usually leads to higher prices. This was certainly the case in 2013, when those 9 sales left the market at an average final list price of $190,854. Last year,  properties during the same week sold, on average, for $137,073.

The single family home market behaved like a seasonal thaw as well, with new listings up 46.6 percent over last year, pending sales up 42.8 percent, and the combination of the two drawing total inventory down 3.6 percent.

On average, sellers are currently accepting offers at 95.8 percent of their listing price. Perhaps this is because their properties are staying on the market a scant 75 days.

Again, there isn’t a lot of competition for duplex sellers right now. And that always means more money.

10 Reasons To Sell A Duplex During The Holidays

said on December 2nd, 2013 categorized under: Selling A Duplex

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duplex sales in a bowMany investment property owners have the mistaken belief the holidays are a terrible time to sell a duplex.

Here are 10 reasons the holidays are actually a great time to sell:

  1. Properties tend to show better when they are decorated for the holidays. In fact, your tenants may have decorated and even picked up their units for family gatherings
  2. Winter buyers are more serious than their spring/summer counterparts. After all, if you didn’t absolutely have to be out in the snow and cold looking at property, would you be?
  3. Duplex, triplex and fourplex buyers get tremendous tax advantages buying at the end of the year.
  4. There is less inventory for buyers to chose from, therefore sellers have less competition.
  5. Less competition means higher prices.
  6. January is a big month for moving. With job transfers and school calendar breaks, many people focus on moving specifically in January, rather than over the course of a summer.
  7. When you sell your duplex over the winter, there will be more properties available to chose a replacement property from when the spring market begins.
  8. Your rental property is occupied. To investors, not having to find tenants over the winter may be a bonus.
  9. Showings can be restricted so as not to interfere with tenant’s family activities.
  10. Buyers can be more emotional over the holidays. While this may not be a factor if your property lends itself primarily to being 100 percent tenant occupied, it may be a significant one if your duplex is currently or is conducive to being owner occupied.

If you’ve been thinking about selling your duplex, but waiting until spring, thank carefully. Now might be the perfect time to beat the competition and net more for your property.