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Twin Cities Housing Market Needs Hair Of The Dog

August 17th, 2010 categories: Twin Cities Real Est

If the first time and repeat buyer tax credits were a housing party, then it’s fair to say the post tax credit hangover continued in the Twin Cities housing market for the week ending August 7.

Pending sales of single family homes continued stay in bed; down 36.5 percent from their mark one year ago.

With fewer sales, it’s natural that the amount of  inventory would continue to swell. In fact, there are 7.4 percent more homes available for sale than there were last year at this time. This month, there will be 8.64 homes available for every buyer in the marketplace. Last year, there was an average of just 5.28 for each buyer to choose from.

Duplex sales fared no better, with week over week sales dropping 25.6 percent from their 2009 mark. Of those duplex houses went under contract, just 13.79 percent were offered by traditional sellers. While this is an improvement over the 10.26 percent sold by parties other than banks for the same week last year, neither number is reason to celebrate.

However, it could be argued that the $118.224 average off market price for the pended sales is an improvement over last year’s sold price of $86,334, neither number is worthy of a party announcement.

Unlike single family homes, new duplex and small multi-family listings were down year over year by 31.8 percent.

While less inventory should ultimately put upward pressure on prices, and 7 percent more of the week’s new listings were offered by traditional sellers than last year’s figures, we’re a long way from anything resembling either price stability or appreciation.

Spoken by Kari Lundin | Discussion: No Comments »

Minneapolis Duplex Buyers Busy At The Mall

December 8th, 2009 categories: Twin Cities Real Est

It’s easy to blame a long holiday weekend for many things: weight gain, too much shopping, and, even, perhaps, a case of sagging Minneapolis duplex sales.

Pending sales for the week ending November 28 dropped 27.5 percent from their mark for the week one year ago. 

This slowing in transactions also resulted in a slightly lower average off market price of $117,776, compared with last year’s sold price of $120,363. The good news is traditional sellers accounted for 20 percent of the properties that left the active roster this year, compared with just 13.79 percent one year ago.

Another encouraging sign is the trickle of new inventory coming on the market.

New listings for the week dropped 52 percent, meaning there are increasingly fewer properties for buyers to choose from. Of this new inventory, 38 percent was offered by traditional sellers. This represents a radical shift from last year, when 91 percent of the properties new to the market were lender owned or mediated.

The holiday season distracts nearly everyone, so it’s unlikely we’ll be able to glean any sort of real market knowledge until the new year.

Spoken by Kari Lundin | Discussion: No Comments »

Can A Vacancy Help You Sell Your Minneapolis Duplex?

December 7th, 2009 categories: Selling A Duplex, Tenants

The other day a seller received notice one of his tenants is moving out. As his property is on the market, he asked whether it was more advantageous to a sale for the unit to be vacant or full.

The answer is full.

But isn’t it easier to show the property with no one in it? Doesn’t it show better?

Yes.

However, the benefits of it being occupied far outweigh the consequences of a vacancy.

First,  mortgage payments, taxes, insurance and utilities are all due whether the property is available for sale or not. As a result, it’s important the owner continue to generate revenue to cover those expenses.

Next, prospective buyers want to know not only that a property is appealing enough to attract tenants, but what the market value of that appeal is. If the rents are healthy, the property is a more desirable investment.  The rents that are reflected on the MLS are therefore actual, not a fantasy concocted by the listing agent and seller.

Many buyers also like to know they are going to have a revenue-generating property the minute they take ownership. A 100 percent vacant duplex means a new owner has to scurry to fill two vacancies before the first mortgage payment comes due a month later.

What if a prospective owner wants to live in a tenant occupied unit? This takes some forethought, but if there’s a possibility you many sell your duplex some time in the future, it’s a good idea to have a clause in your lease stating the tenant agrees to vacate the property for an owner occupant provided they are given appropriate notice.

Of course, if  your lease doesn’t have such a clause, you may need to visit with the residents to see if there’s an incentive that would entice them to move.

If they choose not to, the lease is a legally binding contract that both the seller and new buyer must honor.

Spoken by Kari Lundin | Discussion: No Comments »

Calculate Quality of Living In Your Minneapolis Duplex Financial Analysis

December 3rd, 2009 categories: Twin Cities Real Est

There are two phrases I hear over and over again these days: “When will the market rebound?” and “I’m going to wait until it does to sell/buy.”

Whenever I hear these words I always wish I had an answer to the first, because it would also solve the last.

The trouble is, absolutely no one knows when the market will rebound.

I’ve recently been more optimistic about a recovery in light of the foothold I see traditional sellers gaining in the small multi-family sector.

However, yesterday an agent who works primarily with foreclosures told me he is managing over 100 properties for a single financial institution. These are foreclosed properties, sitting empty, and deliberately being withheld from the market by the lender.

If he has that many, how many more can there be?

If you look for housing rebound predicitons among economic prognosticators, you’ll see dates ranging from the fall of 2010 to some time in 2013 or 2014.

This would be in keeping with recent history. The Savings and Loan Crisis of the late 1980’s resulted in a real estate crash in many parts of the United States. And by most accounts, the recovery took from 1989 to 1995 or 1996. In other words, six or seven years.

Read the rest of this entry »

Spoken by Kari Lundin | Discussion: No Comments »

Minneapolis Duplex Market Plays Red Light Green Light

December 1st, 2009 categories: Twin Cities Real Est

Just when we thought the light might be turning green in the Twin Cities duplex market, statistics for the week ending November 21, 2009 continued to send mixed signals.

The average off-market price for the week was $123,244, compared to last year’s average sales figure for the same week in November, which was $103, 659.  This represents an increase of nearly $20,000.

Pending sales for the week were up 21.9 percent from last year as well. So too was the percentage of those transactions that represented traditional sellers; 21.9 percent this year, compared with just a 12 percent market share for the week in 2008.

It all sounds like a reason to put your foot down on the accelerator, right?

Hold off  a second. The number of new listings week over week was actually up 28.9 percent. Normally, this would be cause for alarm. However, as we have recently seemed to experience a shortage of inventory, this may help inspire buyers lurking in the market to act.

Traditional sellers also continued to show signs of gaining traction among new listings. Thirty-one percent of the week’s new inventory was also offered by traditional sellers, compared with 12.5 percent for the week in 2008.

Single family home transactions also sent mixed signals. The number of transactions was up 5.2 percent from the same week in 2008. However, sales have slowed considerably since the rush to beat the tax credit ended.

Spoken by Kari Lundin | Discussion: 1 Comment »

Traditional Minneapolis Duplex Sellers Give Thanks

November 24th, 2009 categories: Twin Cities Real Est

Traditional Minneapolis and St Paul duplex sellers have much to be grateful for this Thanksgiving, as market numbers for the week ending November 14, 2009, continue to suggest a shift in the market in their favor.

While it may seem ludicrous to herald a 27 percent share of properties that pended for the week as a triumph, bear in mind that one year ago during the same week, traditional sellers managed to corner just 16 percent of the market.

This is the fourth consecutive week where bank-negotiated transactions were down year over year.

This apparent trend seemed to benefit prices as well. The average off market price held relatively steady for the week, being $4400 higher than the sold prices of last year’s properties. 

Better yet, new inventory dropped a whopping 38 percent from one year a ago. Traditional sellers comprised 42 percent of the market, compared with last year’s 81 percent lender mediated offerings.

Eventually, this trend will improve prices for sellers, as fewer of the bargain basement bank owned duplexes flood the market.

Meanwhile, single family home sales appeared to suffer the effects of the expiration of the first time home buyer tax credit. There were 7.1 percent fewer purchase agreements signed for the week than there were during the same stretch last year.  Leading up to the credit’s expiration, these figures were often up more than 40 percent.

Like the small multi-family market, however, new listings continued to drop. Overall, there is 20 percent less inventory on the market than at this time last year.

Spoken by Kari Lundin | Discussion: No Comments »

Minneapolis Duplex Buyers Face Empty Shelves

November 17th, 2009 categories: Twin Cities Real Est

Shopping for a duplex or entry-level single family home in the Twin Cities right now is a bit like shopping at the mall ten days after Christmas.

There’s not much left on the shelves and what is there, is, well, like an ugly sweater.

In October, first time home buyers rushed to find and buy homes in time to close by the November 30 first time home buyer tax credit deadline. Essentially, they had to have a purchase agreement no later than Halloween.

As a result, for the week ending November 7, the Twin Cities market posted “only” a 17.2 percent sales increase from last year. For the week ending October 31, that figure had been a 42.9 percent spike.

New listings in the single family sector were also down 14.3 percent for the period. In all, the Twin Cities region has 12,000 fewer listings than there were at the supply peak in September, 2007.

In the duplex and small multi-family sector, pending sales were exactly twice what they were for the same stretch last year. Of these, 31.25 percent were offered by traditional sellers, compared with a 20.83 percent traditional seller market share last year.

While a greater percentage of traditional sellers has, over the past few weeks, translated to a higher average off market price year-over-year, that wasn’t the case this time. Average off market prices were down just over $15,000.

Here’s the good news if you’re a seller. There’s a whole lot less inventory on the shelves for buyers to choose from. The first week in November last year saw 73 new duplex listings come on the market. This year, there were just 45 new properties for buyers to choose from.

If this trend continues, demand will exceed supply, forcing prices to rise.

In all likelihood, however, there will probably still be a couple of ugly duplexes left on the shelves.

Spoken by Kari Lundin | Discussion: No Comments »

How To Frustrate A Minneapolis Duplex Buyer’s Agent

November 16th, 2009 categories: Selling A Duplex

While it may seem like an easy job, buyers agents actually do a great deal of work in coordinating showings for their clients.

First, they coordinate windows of mutual opportunity with the buyer, which isn’t as easy as it may seem. Sometimes those opportunities are days away. Others they are merely moments away.

Once she and her client have agreed upon a time, she scours the MLS, trying to match their clients’ list of “must have’s” and “would love to have’s” with the inventory that’s available.

Next, the fact is, most duplex buyers are concerned with numbers. For owner occupants that may mean making sure their portion of the mortgage payment and expenses doesn’t exceed a specific figure. Investors, on the other hand, are often looking for a specific percentage of return on their investment dollars.

In other words, the agent does a lot of math.

Once she has a group of prospective properties, the agent puts them in some semblance of geographic order so neither she nor her client waste time doubling their tracks.

It’s at that point she either calls or goes online to set up showings. These days it’s not unusual for her to be informed almost immediately that a property has an offer at the bank awaiting their approval.

And, sadly, it’s far too common for her to be told the tenants didn’t receive ample notice.

As we’ve discussed here before, Minnesota state law does not require that a tenant be given 24 hour notice prior to any showing. The owner may enter the premises for business purposes provided he or she has made a reasonable attempt to notify the tenant.  While it’s important to be respectuful of tenants, nowhere in Minnesota state law is “reasonable attempt to notify” defined.

So, because the tenant, duplex owner and listing agent are mis-informed about the law, the buyer’s agent doesn’t show the property.  In all likelihood, it will take a lot to get her to try again.

Why? It’s just too hard to do all of that again.  And chances are, the seller may have lost a sale.

Spoken by Kari Lundin | Discussion: No Comments »

Minneapolis Duplex Sales Offer Clues

November 3rd, 2009 categories: Twin Cities Real Est

Mrs. White, in the library, with a candlestick.

Signed purchase agreements up 53.8 percent from a year ago, sales of homes under $250,000 up 40 percent over the same stretch in 2008, and pending expiration of the $8000 first time home buyer tax credit.

Congress?

Get a Clue. Extend the tax credit.

Need further proof that it’s a good idea?

Compared to one year ago, there are 5300 fewer homes available under $250,000 than there were. What’s more, the Supply-Demand Ratio, which is the number of properties on the market for every buyer, is down 29.3 percent from 2008; to 7.69 per buyer.

In the duplex, triplex and fourplex market, sales were relatively constant year-over-year, with 38 properties receiving purchase agreements to last year’s 39. The average off market price, however, showed marked improvement, up $11,758.42.

Of the properties that pended, 18.42 percent were listed by traditional sellers. Last year, this mark stood at just 12.8 percent.

The biggest shift in the small multi-f market is evidenced in new inventory, which was down 9 percent from last year. The important fact here, however, was that 46.3 percent of those new listings were offered by traditional sellers; up significantly from last year’s 27.12 percent.

The Senate is promising to pass some sort of tax credit extension by week’s end before sending it on to the house.

Let’s hope they solve that mystery soon.

Spoken by Kari Lundin | Discussion: No Comments »

5 Reasons To Buy A Minneapolis Duplex Now

November 2nd, 2009 categories: Buying A Duplex

Come winter, most duplex buyers turn their thoughts to the holidays and devising survival tactics to make it until spring.  After all,  icey sidewalks and knee deep snow are hardly inspiration for moving, right?

Well, here are five good reasons why everybody should.

1. The Tax Credit – While we’re still waiting for Congress to officially act on extending the $8000 first time home buyer tax credit, signs coming from Washington are encouraging. It looks, at the very least, as if there will be a new deadline of April 30th in order to qualify for the credit. Remember, in Minnesota, if you wait, sometimes it still snows in April.

2. Low Interest Rates – On Friday, both 30-year fixed conventional and FHA loans were at 4.875 percent. For those who are qualified, money is historically cheap to borrow.

3. Banks Don’t Wait Until Spring – Like many buyers, most traditional home and duplex sellers believe spring is the optimum time to move. As a result, they wait until they’ve seen the first robin to put their home on the market. However, banks don’t typically have the luxury of timing the market, and list their foreclosure inventory year-round.  This means there will be plenty of properties to choose from through the long, frozen months.

4. Fewer Buyers to Compete With – One of the challenges people rushing to beat the November 30 first time home buyer tax credit deadline ran into was they were not alone. A mad crush of buyers resulted in multiple offers on the more desirable properties, and a venerable frenzy to get there first. Winter, and its challenges, will keep many of those potential competitiors home until the first thaw; meaning you’re more likely to be able to buy a good property at a fair value, rather than a number that’s been inflated by fear.

5. You’ll Save A Lot of Money- Believe it or not, perhaps due to the preponderance of bank-owned properties on the market, the average sales price of a duplex that sold between October 1, 2008 and Februrary 1, 2009 was $23,000 lower than that of properties that sold between May 1, 2009, and August 1, 2009. 

Last I checked, professional movers didn’t cost anywhere near that much.

Spoken by Kari Lundin | Discussion: No Comments »

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