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If you worked your way through all the Michael Jackson media this week, you might have heard about the report released by Reis, Inc., announcing the national apartment vacancy rate hit a 22-year high in the second quarter.
Reis, a New York based real estate research firm, also found vacancy rates rose nationally to 7.5 percent; an increase of 1.4 percent from the year before. Of the 79 markets they track, 45 showed increased vacancies.
Of course, Reis charges a small fortune for their reports. None of the information leaked to the media so far included the Twin Cities in either the list of ten worst or best markets. We’ll have to wait for Saturday’s version of their report in the Star Tribune to know where we stand.
How does this impact a Minneapolis duplex owner?
Vacancy rates and rental income are like a teeter totter. When one goes up, the other goes down. So it comes as no surprise that Reis says the amount of rental revenue dropped as well.
Why the increase in vacancies at a time when so many people are losing their homes?
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While the media continues to report disheartening news for the national housing market, the most recent data for the Minneapolis/St Paul real estate market again suggests there may be reasons for cautious optimism locally.
With their release of the Weekly Activity Report for the week ending June 27, MAAR reports that new listings for the week were down 18.9 percent from the same period last year. In fact, the total supply of listings is down 21.3 percent from 2008.
The number of pending sales for the week were also encouraging. The 1,121 propererties that received purchase agreements was a leap of 31 percent over last year.
On a broader scale, there are now just 4.9 homes available for sale for every buyer. That’s 32.6 percent lower than last year, and a number that hasn’t been seen since 2005.
In the multi-family market, pending duplex sales were up 25.7 percent from the comparable week in 2008. Of the properties that received purchase agreements, 91 percent were lender owned or mediated, with an average off market price of $109,742.
This figure once again represents an increase in the number of short and foreclosure sales from the 2008 mark. The duplexes that pended for the same week in 2008, meanwhile, averaged a sale price of $122,389.
The number of new listings for the last week in June, however, was down an incredible 34.9 percent from last year. As supply continues to decline, we may see price improvements in the near future.
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Someone asked the other day what the average heat bill on a duplex was. I couldn’t answer.
See, utility bills like heat, electric, water and sewer are as unique to a property as they are to a single family home. The cost of each is dependent upon the number of people who live there, the square footage of the unit, the type of heat, which utilities are tenant paid and which the landlord takes care of.
If you’re buying a duplex, however, there are a couple of ways to find out what the utility bills are.
As a contingency in your purchase agreement, you can always ask the seller to share copies of utility bills with you prior to closing.
Or, in the Twin Cities, you can simply call the utility companies and ask to tell you. Many of the power companies will give you a number that represents a monthly average. The water department, on the other hand, may offer precise figures.
In either case, it’s always wise to be fully informed of the costs involved in owning any income property before the seller gives you the keys.
Have a happy and safe holiday weekend!
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Which do you want first? The good news? Or the bad?
Chances are you’ve already heard the bad on CNN or MSNBC. The monthly Standard & Poor’s/Case-Shiller National Home Price Index reported national home prices dropped 19.1 percent in the first quarter. In all, home prices have now fallen 32.2 percent since 2006.
It gets worse. Between February and March, Minneapolis posted a drop of 6.1 percent; the biggest monthly drop on record for any of the 20 major metropolitan areas in the index.
But remember, all of this news was for the first quarter. It doesn’t take into account what we’ve seen here since April.
MAAR announced in its weekly activity report this morning that new listings for the week ending May 16 were down 10.2 percent from the same week last year. In all, there are 20.5 percent fewer listings on the market now than there were at this time last year.
Pending sales, meanwhile, eclipsed the 1200 mark for the first time in three years. In fact, the 1,235 sales are up 36.9 percent over the same stretch in 2008.
And the duplex market?
Pending sales continued their strong performance; up 32 percent over last year. Of those properties that received purchase agreements, 82.9 percent were lender owned or mediated. Seventy-seven percent of the transactions for the same week in 2008 involved a bank in the negotiations.
Last week’s euphoria proved short-lived, with the average off market price for 2009 being just $118,156. This figure was far below the average sale price of $145,311 set during the week in 2008.
New listings were down 5.7 percent, however, which should ultimately bode well for future price increases.
Once again, it’s wait and see.
