Minneapolis Real Estate Blog

Eden Prarie Named "The Best Small City in America" by Money Magazine

Sat, 07 Aug 2010 02:00:00 GMT

'Why is Eden Prairie No. 1 this year? Not only is it family-friendly, it has a dynamite economy too.

At 5.1%, its unemployment rate is nearly one percentage point below the county rate and more than four points below the national average. It helps when you've got 50,000 jobs right in town.

Major employers include Fortune 500 trucking company C.H. Robinson, hearing-aid maker Starkey Labs, and the Minnesota Vikings, whose practice facility and front office are here. As for fiscal strength, Moody's gives the town a perfect AAA bond rating.

While it doesn't have much of a downtown, there's plenty of outer beauty: from gently rolling hills to 17 lakes that residents flock to year-round for swimming and ice skating. Town parks are laced with 125 miles of running, hiking, and biking trails.

No wonder residents rank among the healthiest people in the nation. Add in top-notch schools and safe streets and you've got a place that's tough to beat." -Ismat Mangla

Source: Money Magazine

U.S. House Backs Homebuyer Tax Credit Extension

Tue, 29 Jun 2010 16:13:00 GMT

Tue Jun 29, 2010 3:52pm EDT

WASHINGTON June 29 (Reuters) - The U.S. House of Representatives on Tuesday approved giving extra time to homebuyers trying to get a popular federal tax credit by the end of the month.

The House backed a measure to extend the closing deadline to Sept. 30 for buyers who met the April 30 deadline to have a signed contract. The current deadline requires those buyers to close the transaction by June 30 to receive the $8,000 tax credit for first-time homebuyers.

Source: Reuters.com

Tax Credit Deadline Extension in Jeopardy

Mon, 28 Jun 2010 02:00:00 GMT

Up to 180,000 home buyers will lose their tax credit through no fault of their own if Congress fails to pass an extension to the home buyer tax credit by June 30 when the closing deadline expires.

Included in that number are thousands of home buyers in every state of the union, from 390 in Wyoming to 17,700 in California, according to estimates by the National Association of REALTORS®.

“We are strongly urging the Senate and the House to act quickly to pass this legislation and ease the minds and pocketbooks of these home buyers,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz.

“These are not buyers who just entered into the market. These are buyers who previously met all the qualifications for the tax credit, but find themselves at the mercy of a workflow jam with lenders or other delays such as lapses in the National Flood Insurance Program, Rural Housing Service, and new home construction, and might not be able to complete the purchase of their homes by the current deadline,” said Golder. “It would be a tragedy for them not to be able to complete the purchase in time to claim the credit.”

NAR issued the following state-by-state estimate of the number of home sales that would be delayed beyond the June 30 deadline; numbers are rounded to the nearest 10:

Alabama, 2,590; Alaska, 830; Arizona, 5,440; Arkansas, 2,090; California, 17,700; Colorado, 3,390; Connecticut, 1,770; Delaware, 400; District of Columbia, 300; Florida, 14,830; Georgia, 6,270; Hawaii, 710; Idaho, 1,270; Illinois, 7,030; Indiana, 3,560; Iowa, 2, 030; Kansas, 1,840; Kentucky, 2,540; Louisiana,1,800; Maine, 840; Maryland, 2,630; Massachusetts, 3,930; Michigan, 6,470; Minnesota, 3,760; Mississippi, 1,530; Missouri, 3,600; Montana, 760; Nebraska, 1,110; Nevada, 3,800; New Hampshire, 690; New Jersey, 4,300; New Mexico, 1,160; New York, 9,190; North Carolina, 4,890; North Dakota, 460; Ohio, 8,510; Oklahoma, 2,760; Oregon, 2,090; Pennsylvania, 5,830; Rhode Island, 500; South Carolina, 2,460; South Dakota, 500; Tennessee, 3,910; Texas, 15,340; Utah, 1,130; Vermont, 400; Virginia, 3,890; Washington, 3,190; West Virginia, 940; Wisconsin, 2,690; and Wyoming, 390.

Source: NAR

Study: Homeownership Rate Declines

Sat, 12 Jun 2010 02:00:00 GMT

Homeownership rates are down 2 percentage points from their 2006 peak, but could fall another 5 percentage points in the next couple of years, according to a study by the Federal Reserve Bank of New York.

The study subtracts the number of home owners who are underwater from the official homeownership rate calculated quarterly by the U.S. Census Bureau.

Officially, homeownership was 67.2 percent at the end of 2009, but the report says that effectively the rate is about 62 percent if those home owners likely to lose their homes are subtracted from the total.

Cities cited as having very low effective homeownership rates include Las Vegas, Phoenix, San Diego, Los Angeles, San Francisco, Miami, Tampa, Detroit, and Washington, D.C.

Source: The Wall Street Journal, Nick Timiraos (06/07/2010)

Year-Over-Year Price Gains in 91 Markets

Tue, 11 May 2010 02:00:00 GMT

Here's a look at a price breakdown by region:

Northeast. The median existing single-family home price in the Northeast rose 9.0 percent to $256,300 in the first quarter from the same quarter in 2009. Existing-home sales in the Northeast fell 17.7 percent in the first quarter to a level of 850,000 but are 19.7 percent higher than a year ago.

Midwest. The median existing single-family home price slipped 0.8 percent to $130,600 in the first quarter from a year ago. Existing-home sales in the Midwest dropped 17.3 percent in the first quarter to a pace of 1.13 million but are 10.8 percent above the first quarter of 2009.

South. In the South, the median existing single-family home price was $148,200 in the first quarter, up 1.1 percent from the first quarter of 2009. Existing-home sales in the South fell 14.6 percent in the first quarter to an annual rate of 1.89 million but are 10.7 percent higher than a year ago.

West. The median existing single-family home price in the West was $210,200 in the fourth quarter, which is 8.3 percent below a year ago. Existing-home sales in the West declined 6.8 percent in the first quarter to an annual rate of 1.27 million but are 8.3 percent higher than the first quarter of 2009.

Source: NAR

Households Unfazed by Expiring Tax Credits

Thu, 29 Apr 2010 13:13:00 GMT

The expiration of the home buyer tax credits won’t deter optimistic households who believe the market is improving, according to a survey released Wednesday by Prudential Real Estate and Relocation Services.

More than 90 percent of those surveyed believe the home buyer tax credits have helped both first-time buyers and the overall housing market, but 65 percent say that end of tax credits won’t reduce their personal interest in buying a home.

Over the next five years, 79 percent expect real estate prices to increase, and 20 percent expect prices to rise substantially. Only 12 percent believe prices will decrease.

Among renters, 75 percent believe owning a home is a better long-term choice for them than renting.

The majority of consumers also believe that homeownership is a good investment, with 75 percent saying it is better than stocks or bonds, 72 percent preferring it to mutual funds, and 74 percent saying it surpasses savings accounts.

Source: Prudential Real Estate and Relocation Services, Inc. (04/28/2010)

1st Quarter Foreclosure Inventory Hits Record High

Thu, 15 Apr 2010 02:00:00 GMT

Households facing foreclosure rose 16 percent in the first quarter of 2010 and the number of homes repossessed and scheduled for sale by banks rose 35 percent compared to the first quarter of 2009, according to RealtyTrac – the highest numbers since the foreclosure sales company began keeping records in January 2005.

RealtyTrac senior vice president Rick Sharga says these rising numbers were a sign that banks were unclogging the bottlenecks that have delayed the processing of homes facing foreclosure. "We're right now on pace to see more than 1 million bank repossessions this year," he says.

Here are the 10 states with the most foreclosure filings in the first quarter:

• California
• Florida
• Arizona
• Illinois
• Michigan
• Georgia
• Texas
• Nevada
• Ohio
• Colorado

Investors to Pick Up Slack in Mortgage Backs

Wed, 07 Apr 2010 02:00:00 GMT

The Federal Reserve ends its purchase of mortgage securities this week and private investors are expected to step in.

The change probably won’t push mortgage rates up very much. Analysts expect they will rise less than a quarter of a percentage point in the next three months. That gain would increase a monthly payment on a $250,000 mortgage by $30.

In a statement released March 12, Freddie Mac predicted that mortgage rates would average 5.2 percent on a 30-year fixed loan after the Fed stops buying. Fannie Mae put the rate slightly higher at 5.13 percent.

Source: Bloomberg, Kathleen M. Howley (03/30/2010)

New Foreclosure Prevention Plan Announced

Sat, 03 Apr 2010 02:00:00 GMT

President Obama is announcing an expansion of foreclosure-prevent tactics, including a plan to reduce principal balances and special aid for unemployed borrowers.

The bulk of the responsibility for carrying out the new program will be assigned to the Federal Housing Administration, which will insure lenders against part of the losses.

The plan asks banks to write down loan balances to less than the value of the home. If there is both a first and second mortgage, the combined total would have to be no more than 115 percent of the home’s value.

The Treasury would pay part of unemployed homeowners’ loans for three months while they job hunt.

Source: The Wall Street Journal, Nick Timiraos and James R. Hagerty (03/25/2010)

Buffett Predicts Downturn Will End in 2011

Thu, 25 Mar 2010 02:00:00 GMT

Billionaire investor Warren Buffett predicted that the real estate market downturn will end by 2011 as the housing inventory declines.

"Within a year or so, residential housing problems should largely be behind us," Buffett wrote in his annual letter to the shareholders of Berkshire Hathaway, where he is chairman and CEO. "Prices will remain far below 'bubble' levels, of course, but for every seller or lender hurt by this there will be a buyer who benefits. Indeed, many families that couldn't afford to buy an appropriate home a few years ago now find it well within their means."

He also pinpointed what he sees as the cause of the downturn. "People thought it was good news a few years back when housing starts — the supply side of the picture — were running about 2 million annually," wrote Buffett, "But household formations — the demand side — only amounted to about 1.2 million."

Source: Bloomberg News, Andrew Frye (03/01/2010)

Fed To Stop Buying Mtg Backed Securities

Thu, 18 Mar 2010 02:00:00 GMT

The Federal Reserve renewed its commitment to keep key interest rates near zero for an “extended period,” but also confirmed that it will stop buying mortgage-backed securities at the end of March.

The Fed, whose regular meeting began Tuesday, said that “housing starts have been flat at depressed levels” and “employers remain reluctant to add to payrolls” as a reason for extending the cap on interest rates.

“The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability,” the Federal Open Market Committee statement said.

Source: Bloomberg, Craig Torres and Scott Lanman (03/16/2010)

Fannie Mae Seeks Another Bailout

Sat, 13 Mar 2010 03:00:00 GMT

Fannie Mae admitted last week that it needs another $15.3 billion from the federal government to stabilize its finances.

Fannie, which is controlled by the federal government, is making financial progress. It reported a fourth-quarter loss of $16.3 billion, including $1.2 billion in dividend payments to the Treasury Department, as compared to a loss of $25.2 billion in the same period in 2008.

Fannie’s problems stem from a continuing stream of bad loans, with 5.38 percent of its single-family loans more than 90-days delinquent, up from 2.42 percent in 2009.

Source: CNNMoney, Tami Luhby (02/26/2010)

Home Prices May Still Be Too High

Thu, 11 Mar 2010 03:00:00 GMT

Adjusted for inflation, housing prices are still 15 percent to 20 percent higher than they were in the mid-1990s, calculates housing economist Dean Baker, co-director of the nonpartisan Center for Economic and Policy Research.

“There’s no plausible fundamental explanation for that,” he says.

Baker believes economic fundamentals translate to a weak recovery at best. “People who say this is a temporary story, there’s no real reason to believe anything like that,” he says. “If anything, I expect housing to be weaker than normal rather than stronger over the next decade.”

Baker is opposed to the housing tax credit.

"As a matter of policy I can’t see that we want people to buy a house in 2009 that’s 10-20 percent higher than it would sell for in 2011,” he says. “In so far as the FHA was encouraging people to buy homes in bubble markets that were not deflated, that’s not good for the FHA and you didn’t help the home owner. We didn’t do those people a favor.”

Source: Bloomberg News, Nick Timiraos (01/26/2010)

Banks Seek Payback from Walkaways

Thu, 11 Mar 2010 03:00:00 GMT

Increasingly aggressive mortgage lenders are seeking to collect deficiencies from former home owners who walked away from their properties or sold them in short sales.

Many states, including Florida, give mortgage holders as long as five years to seek a deficiency judgment. If granted, the bank gets up to 20 years to collect and the option to renew for another 20 years if the debt isn’t paid.

About one-third of U.S. states, including California and Arizona, prohibit collection efforts after foreclosure, but home owners usually waive that protection in a refinance.

Most states allow collection on unpaid home-equity loans.

Banks are most likely to try to collect from people who walk away from a property in which they are still making payments.

“The bank is going to pull your credit report, and if you’re current on your other bills they are going to come after you and potentially ruin you,” says Larry Tolchinsky, a Florida real estate attorney.

Source: Bloomberg, Kathleen M. Howley (01/28/2010)

Strategy for "Flipping Houses"

Thu, 04 Mar 2010 03:00:00 GMT

The strategy that we use for short term real estate investment is not connected to any particular “profit margin.”

The ratios that we are working with when investing in short term real estate deals is the Cash Price vs. Market Value Ratio and ROI Ratio (Return On Investment.) The Cash price vs. Market Value Ratios currently range from 40% to 80% depending on what’s necessary to change the marketable terms.

ROI varies from investor to investor based upon how they deal with the asset once it is acquired. A savvy investor can make 20% to 40% in a 90 to 120 day period depending on the environment at the time of acquisition/the environment at the time of liquidation/the decisions they make while owning/the talent of the agent representing them. In this market, a poor investor will typically make at least 10% ROI but if not careful, they stand to lose money.

If you have any interest in investing money into the real estate sector we would be happy to meet with you. Email Nick Leyendecker directly at nick@nicklgroup.com to schedule a meeting.

Source: Nick Leyendecker - Coldwell Banker Burnet

The 10 Most Undervalued Housing Markets

Sat, 27 Feb 2010 20:59:00 GMT

Nationwide, only 87 markets are in the overvalued category, according to a newly released 2010 report compiled by IHS Global Insight and PNC Financial Services.

That means 242 of the 299 largest U.S. housing markets are selling for prices that even bankers think are less than fair market value. The judgment is based on a comparison of median home prices, local interest rates, population densities, and income, plus historic premiums or discounts.

Here are the 10 most undervalued areas, according to the study:

Las Vegas, -41.4 percent
Vero Beach, Fla., -39.8 percent
Merced, Calif., -37.7 percent
Cape Coral, Fla., -36.8 percent
Houma, La., -34.6 percent
Port St. Lucie, Fla., -33.3 percent
Warren, Mich., -32.3 percent
Vallejo, Calif., -31.9 percent
Modesto, Calif. -31.8 percent
Stockton, Calif., -31.8 percent

Source: CNNMoney, Les Christie (01/27/2010)

FHA Toughens Down Payment Rules

Sat, 27 Feb 2010 03:00:00 GMT

The Federal Housing Administration will raise the minimum down payment for its least credit-worthy borrowers, the agency announced Tuesday.

The change is among a number of major changes the FHA is making to ensure its long-term financial soundness.

Borrowers with credit-rating scores below 580 will be required to put down at least 10 percent. Those with a credit score above 580 will be able to continue to put down only 3.5 percent. The changes are intended to shore up the agency's finances.

The FHA also will increase its upfront mortgage insurance premium from 1.75 percent to 2.25 percent. The agency is expected to seek congressional approval to raise annual mortgage insurance premiums, paid by borrowers over the life of the loan, above the current 0.55 percent maximum. The amount it will seek has yet to be announced.

For more information on the FHA changes, inlcuding a summary of all changes, visit REALTOR.org or email us at info@nicklgroup.com.

Source: Reuters News, Corbett B. Daly (01/19/2010)

10 Cities Where It's Smarter to Buy

Mon, 25 Jan 2010 03:00:00 GMT

For people who want to own a home, the premium to buy—the spread between what they’d spend to rent and what they’d pay for a mortgage—is much lower than the 15-year average in many cities.

To determine what cities are smart buys, Forbes magazine computed the premium and also identified locales where economists predict home prices will go up the most over the next five years.

Here are the top 10 cities the magazine chose as the best places to buy right now.

Boston-Cambridge-Quincy, Mass.
Charlotte-Gastonia-Concord, N.C.-S.C.
Chicago-Naperville-Joliet, Ill.-Ind.-Wis.
Cincinnati-Middletown, Ohio-Ky.-Ind.
Denver-Aurora-Broomfield, Colo
Minneapolis-St. Paul-Bloomington, Minn.-Wis.
Philadelphia-Camden-Wilmington, Pa.-N.J.-Del.-Md.
Portland-Vancouver-Beaverton, Ore.-Wash.
San Francisco-Oakland-Fremont, Calif.
Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.V.

A Decade of Dramatic Developments

Fri, 01 Jan 2010 03:00:00 GMT

At the beginning of the 21st century, most home buyers had never viewed a home online; the three top home sale marketing methods were yard signs, newspaper ads, and open houses; and nearly nine out of 10 buyers financed their purchase with a fixed-rate, 30-year mortgage.

What a difference a decade makes.

“The real estate industry has seen tremendous change and evolution over the past decade,” said NATIONAL ASSOCIATION OF REALTORS® President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz. “As the first, best source for real estate information, REALTORS® have not only anticipated and adapted to the evolving needs of their clients and customers, but also have influenced industry trends and innovations that will carry us into the future.”

In 1999, buyers who went online in search for a home were in the minority – only 37 percent of buyers used the Internet in their home search, according to data from the NAR Profile of Home Buyers and Sellers. Today, 90 percent of buyers are searching online, and the real estate industry has responded. Sites like REALTOR.com, which attracts nearly 12 million total visits every month, have evolved to gives today’s buyers what they want – not just property listings, but multiple photos, online videos, mapping features, and comprehensive neighborhood information, as well.

Median home values over the past decade have increased more than 25 percent, from $137,600 in November 1999 to $172,600 in November 2009 (the most recent existing-home data available). Fewer people are buying detached, single family homes – 82 percent in 1999 compared to 78 percent in 2009 – but more people are buying homes in suburban neighborhoods – 46 percent in 1999 compared to 54 percent today.

Buyers themselves have also changed. A smaller proportion of married couples are buying homes these days; while married couples comprised 68 percent of all home purchases at the beginning of this century, they represent 60 percent of all buyers today. Single men and women have made up the difference – single men purchased 10 percent of all homes last year, compared to only 7 percent 10 years ago. Single women now represent more than one-fifth of all home buyers – 21 percent, up from 15 percent in 1999.

Other things haven’t changed. The median age for home buyers last year was 39, just as it was in 1999. Neighborhood quality, affordability, and convenience to work and school have consistently been top priorities for both past and present buyers. And eight out of 10 recently surveyed consumers believe that owning a home is an investment in their future.

Source: NAR

Treasury Urges Banks to Fix Foreclosure Problem

Wed, 09 Dec 2009 03:00:00 GMT

Unemployed Americans need more help escaping foreclosure, Assistant Treasury Secretary Michael Barr said Thursday.

"We are looking at a wide range of tools to help people who are unemployed," Barr said. "We need to look at a process, if we come to this point, that is fair to everyone, that is cost effective, that protects the taxpayers and that gives responsible home owners a chance to stay in their homes."

Barr said it was the responsibility of the banks to get their troubled borrowers into modification plans. “We are examining their performance every day ... soon to be twice a day," he said.

Source: Reuters News (12/03/2009)