Comment
Remember the Aesop’s fable about the tortoise and the hare?
You know the one; where the rabbit challenges all the other animals in the forest to a race, and the only one to take him up on it is the tortoise.
Of course the hare finds this laughable and gets so far ahead he decides to stop and take a nap. The tortoise, meanwhile, just keeps plodding along and ends up winning the race.
Well, let’s hope the Minneapolis and St Paul duplex market is like the tortoise because the numbers for the week ending June 5 (which include much of Memorial Day weekend) sure are slow.
According to MAAR, pending single family home sales wer 57 percent behind that seen one year ago. Of course, Memorial Day fell a week earlier in 2009, so that may have had some effect.
Perhaps a more accurate commentary is the total number of purchase agreements signed for the week dropped for the fifth week in a row.
The single family home market has also seen a gradual year-over-year market share increase of lender-mediated inventory. This year, that market comprises 43.3 percent of the inventory on the MLS, compared to 37.8 percent last year.
The week saw equal lumbering along in the duplex and small multi-family market. Pended sales were down week-over-week by what we hope is a holiday-influenced 52.9 percent. The average off market price for these duplexes was $115,200; a number that significantly trails the $129,456 seen for the same week in 2009.
Of the inventory that pended for the week, just 12.5 percent was being sold by a traditional seller. This is up slightly from the 11.76 percent mark a year earlier.
Traditional sellers, did, however, continue to hold their own in new inventory offerings; with 50 percent of the listings. They contributed 47.44 percent one year ago.
If Aesop was right and slow and steady do win the race, then we’ve got some hope. After all, we’ve got the slow part of the equation down. Let’s hope next week brings steady.
Comment
Sometimes, the weekly duplex market report feels a little like looking at cloud formations.
There may or may not be faces in the clouds; depends on who you ask and their point of view.
Are there faces in the duplex market? Puppies? Or just random shapes?
Well, for the week ending May 22, pending Twin Cities duplex sales saw a year-over-year drop of 26.3 percent. Of those listed properties that received purchase agreements, 25 percent were placed on the market by traditional sellers. On average, these properties pended at $125,965.
For the same week in 2009, just 6 percent of the pended properties were sold by traditional sellers. The average price of all of those sold properties was $105,054.
The third week in May, 2010, also saw a 15.6 percent week-over-week increase in new inventory. While this years formation of new listings consisted of just over 51 percent traditional sellers, just 30.5 percent of last year’s new offerings didn’t involve lenders in any negotiations.
So what’s happening in the market?
I’ll get back to you after I lay in the grass and ponder it for a while.
said on February 15th, 2010 categorized under: Tax Credits
Comment
With all the snow on the ground, April 30 seems ages away.
But really, it’s only 74 days away.
Less than three months to find your first duplex or house before the $8000 first time home buyer tax credit expires. Less than three months for repeat buyers to qualify for the $6500 credit.
Yes, it still sounds like a lot of time. Except for the fact that many of the first time buyers I’ve worked with have taken four to six months to define exactly what it is they’re looking for in a property and then find one that matches both their budgets and criteria.
Remember, purchase agreements must be signed no later than April 30, 2010, to qualify for the credit. New owners must take title no later than June 30.
If you’re wondering whether you qualify, just remember; a first time home buyer is defined as anyone who has not owned a home in the last three years.
A repeat buyer must have lived in their homes consecutively for five of the previous eight years.
For either, income limits are $125,000 for single buyers and $225,000 on a joint tax return.
Of course, in either instance, the maximum home price is $800,000.
Comment
MAAR issued its Weekly Market Activity Report this morning and by all appearances, housing transactions for the week ending January 30, 2010, remained in their meditative state.
Pending single family home sales were down just slightly from the same week in 2009, while the number of signed purchase agreements rose just 0.7 percent.
The number of new single family home listings didn’t make any real perceptible moves either, dropping 3.7 percent year over year.
The duplex and small multi-family market showed a few signs of movement, but most were slight. For example, of the properties this year that received purchase agreements, 95 percent involve a lender in the negotiations. This is down .5 percent from last year.
The average pended price of properties for the week in 2010 was $98,395, compared with last year’s average sale price of $93,118.
New listings for the week trailed last year by 12.3 percent. The good news is 40.35 percent of the week’s new inventory was offered by traditional sellers, compared with just 26 percent for last year.
Let’s hope the tranquility doesn’t last.
Comment
What is the most common question I get asked in a duplex open house?
Is it, “What will the seller take?”
No. And even if it were, and I knew the answer (sometimes sellers surprise me), I couldn’t tell you. After all, the seller hired me to look out for her best interests, and by law, I have a duty to do just that.
The number one question is, “Is the whole duplex for sale or just one side?”
Many people don’t understand that while a duplex contains two residences, it has one Property Identification Number or PIN, with the county. It is considered one property.
In order for the two halves to be sold separately, each would need to have its own PIN. While that is possible, and certainly, many fourplexes and larger apartment buildings have been split up and sold independently as condominiums, there is some legal paperwork involved.
One of the challenges in doing this with a duplex is the formation of an association. With larger properties especially, developers who are selling the individual units, hire an attorney to form a homeowners association,.
In the bylaws, all the rules, regulations, dues, and means of resolving disputes are clearly spelled out in advance of the sale. This infrastructure helps prove a mechanism through which to collect and pay for maintenance, improvements and pursue delinquent homeowners.
Most of these associations have a board of directors which is populated by residents of the property. The board makes recommendations in terms of increased fees, exterior paint color schemes, etc., which residents then vote on.
What happens in a duplex if each owner wants the outside a different color? Who casts the deciding vote? Or if one owner stops paying her share?
Tough to resolve. Which is exactly why most duplexes never face being split up and sold separately.
Comment
The Minneapolis Area Association of Realtors released its weekly activity report last night, and it turns out that January of 2009 and 2010 are almost mirror images of one another.
Pending sales and new listings are down a bit from last year, and there’s a little bit more inventory on the market, but, by en large, it’s a wash.
For the week ending January 23, there were 2.3 percent fewer signed single family purchase agreements than there were for the previous year.
In the duplex market, however, the reflection from year over year had a few ripples in it.
The number of signed purchase agreements for the week in 2010 was down 31.4 percent from the 2009 mark. Of those properties that did receive and accept offers, 12.5 percent were brought to the market by traditional sellers. This represennts an increase of 4 percent year over year.
The average off market price for the week was $95,177; almost identical to 2009’s $95,371.
While the number of new listings to hit the market was virtually identical, this year traditional sellers were responsible for 40.35 percent of the new inventory. This is a stark contrast to last year’s market share of just 8.5 percent.
Hey, look at it this way. At least there aren’t any new wrinkles or gray hairs to contend with.
Comment
While the procrastinators among us still have time, those who are more organized might like to get working on their Certificates of Rent Paid (CRP).
Minnesota landlords are required to provide their tenants with completed CRPs no later than January 31. The certificates reflect the amount of rent the tenant paid in the previous year, and the amount of property taxes your unit helped pay for (expressed as a percentage of total rent collected for that unit).
The CRP helps tenants qualify for a portion of the property tax refund received on the duplex.
There are income limits for qualification. Households with no dependants can earn no more than $50,030 per year. Income limits increase with the number of dependants, going up to $74,930 with five or more dependants.
The forms are easy to understand and simple to fill out. On occasions when I’ve had multiple units at one location, I’ve made a master copy with the property address, owner name and PID number filled out. I then made multiple copies of it and filled each in with a tenants name and rental history.
Failure to provide tenants with CRPs can result in a $100 penalty for each occurance. If you have more than one rental unit, this can add up in a hurry.
said on January 15th, 2010 categorized under: Financing
1 Comment »
One of the challenges many first time home owners face when buying a foreclosed Minneapolis duplex is the cost of repairing and deferred maintenance or damage.
After all, when you spend your savings on the down payment and have to wait several months to get your $8000 first time home buyer tax credit check, how can you afford to make the place livable?
It’s important to remember for the last several years FHA has offered a loan called a 203k construction loan. Basically, you can get a loan for up to 110 percent of the rehabbed value of the property, with the money left after purchase being allocated for construction and repairs.
The 203k is one loan, as opposed to a first and second mortgage.
There are stipulations to these mortgages, including that the improvements must be made by licensed contractors and the bank pays those vendors directly.
Historically, these loans have typically been more expensive than a straight FHA loan: as much as 1 – 1.5 percent higher.
However, a loan officer who specializes in 203ks told me yesterday in the last several months, interest rates on them have been just .25-.85 percent higher.
That seems like a pretty affordable way to finance the repairs and updates so many of these distressed properties require.
Comment
Once upon a time, in a land called the Twin Cities housing market, a duplex buyer could purchase a foreclosed or run-down property, renovate it, and turn around in short order and sell it for a profit.
It was a good thing.
Until, of course, Evil Fraud Doers saw it as an opportunity to artificially inflate the value of a property, conspire with an appraiser and sell it for an unreasonable profit.
In 2006, seeing a blight upon the land, along came the Department of Housing and Urban Development (HUD) . They decided to right this wrong by refusing to grant mortgage insurance on any FHA loan on a property where the seller had owned it for less than 90 days. This, they hoped, would keep the Evil Fraud Doers from pillaging and plundering.
It was then that a dark cloud formed and a cold wind began to blow, bringing with it the flying monkeys of foreclosure.
Suddenly there were properties everywhere that needed help. In an effort to encourage investors and rehabbers to fight the wounded inventory, in 2009 HUD briefly lifted it’s “anti-flipping” rules. This allowed properties to be fixed up and resold to first time home buyers who generally had neither the cash nor experience to undertake the battle.
The petulance continued. And yet, HUD ended it’s ban.
So what? If you’re a rehabber just wait three months to sell, right?
Well, the moratorium actually starts the day you close. And it isn’t waiting 90 days to close on a resale. Rather, it’s waiting 90 days before you can even look at a buyer using either an FHA, or often, conventional loan.
And since it’s likely to take 30-45 days to close on a resale, you’re actually looking at having to hold the property a minimum of four months. In other words, if you don’t have you’re rehab property in had by the end of this month, it’s likely you won’t get a chance to resell it.
On the other hand, if you’re a buyer who missed out in one of those multiple offer scenarios on a duplex ripe for renovation and we’re hoping to buy it once the repairs were done, you may have to wait until spring; when everyone else is wishing on stars too.
Wish I had a magic wand to use to lift that anti-flipping rule just one more time. There simply aren’t enough duplexes in good condition and a fair price out their for my clients to buy.
Comment
The buyer’s market is over.
Buried in the Weekly Market Activity Report from the Minneapolis Area Association of Realtors was news that The Months Supply of Inventory in the marketplace is 5.
In other words, if no new houses came on the market today, in 5 months we’d be out of houses to sell.
A year ago, we had a 6.7 month supply.
Generally speaking, the housing market is considered to be balanced, with neither buyer nor seller having the advantage, at a 5 month supply.
Does this mean we’re once again on course for double digit rates of appreciation for single family homes?
Unlikely. Especially with the distinct possibility of higher interest rates on the spring horizon.
The duplex market for the week ending January 2, 2010, however, tells an entirely different story. The average off market price for a pended duplex or small multi family property for the week was $161,237. For the same week in 2008, that number was $92,656.
The number of sales week over week was a bit less promising, dropping 16 percent. Traditional sellers for the week represented 19 percent of the transactions. This is more than double their market share for the year before.
New listings continued to be few and far between, dropping 38 percent week over week. Just over one quarter of the new inventory for the New Year was offered by traditional sellers, an increase of three percent year over year.
While the months supply of inventory and increased traditional seller market share are good news, it’s important to remember the vast majority of the market is still controlled by lender mediated transactions.
While foreclosed duplexes seem to be increasingly rare, the same cannot be said in the single family home market. There are persistent rumours of a shadow inventory of foreclosure properties being kept off the market by banks, though the validity of those rumors is difficult to substantiate.
If they exist, we’re all likely to lose our balance.
