Comment
Last week, the National Association of Realtors reported the Pending Home Sales Index (PHSI), which is an indicator based on purchase agreements signed in June, rose 5.3 percent nationally over their May mark. While an improvement, this number is still 12.3 percent below the June 2007 mark.
Again, while this data reflects activity in the single family home, town home and condo markets, it is nonetheless critical information to have. When it comes to small multi family property, owner-occupied duplex sales probably most closely mirror single family statistics. Many home-owners find duplexes to be an affordable entry point into more expensive neighborhoods, or a means of buying a little more house in such a location.
What’s especially interesting to note is there were gains nationwide. Here in the Midwest, the index was up 1.3 percent over May, but was 13.3. percent below a year ago. In the South, there was a 9.3 percent increase, which is nonetheless, 16.6 percent below June of last year. In the West, the index rose 4.6 percent in June, and while still lagging, this figure is just 1.7 percent below last year’s mark. Meanwhile, in the Northeast, the June figure rose 3.4 percent, but trailed last year’s volume by 15.4 percent.
The always optimistic NAR also projects that as many as 2.5 million first-time home buyers will take advantage of the $7500 temporary tax credit in the new housing bill. If they do, existing-home sales would be likely to rise 7.0 percent in 2009 over this year’s expected figure.
Comment
One of the challenges in the current market for the Twin Cities Realtor’s associations has been spotting trends in terms of trends with lender-involved properties, vs. those being sold by a traditional seller. Until recently, it was impossible to discern what percentage of properties on the market involved lender-owned properties or short sales. Consequently, it was also virtually impossible to determine how traditional sellers were fairing.
In an effort to address and decipher these issues, the Minneapolis Area Association of Realtors released a comprehensive report yesterday detailing the full impact of the mortgage crisis in the Twin Cities market.
Highlights of the report include:
- “Over the past year, the inventory of lender-mediated properties for sale has almost doubled, while traditional inventory has declined by 16 percent
- Of all current active properties for sale, 21.7 percent are foreclosures or short sales.
- Traditional homes continue to hold their value better than foreclosures and short sales. The Q2 median sales price of foreclosures and short sales has fallen by 11.7 percent in the last two years while traditional homes has declined by only 3.4 percent.
- The prevalence of lender-mediated homes varies greatly from area to area. A full index of MLS areas and cities is included in this report. “
While the report does not address small multi-family housing (duplexes, triplexes and fourplexes), it nonetheless provides useful information to investors. To see the full report, click here.
Comment
One of the most frustrating transactions in today’s real estate market for buyers, sellers and Realtors is the short sale.
As discussed here before, a short sale is when a property is being sold for less than the amount owed to the bank. The seller may or may not be behind in payments. Due to the decline in market values over the last year, he or she simply can’t sell the house for what he bought it for.
In many cases, properties receive strong offers, which are accepted by the seller. Then everyone involved has to wait for the bank or banks with mortgages on the property to respond as to whether or not they will accept less than the amount they are owed. This can take months. Many, many months.
I have a buyer who wrote such an offer on Mother’s Day. The bank who holds the second mortgage on the property has refused to negotiate in any way. So we sit and wait for something to happen. That buyer has the patience of a saint. Others do not.
That’s the case on a gorgeous Mediterranean duplex in southwest Minneapolis. It’s been on the market for a while, and had numerous offers on it, which have been accepted by the seller. Months passed, and still no response from the bank. With built-ins, fireplaces, coved ceilings, three bedrooms on each floor and separate utilities, it’s a no-brainer in any other market. In fact, it sold for well over $100,000 more than it’s presently on the market for just two years ago. But none of the buyers have been able to outlast the bank.
If you’re patient, call me and we’ll take a look. It’s a terrific deal, and an even better long-term value.
Comment
Several of the trends spotted in last week’s MAAR Market Activity Report continued for the week ending July 12.
New listings of single family homes were down 11.5 percent from their mark during the same period last year. In all, over the last three months about 4000 fewer homes have come onto the market than the number that did in the same window a year ago. Overall, the total number of properties for sale is down 4.7 percent from this time last year.
Pending sales showed a slight increase of 1.8 percent year over year. It appears, for now anyway, there continues to be a leveling off of buyer activity. The number of pending sales for the last three months is down about 300 transactions, with is a decline of 2.7 percent.
The small multi-family market, however, continues to outperform its single family sibling.
For the week ending July 12, 41 executed purchase agreements were reported. This represents an increase of 273 percent over the same time last year. A full 87.9% of the transactions this year involved either a short sale or foreclosure property. The 2007 sales for the same week were included just 30 percent lender-involved properties.
Listings for multi-family properties were also down eight percent over those from one year ago.
said on July 18th, 2008 categorized under: Tenants
Comment
One of the biggest challenges landlords face is finding great tenants who not only pay their rent on time, but also take care of your property, communicate with you and are generally respectful.
Most landlords run a credit and criminal background check on any prospective tenant through companies like the locally based ASP Screening. The applicant must give you written permission to gather this information; which can be achieved by using MHA’s standard application.
For a nominal fee, usually about $20, these companies can almost immediately provide you with an individual’s complete credit report and a state by state criminal record. It is common to ask an applicant for this processing fee up front. This accomplishes several things: it proves they are serious, tends to weed people out who know their past is suspect, and reimburses your expense.
While these reports are useful, they often don’t contain invaluable information like evictions? Why? In Minnesota, the court costs of filing an eviction notice, then having it reported to the credit bureaus is hundreds of dollars. As a result, landlords often offer incentives for a delinquent tenant to vacate the property. Carrots they dangle include not reporting the rent delinquency to the credit bureaus, leaving the renter’s record clean and the next property owner they rent from exposed.
In addition to these reports, it’s imperative to call as many of the tenant’s previous landlords as possible, their employer, and any references you can procure outside of family members. After all, no matter how difficult anyone’s son or sister may be, family ties are always stronger than the most airtight of leases.
While all of these efforts are scientific, it’s also a good idea, on occasion, to trust your gut. I had once had an applicant who, while everything checked out, seemed off. I couldn’t put my finger on it, and by law, couldn’t reject him “just because” (or discriminate against him in any way). So I Googled him. Turns out he took a butcher knife to his family in a state I didn’t pull a criminal background check in.
Finally, there’s a new way to screen for all of the things that don’t show up via conventional means. KPIC, a CBS affiliate station in Roseburg, Oregon, recently reported on a new web site where landlords can share all the intangibles on undesirable tenants. For a subscription fee of about $30, DoNotRentTo.com lets you search for reports of an applicant trashing a place, was noisy, or exhibited any other sort of undesirable behavior.
This site also affords you an opportunity to report tenants whose behavior was unacceptable while living in your property.
While this site seems as if it could potentially be libellous, it does require the landlord be able to provide documentation of any incendiary events.
No system is perfect. But these are good places to start.
Comment
Last night MAAR released it’s weekly activity report for sales ending the week of July 5.
The number of duplexes that received accepted purchase agreements last week was double those from the same time last year.
Thirty properties moved to pended status. Of these, 83 percent were either bank owned or short sale transactions. This figure represents an increase of 20 percent over those involving financial institutions last year.
I also once again saw a number of quality seller owned properties that had been lingering move from active to pending.
Meanwhile, in the single family home division, there were 735 signed purchase agreements, which represents an increase of 7.3% over the same week a year ago. New listings were up as well, increasing 2.5% over this time last year.
Two other factors bode well for sellers: the average number of days on the market fell to 147, and the percent of the original list price received rose to 92.8 percent.
However, there were some discouraging signs as well. The months supply of inventory increased to 10.6 months, up 11.0 percent from last July, while due to an increase in interest rates, the housing affordability index slipped to 148.
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I showed a three story duplex in southwest Minneapolis featuring a deck on every floor. There were stairs leading from the second story deck to the ground, but none from the third to the second or the ground for that matter.
And the question came up: would the owner be required to add stairs to comply with the fire code?
According the the Minneapolis Fire Marshall, no.
No matter what story a unit is on, there must be one window in each sleeping room that is easily openable from the inside. It is required to have a net glazed area of 5.7 square feet. The minimum openable height of the window is 24 inches, while the minimum openable width is 20 inches.
Of course, the window can’t be more than 48 inches above the floor either. And area wells must meet minimum size requirements.
The same criteria holds true for St Paul. However, the city may require the property owner to install another escape on the third story. According to the Fire Marshall, while a secondary stairway isn’t required on the second story, the third floor is judged on a case by case basis. The fire marshall determines whether or not it is necessary by considering the square footage of the third floor as well as the layout of the property.
Comment
The Minneapolis Area Association of Realtors (MAAR) just released it’s weekly activity report for the week ending May 24. For the second straight week, pending sales are relatively flat; down just 1.4 percent from the same week last year. Over the same time period, new listings declined 6.4%. The total listing supply declined too, which is an oddity for the spring housing market. In other words, it kind of looks like things might be stabilizing.
Of course, MAAR doesn’t keep track of the same kind of data for duplexes. So, we’re left with me and my abacus.
In the week ending May 24,68 new duplex listings came on the market in the Twin Cities metro area. This represents an increase of 179% over the same period last year. That would be disastrous were it not for the fact that duplex sales for that same week are up 46% over last years mark. Of those, a full 87% were short sale or foreclosed properties.
I know, Realtors saxy the market is picking up all the time. I don’t compile the statistics, but I do know that in the last week I’ve had clients who wanted to write offers on two different properties. Both were either selling in multiple offers or already had accepted purchase agreements on them. These were foreclosed buildings in great locations that required a little bit of cosmetic repair. However, both also had positive cash flows of several thousand dollars a year. That’s something investors haven’t seen in this market for years.
