2nd Quarter Market & Economic Report

LOTS OF NUMBER CRUNCHY GOODNESS

Today the RMLS Released some pretty interesting stats about the current -s l o w - market.

Here's a quick breakdown for Hennepin County:

JOBS
In the 2nd Quarter 6,405 New Jobs were added. This is part of a very positive overall trend in a reduction in the average unemployment figures whic dropped from 3..9% to 3.8%.

Average Price
First Quarter: $301,300
Second Quarter: $296,300
Third Quarter Forecast: Rising

So some obvious adjustment is taking place here.

Number of Homes on Market
First Quarter: 13,321
Second Quarter: 16,957
Third Quarter Forecast: Flat

While Inventories continued to rise they did so at a much slower rate than previously. This will help to level the playing field between Buyers & Sellers.

Number of Homes Sold
First Quarter: 2,964
Second Quarter: 4,378
Third Quarter Forecast: Declining

Welcome numbers but not surprising considering the seasonal adjustments we all make.

Average Number of Days on Market
First Quarter: 79
Second Quarter: 64
Third Quarter Forecast: Rising

What is clear here is that Sellers need to remain patient when selling their homes.

One more bit of positive news...on average homes in the Twin Cities are selling for 96-98% of their original list price. So while it is a Buyer's Market, Sellers who are priced at where the market value is are still getting what they are asking.

My mantra these days is: "Price it Right, Sell it Fast."

Rain Can't Dampen Spirit of Peace

Japanese Lantern Lighting Festival

On Sunday we attended the Japanese Lantern Lighting Festival at the Como Zoo Conservatory.

Despite the heavy rain, we were delighted to attend. There was a decent sized crowd there to see the various performer and demonstrations. Everything from Drum Circles, Dancers, Martial Arts Demos, and lots and lots of tasty food. The highlight was the Lantern Lighting at dusk. It was like watching the mellowest fireworks of all time. Awe-inspiring in a super low-key way.

We definitely hope to make this an annual event!

As a Buyer Do I REALLY NEED a Realtor?

Short answer: Yes.

Here's the long answer:

There are plenty of houses on the market today. You're smart enough to know what you want, so why bother with a Realtor?

For starters, purchasing a home is one of the largest financial decisions you'll ever make. Even the most savvy person can appreciate the value of professional assistance when making such a major purchase. So, what can a Realtor do for you that can make their service so valuable?

Resources: Nothing beats the value of knowing what and where to find just what you need. That applies to locating the perfect home as well as getting the small details taken care of, including financing and inspections. Not every available property has a sign in front or an ad in the paper. Your Realtor knows where these hidden treasures are.

Negotiation: Once you've located the 'right home' negotiating the price is just the beginning. There are a myriad of other items that might come into play. Have you factored in the cost of utilities? Are the appliances included? Will the seller be willing to fix items that come up on the inspection list? Are their moving dates in line with yours?

A Keen Eye: Your Realtor can look past the pretty decor and be able to see hidden potential as well as possible challenges. There are some things about a home's amenities you might be able to change, but altering the floor plan can be expensive. Your Realtor will be able to give you valuable insight on how this home works for you.

A Cool Head: Above all, it's important to remain calm and objective in a real estate transaction. This is a financial decision but there are so many emotions that can arise. Owners may have mixed feelings about leaving their beloved home. After all, they have much invested here. You, on the other hand, may be anxious and a little frightened. All that is normal. Your Realtor will be there through the entire process from the initial search to the final closing date and beyond.
It's your Realtor's job to guide the process along in a professional manner, taking care of the many details, providing the service you need and doing a little bit of hand holding. Before you decide to go it alone, give all this serious consideration.

BEST OF ALL - OUR SERVICES ARE FREE FOR BUYERS!
Because we get paid out of the Commission that the Seller has agreed to pay the List Agent, as a Buyer you don't have to pay anything out of pocket for our services...and that is really what being a Realtor is all about imho - providing people the best possible service.

WOW! Tunes of Yummy Real Estate Market Stats Yummy Goodness!

In addition to this week's Market Update from MAAR I want to share with you this report.(Click on the following link for some cool graphs and such!)

JULY 2007 MINNEAPOLIS MARKET UPDATE

Here's some of the Highlights:

Minneapolis JULY YEAR TO DATE
2006 2007 Change 2006 2007 Change
New Listings 1,210 1,108 -8.4% 8,560 8,208 -4.1%

Closed Sales 511 461 -9.8% 3,427 2,636 -23.1%

Ave. Sales Price $272,250 $267,178 -1.9% $272,778 $261,905 -4.0%

Percent of Original
List Price Received
at Sale 96.7% 95.1% -1.7% 97.8% 94.8% -3.0%

Average Days on
Market Until Sale NA 124 NA NA 127 NA

Total Current
Inventory NA 3,738 NA -- -- --

Single-Family
(Exclude Condos) NA 2,759 NA -- -- --


T. J. 's Take:

The GOOD
New Listings are continuing to tail off. While there are less NEW options for Buyers they still have about a 9 month supply of homes to choose from. For Sellers they have less new competition so this is good for both.

The BAD
127 Days is a long time to have your house on the market. While we don't have comparable stats from last year, we can clearly see that this is something that would test the patience of almost anyone. This really indicates 2 things, in my opinion. First, quite a few Buyers are continuing to sit on the sidelines, despite the great interest rates and the plethora of choices and, second, some of the List Prices might still be too high.

OVERALL
I think you can look at this as being rather positive. Statistically July can be the SLOWEST month of the year and perhaps this is THE bottom that we can begin to grow from. Only time will tell, and as Merv Griffin once said, "Stay tuned."

As promised here's the Weekly Real Estate Market Update from MAAR:

Weekly Market Activity Report

Activity in the regional housing market continues its downward trend as buyers and sellers respond to a changing market landscape. For the week ending August 4, newly signed purchase agreements (pending sales) posted 802 residential unit sales, down 15.4 percent from the same week in 2006. Sellers and builders are slowing their activity as well, as new listings were 8.0 percent behind for the same time period comparison. In the last 19 weeks, this is the 17th week of year-over-year declines in listings.

This week's edition of the MAAR Weekly Market Activity Report features updated figures for Percent of Original List Price Received at Sale, our Housing Affordability Index (HAI) and our Housing Supply Outlook (HSO). The average percent received at sale for July was 95.3 percent, down slightly from last month. The HAI held steady at 127 due to flat interest rates and home prices. And our HSO grew to a 9.7 months supply of homes on the market.

To see how the Twin Cities housing market performed in July, see our July 2007 Monthly Indicators. This report features a new format designed to be consumer friendly and easy to understand.

What Buyers Want

Results of Recent National Association of Realtor's Survey

The number of buyers expressing a desire for oversized garages grew 16 percentage points since NAR's last survey of buyer preferences in 2004. About 57 percent of home buyers surveyed now say they want an oversized garage. What's more, among buyers who purchased homes without big garages, 56 percent said they would have paid more for an oversized garage, compared to only 6 percent in the 2004 survey.

NAR's latest home buyer preference survey, which reports responses from buyers who purchased homes in 2006, asks buyers about the importance of 75 home features and room types.

Other priorities for today’s home buyers include:

Air conditioning: three out of every four respondents surveyed ranked this as “very important.”

Master bedroom walk-in closet: 53 percent of buyers rated this as an important feature in a home.

Hardwood floors and granite countertops: each gained 7 percentage points in popularity since the 2004 survey; 28 percent and 23 percent, respectively, of buyers labeled these home features as very important.

Cable/satellite TV-ready: 46 percent, a growth of 6 percentage points from the 2004 survey, said this was important.

Energy efficiency: especially among new-home buyers — 65 percent of new-home buyers said energy efficiency home features are very important compared to 39 percent for buyers of existing homes.

Buyers also said they're willing to pay more for these extras. For example, 65 percent of buyers said they would be willing to pay a median $1,880 extra for a home with central air conditioning. One out of four buyers also was willing to pay a median of $4,760 more for waterfront property.

West want oversize garages (66 percent), followed by central air conditioning at 59 percent.

Fixing up the Nest

According to the survey, nearly six out of 10 recent home buyers took on remodeling or home improvement projects within three months of their purchase. Close to half of home buyers who remodeled or made improvements updated their kitchen, and nearly half remodeled or improved their bathroom.

New-home owners spent a median of $4,350 on home improvement or remodeling projects undertaken within three months of purchase.

“The fact that a majority of home buyers quickly remodel key areas of their homes ties into the fact that their home is a good, long-term investment,” says Paul Bishop, NAR manager of real estate research. “Regardless of market conditions in the short term, when purchased for the long term, housing is one of the safest investments consumers can make.”

Indeed, more than half of home buyers said they believe their home has high investment potential, and another four out of 10 say it has moderate investment potential. Only 3 percent felt their home’s investment potential was low.

Generational Differences

Age was the biggest differentiation in what buyers were looking for in a home. Buyers 75 years old and older wanted a single-level home (74 percent) that was less than 10 years old (43 percent) with a walk-in closet in the master bedroom (74 percent).

On the other hand, most buyers between the ages of 25-34 wanted a backyard or play area (60 percent).

More than half of buyers over 65 wanted a separate shower enclosure in the master bathroom, compared to only one-fourth of buyers ages 25-34.

Also, older buyers placed a higher priority on energy efficiency home features than did younger buyers — 63 percent of buyers 75 and older said it was very important, but only 32 percent of buyers who were 18-24 agreed.

Home Growth

Overall, the survey also revealed that while homes are getting bigger, the number of bedrooms is shrinking. From 2004 to 2006, the size of the typical home purchased increased by about 100 square feet to 1,840 square feet, while the median number of bedrooms dropped from four to three during that same period.

The median age of the home reported in the current survey is 12 years, down from 15 years in 2004.

Real estate practitioners see hundreds, if not thousands, of houses with their buyer clients every year and know exactly what buyers are looking for in a home, says NAR President Pat V. Combs. “This insight is one more way REALTORS® add value to the real estate transaction,” Combs says.

Sales Go Down But Prices Hold Steady

The National Association of Realtors Revised Forecast

U.S. home sales will hit a five-year low this year as wary lenders cut back on loans for many borrowers, he National Association of Realtors said Wednesday.

The National Association of Realtors' revised forecast calls for existing home sales of 6.04 million in 2007, down 6.8 percent from last year. The forecast was 1 percent lower, or 70,000 fewer homes, than July’s prediction of 6.11 million.

This year’s sales would be the lowest since 2002, when sales hit 5.63 million. Last year’s sales were 6.48 million.

Next year, the trade group expects sales to climb to 6.38 million, up slightly from the forecast it gave in July of 6.37 million.

The forecast comes as delinquencies among borrowers with weak, or subprime, credit have risen dramatically over the past year, and other loans are showing weakness as well.

“With fewer affordable loans available, that will cut back on some of the homebuyers who wanted to enter the market,” Lawrence Yun, the trade group’s senior economist, said in an interview. However, Yun projected that demand would rebound next year.

As of May, more than 16 percent of mortgageissued to subprime borrowers were behind on their payments by 60 days or more — nearly double last year’s levels, according to research firm First American LoanPerformance.

As delinquencies rise, lenders are reducing the availability of credit to those borrowers.

While sales fall, some elements of supply are expected to be down as well. More than 1.4 million housing starts, including multifamily units, are forecast this year and in 2008, but that is down from 1.8 million last year.

Median nationwide existing-home prices are expected to fall by 1.2 percent to a median of $219,300 this year, before climbing back next year to $223,600. Median new home prices are projected to fall 2.3 percent to $240,800 this year and then rise to $246,300 in 2008.

Is the Window Closing for First Time Buyers?

Many Lenders Eliminating No Money Down Mortgage Products

In the wake of a meltdown in the subprime mortgage market, many lenders have stopped offering no money down mortgage products. Now, more than ever, is the time for Congress to act by passing FHA reform legislation, which would provide consumers with a safe, and valuable no money down mortgage option. Federally backed home loans by the FHA have decreased consistently in recent years due to stringent down payment requirements and low loan limits. As a result, many consumers have been pushed into the subprime market, with attractive teaser rates and no or negative money down financing options. As housing prices have stagnated, and interest rates on these exotic mortgage products have readjusted, many of these loans have resulted in foreclosure, which harms the consumer, the lender, and the economy in general. Just last week American Home Mortgage which had over 7,000 employees joined New Century Financial, by declaring bankruptcy and closing it's doors as a result of offering too many loans that resulted in delinquency

Read NAR's position on subprime loans, and FHA modernization.

Weekly Twin Cities Real Estate Market Activity Report

Here's the latests from the Minneapolis Area Association of Realtors

As summer enters its final full month, both seller and buyer activity are beginning to gradually decline in the Twin Cities housing market. For the week ending July 28, there were just over 2,100 new listings on the market, down a few hundred units from the weekly velocity levels seen earlier this summer. Similarly, newly signed purchase agreements (pending sales) are down from the higher absorption levels seen in May and June. Compared to this time in 2006, new listings were behind by 1.9 percent and pending sales were behind by 22.0 percent.

This week's edition of the MAAR Weekly Market Activity Report features updated August 2007 figures for Supply-Demand Ratio (SDR) and Mortgage Rates. The SDR posted a figure of 8.57, which means that there are 8.57 houses on the market for every buyer. Mortgage rates held steady from last month at 6.7 percent. While rates have risen in recent months, they remain favorable relative to historical conditions.

Mortgages rates drop, good news for homebuyers

Freddie Mac to the Rescue!

Mortgage rates around the country edged down this week, with rates on 30-year home loans sinking to their lowest point in a month, good news for prospective buyers.

Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 6.68 percent. That was down slightly from 6.69 percent last week and was the lowest since early July, when rates stood at 6.63 percent.

The moderation is welcome for people in the market to buy a home. In mid-June, rates on 30-year mortgages had climbed to 6.74 percent, an 11-month high.

Rates on mortgages are ebbing as recent stock market turbulence has prompted investors to plow money into bonds, driving down rates on bonds. That, in turn, has pushed down rates on mortgages.

"Market investors seeking safety from the subprime fallout bought Treasury securities, pushing bond yields down and allowing mortgage rates to drift a bit lower," explained Frank Nothaft, Freddie Mac's chief economist.

Rates on 15-year fixed-rate mortgages, a popular choice for refinancing, also moved lower this week. They dropped to 6.32 percent from 6.37 percent last week.

For five-year adjustable-rate mortgages, rates dipped to 6.29 percent this week. That was down a bit from 6.30 percent last week. Rates on one-year adjustable-rate mortgages sank to 5.59 percent this week, compared with 5.69 percent last week.

The mortgage rates do not include add-on fees known as points. Thirty-year and 15-year mortgages each carried a nationwide average fee of 0.3 point. Five-year and one-year ARMs each carried an average fee of 0.5 point.

A year ago, rates on 30-year mortgages stood at 6.63 percent, 15-year mortgages were at 6.27 percent, five-year adjustable-rate mortgages also averaged 6.27 percent and one-year ARMs were at 5.69 percent.

After a five-year boom, the housing market fell into a slump last year. Sales turned weak as did home prices. The slump is expected to drag on probably through the rest of this year.

Worries about the sour housing market along with fears that problems with higher-risk subprime mortgages will spread, caused stocks to crater last week. The carnage left the Dow Jones industrials down more than 585 points, its worst week in five years. Stocks have gyrated since then, reflecting lingering anxiety among investors.

Be Safe & Hug Your Kids

Perspective

The KG Trade? The reeling Real Estate Market? The Airport Noise Lawsuit?

It all seems so trivial in context with yesterday's unexpected 35W Bridge tragedy.

The days and weeks to come will certainly bring more grief to many people.

Take a moment to hug your kids, or your spouse, or your dog, or just walk outside and remember how lucky you are, we all are, just to be alive.

That's what I did today and it really brought the important things in life, into greater focus.

Pending home sales index rises 5 percent

Apparently it's not ALL bad news in the Real Estate Market

Today some news that is actually quite positive!

According to head Number Cruncher or the National Association of Realtors Lawrence Yun, pending sales of existing homes rose by 5 percent in June compared with the previous month, a surprisingly positive sign for our beleaguered housing market.

NAR also said it was the largest monthly gain in more than three years and that increases in pending sales were reported across the country. However Yun, wasn't overly optimistic, and the pending sales index remained 8.6 percent below year-ago levels.

"It is too early to say if home sales have already passed bottom," Yun said in a statement.

Since there typically is a period of one to two months between when buyers and sellers sign a sales contract and when the property changes hands, pending home sales in June are likely to be completed between July and August. This appears to me that the typical Spring Market did indeed start - in Summer!

The Index is considered an indicator of how sales will perform in the coming weeks because it measures home purchases in which a sales contract has been signed, but the deal has not yet been closed. Once the deals close then we will know how the prices have been affected by the changes to the market.

Keep in mind the EVERY market goes in cycles and rarely do they stay flat. Eventually what goes down must go UP!

Weekly Twin Cities Real Estate Market Activity Report

Here's the latest from MAAR (Minneapolis Area Association of Realtors)

As the home sales slowdown continues in the Twin Cities housing market and throughout the country, slowed inventory absorption is keeping the number of homes for sale at record levels in July. There are currently over 35,000 residential properties for sale in the 13-county metropolitan region, up 12.0 percent from this time in 2006 and 56.7 percent from this time in 2005. The rise in inventory this year has less to do with new construction projects, as builder inventory has actually declined from this time in 2006 by 600 units.

Seller activity remains flat, with new listings for the week ending July 21 falling behind the same week last year by 0.5 percent. Buyer activity is even slower, with the number of newly signed purchase agreements declining by 10.2 percent for the same time period comparison.

June Prices Rise, Existing-Home Sales Decline

Sales of existing homes fell in June with some potential buyers staying on the sidelines, but prices rose modestly as inventories eased, according to the NATIONAL ASSOCIATION OF REALTORS®.

Total existing-home sales — including single-family, townhomes, condominiums, and co-ops — declined 3.8 percent to a seasonally adjusted annual rate of 5.75 million units in June from a downwardly revised level of 5.98 million in May. Existing-home sales are 11.4 percent below the 6.49 million-unit pace in June 2006.

“Two bright spots in the June report are a decline in housing inventory and a modest gain in home prices,” says Lawrence Yun, NAR senior economist. “Although we’ve seen seasonal month-to-month price increases over the past four months, this is the first time in 11 months that the median home price is higher than the year-ago price.”

The national median existing-home price for all housing types was $230,100 in June, up 0.3 percent from June 2006 when the median was $229,300. The median is a typical market price where half of the homes sold for more and half sold for less.

Meanwhile, total housing inventory fell 4.2 percent at the end of June to 4.2 million existing homes available for sale, which represents an 8.8-month supply at the current sales pace, the same as a downwardly revised 8.8-month supply in May.

Consumer Reluctance

Yun says some consumers are uncertain about the current real estate market.

“Home buyers have been getting mixed signals about the housing market, which is causing some of them to hesitate,” he says. “Mortgage interest rates have risen recently, and tightening lending standards are continuing to hamper sales, but fewer risky loans will put the market on a healthier path. Although general buying conditions remain favorable for long-term home buyers, it appears some buyers are looking for more signs of stability before they have enough confidence to make an offer.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.66 percent in June, up from 6.26 percent in May; the rate was 6.68 percent in June 2006.

NAR President Pat V. Combs says that local market conditions vary widely. “Consumers should avoid making decisions based on what they hear about the national market because all real estate is local,” she says. “There are pockets around the country where home sales are quite strong."

They've Fallen, and they Can't Get Up (yet)

More CHEERY News from the National Association of Realtors and CNN/Money:

Sales of U.S. existing homes dropped 3.8% in June to a seasonally adjusted, annualized rate of 5.75 million units, the lowest sales pace in nearly five years, even as frustrated sellers pulled their homes off the market by the thousands.

Sales of single-family homes plunged at a 30% annual rate in the second quarter, the steepest decline in 28 years, the National Association of Realtors said Wednesday. Sales of single-family homes were down 12% in June compared with a year earlier.

Even with a significant 4.2% drop in the number of homes for sale, the supply remained at a 15-year high at 8.8 months' worth of sales.

"The numbers were not terribly surprising, but they were somewhat disturbing, " said Mike Schenk, senior economist for the Credit Union National Association. "The slump in housing will be longer and deeper than advertised."

Economists surveyed by MarketWatch had been expecting sales in June to fall to a 5.90 million annualized pace.

"While weaker than expected, the sales pace and the underlying data within the report are probably no worse than what was feared," wrote Tony Crescenzi, chief bond market strategist for Miller Tabak & Co. "If the housing market is to recover from its current woes, inventories must fall."

"This is a pretty good time to buy or sell a house," said Tom Kunz, chief executive of Century 21, the nation's largest realtor.

Kunz said people in the market to buy homes have good jobs, rising incomes, affordable interest rates and a plentiful supply of dwellings to choose from. " We're going to start telling consumers the other side of the story," he said.

The "other side of the story?" Hmmmm....you would think with all these reports that people's homes would be selling for half of their listed price. In reality (Realty reality, say that 5 times fast) most sales I am seeing are closing within 3% of the Listed Price.

I am seeing sales occur within 12 days of the listing hitting the market.

I am seeing competitive offer situations.

Am I seeing things? Perhaps. But the truth is that all of this is happening if the Sellers are willing to price their homes at a point where the market (i.e. the Buyers) says they are willing to pay.

Granted this is MUCH easier said than done. I have talked to some Agents over the past few months who have suggested using a dart board to set the price on their listings. And these are Agents with 20+ years in the biz. Pricing has always been more of an art than a science, now more than ever.

I guess the one bit of advice I would give every Seller would be to listen intently to the feedback they are getting from Buyers and their Agents regarding price and condition.

The unfortunate reality for some Sellers is that both options can take a chunk out of their bottom line. It seems rather ironic that more Buyer's aren't out there reaping these rewards. My guess is that by the time they start jumping back in with both feet, the pool might already be dry, and another cycle of rising prices will follow.

It always does.

Do you Trust YOUR Gut?

No Housing Recovery until 2009?!

Countrywide Mortgage Head Honcho has this to say recently:

Countrywide Financial Corp. Chief Executive Angelo Mozilo said the U.S. housing market is unlikely to recover before 2009, as lenders and homeowners work through oversupply, stagnating home prices and the excesses of recent lax lending standards in much of the mortgage industry.

"It just takes a long time to turn a battleship around," Mozilo said on a conference call discussing quarterly results for Countrywide, the largest U.S. mortgage lender. "This is a huge battleship, and we're headed in the wrong direction."

Calling it "a gut feeling," Mozilo said, "It's going to take the balance of this year to get this thing to look like it's slowing down (and) 2009 to head into the other direction."

Anyone have any Pepto?

Weekly Twin Cities Real Estate Market Activity Report

Here's the latest from MAAR:

Following the annual Independence Day break, the Twin Cities housing market rebounded the week ending July 14. Seller activity shot up almost 900 units from the previous week. There were 2,720 new listings on the market, down 4.2 percent from the same week in 2006. Buyers also returned from their holiday siesta, writing 893 new purchase agreements. While this is an increase over the previous week, it is behind last year at this time by 17.2 percent as the market remains in a relative power nap.

Buyers May Like Cool Summer Prices

Head NAR Number Cruncher Lawrence Yun recently outlined several good reasons why Buyers might be wise to take advantage of the current lull in the market:

There may be good news on the horizon. A multitude of signs suggests that third-quarter existing-home sales will be better than resales registered in the second quarter of this year. Still, an added element of uncertainty regarding tightening lending standards makes it difficult to say definitively if the third quarter can close out with an improvement. I will go out on limb, however, and say that by the fourth quarter, existing-home sales will indeed show a marked improvement. May sales figures were low at 5.99 million sales (seasonally adjusted annualized rate). Closed sales in June and July could be similarly soft as pending home sales notched down for the third straight month. But several factors point toward inevitable improvement in home sales later this year.

Accumulating Pent-Up Demand

The country has added nearly four million new jobs since national home sales began to decline in mid-2005. And those job gains have not been a shift from high to low paying jobs. Rather, the typical worker’s wages have been rising by 7 percent, leading to a rise in aggregate national income by $1.35 trillion over a two-year time span. Further, non-labor wealth has also grown significantly. The Dow is hovering at record highs and the accumulated household wealth as of the first quarter of this year was also at a record high of $56.2 trillion. (That household wealth figure is likely even higher for the second quarter, for which official data has not yet been released.) That is equivalent to four years of annual salary for all the workers in the United States. So, if you’re wondering if people have the financial wherewithal that enables them to purchase a home, they do.

Household formation, meanwhile, mysteriously slowed in the first quarter of 2007. Household formation typically grows by 1.3 million to 1.5 million per year. In fact, a recent study by the Harvard Joint Center for Housing Studies projected such a rate of household formation for the upcoming years. However, the pace of household formation has slowed to less than 500,000 in the first quarter of 2007 – down 70 percent from its pace in 2006. That is absolutely mind-boggling in a job-creating economy. People are doubling up - finding roommates or moving back in with their parents. Why? As mentioned, finances are not the problem for most people. Could it be that people are waiting to see how long the housing market will slump? A turn in psychology and confidence is hard to predict. But one thing is clear: pent-up demand has been accumulating.

Rents are Rising

People are hesitating buying a home. In a job-cutting region like the Detroit area, it is understandable that there is a lack of demand (though bargain prices make a tempting opportunity for those with long-term views). However, for the rest of the country, people are not buying. That means, aside from doubling-up, they are renting. Not surprisingly then, rental rents have been rising. According to the CPI measure on rents, average rents rose 8 percent in the past 24 months (May 2005 to May 2007) while home prices have been largely flat. Renters, feeling the squeeze of these higher rents, may begin to look seriously at ownership rather than put money into their landlord’s bank accounts.

Condos Making Modest gains

The condo market led the recent housing cycle. The condo market was the first to lead the housing boom and first to lead the slump. The condo market also experienced much wider up-and-down swings in relation to the single-family market. Since the beginning of this year, the condo market has been consistently outperforming the single-family market in both sales and price changes. Could that imply an early signal of an overall housing market turnaround?

Better quality mortgage products

Mortgage applications for home purchases (not refinancing) have been rising nearly 10 percent on a year-over-year basis since early May. This data from the Mortgage Bankers Association is not a perfect predictor of home sales due to sampling issues; the MBA’s Purchase Applications Index oversamples prime and FHA loan lenders and undersamples sub-prime lenders and measures applications and not approvals. In a tightening lending environment, more applications will get rejected, so there is likely an increased incidence of re-applications. Nonetheless, a rising applications figure implies consumers are seeking out better quality loan products rather than blindly accepting hidden and exorbitant costs of subprime loans. And better credit quality is certainly better for the housing market over the longer term.

Weakness in the dollar

A weaker national currency typically moves in tandem with rising interest rates. As investors pull out of dollar-denominated assets, including U.S. government bonds, long-term rates have to rise to prevent further exit out of dollar-denominated investments.
Recent months’ movements in the dollar and in long-term interest rates are testament to that logic. Despite that trend, however, mortgage rates are still attractive at around 6.7 percent. All the while the fall in the dollar has essentially dangled a huge For-Sale sign in front of foreign buyers. Europeans can now buy a vacation home in Florida at essentially a 15 percent discount.
How many foreign buyers will now be tempted by what is essentially a deep double-digit price reduction?

The Fed will cut rates in 2008. Inflation is still running at the high end of the Fed’s comfort zone. Nonetheless, inflation looks to slide as the year proceeds. Once consumer prices are well contained, that will provide the Fed with the opportunity to lower interest rates. Early 2008 is the likely time frame for a rate cut. Short-term rates will immediately fall as result. The long-term rates could modestly decline as well. Any help on rates is a positive development for the housing sector. So keep your eyes on the horizon. There are forces at play that will soon turn the U.S. housing market around. Buyers who make the commitment now are likely to be smiling this time next year.

Lenders No Longer Funding 2/28 Loans

It is getting harder and harder for people with less than stellar credit to get loans. The Fed is lurking and has pushed many Lenders to tighten their lending restrictions.

But now Investors, the driving force in the Mortgage Marketplace are seemingly unwilling to invest in these kind of loans.

Recently the Strib reported that:

Countrywide Financial Corp., Option One Mortgage Corp. and Merrill Lynch's First Franklin Financial unit told employees and mortgage brokers this week that they would no longer offer so-called 2/28 subprime loans, ones that carry a relatively low fixed rate for the first two years and then jump to a much higher, floating rate, often more than 10 percent.

A spokesman for Countrywide, the nation's largest home-mortgage lender in terms of lending volume, said investors' demand for such loans is "very, very limited." A spokesman for Wells Fargo & Co., the No. 2 mortgage lender, declined to comment on whether it was still offering 2/28 loans. Some industry executives believe such loans will become rarities.

Lenders sell most subprime loans to packagers of mortgage-backed securities and thus typically offer only loans that investors are eager to buy. Investors have soured on 2/28 loans over the past few months because of a surge in defaults. At the same time, regulators and rating agencies are pushing lenders to be more conservative in granting loans.

While I think people are probably doing themselves a disservice with these kind of loans, what isn't being reported that for some buyers this is the only option. After 2 years they often find themselves in a much better position whether through increased income or just improved credit, which allows them to refinance out of the 2/28 loan and into something better.

The 2/28 has given many people a much needed foot in the door. With this on the outs, more and more people will likely be left out in the cold...

Bean Hole Days & Upper Cullen Resort

Last week we went up north to the Upper Cullen Resort and stayed in a cabin just 14 feet from the lake. It was a great time up there. It is located just outside of Nisswa, Minnesota. It was the quintessential Minnesota Vacation -cribbage, BBQ, beach and beer.

One day we found ourselves in Pequot Lakes and there seemed to be some kind of Festival happening. Our suspicions were confirmed when one of the vendors explained that we were attending Bean Hole Days.

Yep. Bean. Hole. Days.

The put a pot of beans, in a whole, overnight, and then people apparently line up for blocks to eat them.

Needless to say we weren't able to come back the next day and sample those beans. There's always next year...I will have to get a Bean Hole Days t-shirt at the very least!

Weekly Market Activity Report

Here's the latest from MAAR:

Fireworks, fried food and family fun have once again conspired to drag down the Twin Cities housing market during the first week of July. With Twin Cities residents taking their annual break to celebrate Independence Day, new listings in the region took a swan dive for the week ending July 7—dropping 600 units from last week and 14.2 percent behind this week last year. Buyer activity also declined from the week before, but not as severely. Newly signed purchase agreements (pending sales) fell by only 200 units from the previous week and were actually ahead of last year at this time by 1.2 percent.

This week's edition of the MAAR Weekly Market Activity Report features updated figures for the Housing Affordability Index (HAI) and the Housing Supply Outlook (HSO) for July 2007. The HAI took another steep and significant fall this month to 127, down 12 points in the last two months due to seasonal increases in mortgage rates and home prices. Affordability is essential to the long-term health and accessibility of our housing market, so it will be important to keep our eyes on the HAI in the months ahead. The HSO increased to 9.6 months, which means it will take the current supply of homes on the market roughly 9.6 months to completely sell through.

More STATS from MAAR

June 2005 to June 2007 year to date comparison:

	2005	2007	% Change
New Listings	52,414	59,717	+ 13.9%
Pending Sales	34,146	24,713	- 27.6%
Closed Sales	26,399	20,044	- 24.1%
Active Listings	21,613	34,630	+ 60.2%
Median Price	231,000	232,500	+ .6%
Sales to List Price	98.5%	95.7%	- 2.8%
Supply-Demand Ratio	3.67	9.36	+ 155%
Affordability Index	138	127	- 7.7%

Wow! The Inventory has increased 60% since 2005. That is amazing. But notice how the prices are holding steady - there is some ray of hope for Sellers. But right now there is 9 months worth of inventory! That means the competition for the available buyers is ferocious and will not likely fade very soon. Time will tell what this all means...

A Buyers' Market to Behold

Back from Vacation...Did you miss me?!?

A couple of interesting bits today...

Here's what the National Association of Realtor's new number cruncher Lawrence Yun has to say about the current market:

Buyers now have an overwhelming advantage given the wide selection of homes available in many markets, according to NAR's latest forecast. "But with profit margins coming under pressure, homebuilders will limit new construction well into 2008. This should help the overall inventory level to move steadily into a more balanced state," said NAR's Senior Forecast Economist Lawrence Yun. Existing-home sales are expected to total 6.11 million this year and 6.37 million in 2008, down from 6.48 million last year. Prices are likely to rise 1.8 percent next year after a 1.4 percent drop this year

Meanwhile today's STrib ran an editorial about just how bad (for Sellers) and great (for Buyers) the current market is:

These aren't the best of times for selling a home. Sales in the metropolitan area were down nearly 16 percent during the first half of this year, and the median sale price dipped 2.2 percent as sellers began to absorb the reality that their biggest investments may actually be losing value.

Unencumbered buyers, on the other hand, are having a field day with lots of houses to look at. Inventories stand at nearly twice the usual level, and interest rates remain favorable.

Given all of that, real estate experts have not dodged the obvious conclusion: that from a sales and production perspective, the local market has slipped into recession.

That's not as gloomy as it sounds. The public should factor in the unprecedented runup in home values that preceded the slump. Homes are still selling at prices higher than two summers ago. What's happening is a needed correction to irrational prices, excessive speculation and a sea of foreclosures against thousands of people tricked into buying homes they couldn't afford.

More HERE.

How does the Twin Cities stack up against other cities? Well, not so good at the moment...

WHERE HOMES ARE RETAINING VALUE

Percent change in median sales price of existing single-family homes from the first quarter of 2006 to the first quarter of 2007:

Seattle $380,000 +12.3

Portland $290,000 +8.9

San Jose $788,000 +4.4

Des Moines $146,000 +3.5

Chicago $267,000 +1.4

Omaha $134,000 +0.5

Atlanta $171,000 +1.2

Dallas $146,000 -0.6

Boston $387,000 -1.0

San Diego $595,000 -2.0

Denver $239,000 -2.0

Phoenix $263,000 -2.2

Kansas City $146,000 -2.9

Twin Cities $223,000 -5.2

Milwaukee $202,000 -5.8

Source: National Assoc. of Realtors

These things are cyclical. I have no doubt market will rebound and provide better footing for the Sellers but in the meantime, Buyers are WISE to take advantage of this lull to pounce on a great deal!

Now I better get unpacked...

ON VACATION...

SEE YOU NEXT WEEK!

More Good News for Buyers...

From today's Strib:

30-year mortgage rates drop

Rates on 30-year mortgages sank this week to a one-month low, while rates on most other mortgages also fell, good news to prospective home buyers.

Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 6.63 percent. That was down from last week's 6.67 percent rate and was the lowest since early June, when rates stood at 6.53 percent.

The moderation is welcome for people in the market to buy a home. In mid-June, rates on 30-year mortgages climbed to 6.74 percent, an 11-month high.

Renting Vs. Home Ownership (Chapter 1,000,000,000)

This guy was a "Renter." I'm just sayin'...

For the BILLIONTH time an article was published, this time in the Strib, detailing the pros and cons of Home Ownership versus Renting.

They summarized the Pros & Cons of renting as:

RENTING

Pros

More flexibility in moving.

Less maintenance required.

Opportunity to build credit and save money before buying.

Cons

Little or no flexibility in decorating.

No equity is built up.

No tax benefits.

Some additional parking fees might be involved.

They broke down the Pros & Home Ownership as:

BUYING

Pros

Ability to build equity.

Tax benefits.

Free to decorate and change landscape.

Cons

Less flexibility to move.

Responsible for property taxes.

Responsible for maintenance and work on the house.

Potential long-term commitment involved.

It's all well and good I suppose but as someone who at one time rented 7 places in 10 years, here's a few more pros & cons of renting.

1. DOG & CAT LOVERS
As a pet lover I found it EXTREMELY DIFFICULT to get DECENT RENTAL HOUSING that would allow me to have my dog(s). At present I have 2 Labs and a Basenji and a Cat. Two BIG Labs. I shudder to think how hard it would be to find a rental...oh and did I mention I have a 8 month old baby? Not that Landlords would ever discriminate against kids....oh no...NEVER!

2. SPONTANEOUS EVICTION
If you don't pay your Rent you get evicted. If you don't pay your Mortgage you face foreclosure. Neither one is a picnic. However, if you are month-to-month and your Landlord's sister suddenly wants to move into your place you could be homeless in 60 days. (This happened to me - in January - right after I had gotten out of the hospital for a gall bladder operation.) So if you do rent, make sure you have a SIGNED lease that affords you some protection.

3. TRAPPED!
The flip side to having a signed lease is the fact that you may want to move for a new job, a new love, a fresh start but you can't because some Moronic Real Estate Blogger told you to sign a lease...

4. I LIKE LOUD MUSIC
When I bought my first house I hooked up my stereo and turned it up. LOUD. After years of renting -duplexes mostly, it was LIBERATING to PUMP UP THE JAM without fear of someone banging on my floor or ceiling. Of course I try not to shake my neighbors windows when I get the urge to crank up Jay Z....not too much anyway!

5. PRIDE
I was surprised they didn't mention this as a Pro but in my experience the main thing First Time Buyers get when they buy their first place is an overwhelming sense of Pride. Buying a home is not easy. You have to jump through some hoops and you may be asked to make some financial sacrifices. But they don't call it the AMERICAN DREAM for nothin'. Owning your own home is something to be proud of and if you play your cards right you will create a tremendous nest egg for yourself.

6. A GOOD INVESTMENT
You have to look at owning your home long term to realize its full value. I was just talking to my neighbor yesterday and they were saying how this year their home that they have lived in for 20+ years will be paid off. Imagine that - FREE & CLEAR. If they were to sell they would get all of the $$....and that is a lot of $$! It doesn't happen too much these days and it NEVER happens when you rent. Sure you may get back a rent credit but you essentially lose all of your money to the Landlord. When you own it's like you are your own landlord - you are paying yourself.

Okay you got me...I am biased. I sell Real Estate. Obviously I think they Buying is better than Renting. But I am also honest when I say that not everyone is in a position, or has the desire, to buy a home, and that's cool. I respect that. I just wish I would have gotten on the ball when I was younger, as opposed to buying my first home when I was 31. If I knew then what I know now...and remember all work and no play makes Jack a dull renter!

"Honey! I'm Home!"

Airport Noise Lawsuit Open House Recap

A Standing Room Only Crowd Listens to Mayor Ryback and Class Action Lawyers

Your intrepid reporter was there! The setting: a rather charming and rather steamy church, filled to the rafters with a collection of concerned/agitated neighbors, all curious to learn what new information was available about the current lawsuits filed against the Metropolitan Airports Commission (the Strib has an excellent article recapping the story thus far - click HERE)

I think you really have to live in Nokomis to understand why this situation is such a sore subject. Back when the original agreement was made in 1996 and the decision was made NOT to relocate the Airport, the MAC agreed to provide noise insulation/mitigation for homes that were in the 65+ decibel range (Phase 1) as well as those in the 60-64 decibel range (Phase 2). These are all based on confusing and ever changing Noise Contour Maps (click HERE).

But a funny thing happened on the way to fulfilling there promise. Rather than insulate the homes in Phase 2, and sighting concerns for Northwest Airlines and the rising costs of "homeland Security" the MAC decided to renege on their contract/promise.

What they offered instead was to provide Central Air to a portion of the home affected who did not already have it as long as the homeowners would agree to pay for anywhere from 50-90%!

According Minneapolis City Councilperson Scott Benson the current gap between what the City is essentially asking for is HUGE. The City Estimates that the cost to insulate the homes in the areas that the MAC originally promised to be around $350 Million...and as I mentioned they are willing to pay half-sies on the Central Air which would cost them about $25 Million.

Enter the Class Action Lawsuit.

A small group of citizens started who were a bit dubious at the City's prospects for a successful and timely resolution to their lawsuit started a Class Action Lawsuit with a private law firm.

The good news is that at a pre-trial hearing the presiding authority, Judge Stephen Aldridge, emphatically ruled that the MAC violated it's promise and urged all parties: MAC, Northwest (who jumped in to protect their interests and help MAC fight off the public/city suits), The Cities, and the Class Action to enter into Mediation and settle the suit before it would go to trial.

People were jumping for joy - the people had won!

Only we didn't.

Because it now appears the Lawyers for MAC & Northwest were able to devise a rather sly "Divide and Conquer" strategy. They have reached a Preliminary Settlement with the Class Action Lawsuit wherein approximately HALF of the eligible homes would be given Central Air and $1,750 for additional noise insulation IF they did not already have it. (If they already have it and have had it installed in the past 5 years AND they have receipts they might get reimbursed for a portion of the installation costs.)

Needless to say the Class Action Attorney who was allowed to speak at last night's meeting was not necessarily greeted as a Liberator. There were no flowers and candy. In fact, you got the sense that Mayor R. T. was not only having a hard time controlling his own frustration but he seemed keenly aware that the meeting could easily devolve into a shouting match if he weren't there to keep things moving in a civil direction. I have to say I was impressed with how he handled things.

To her credit the Class Action Attorney knew that she was not the most popular kid on the block and she made her case - that the proposed class action settlement would at least guarantee some relief fir some people without having to risk getting nothing if the case were to go to trial.

Rybak clearly bristled at this and seemed to really believe that the City had a great case. But because he and the City are apart of this ongoing lawsuit his hands were kind of tied. He could provide information but he could not offer advice on how the residents should proceed.

Should the City agree to a settlement, similar to what the Class Action people have in place, even if it means many people will be excluded?

Should the City continue with its suit, which will likely be appealed and held up in litigation for several more years, at risk of ultimately losing and getting nothing?

As residents, we are going to be offered a choice in the coming weeks. The way the Reps from City Hall put it last night, if we agree to accept the Class Action Settlement we are excluded from any remedy that the City's lawsuit might bring.

It's like Deal or No Deal, only with Mayor Rybak serving as a much less annoying version of Howie Mandel.

The sad thing about all of this to that everyone can plainly see that the MAC has not lived up to its promise and now neighbors are going to be pitted against each other so that they can escape their obligation.

The entire thing just seems so unfair. I realize that people in other parts of the city might think that we who chose to live near the Airport knew what we were getting into when we moved here. "Duh! You live near the Airport. There will be noise!" and I understand that sentiment...to a point. But I know when I moved into Nokomis that there had been this promised made, that in the future my home would be eligible for the noise insulation that my neighbors - ACROSS THE STREET - have. It was one of (but certainly not the only) reasons why I purchased the house.

I am sure I am not alone in that predicament. It will be interesting to see where all of this will ultimately end up. At this point the City is actively seeking comments from residents so that they can decide what course to take The Class Action is continuing to work out the details on their settlement. And the residents are all left scratching our heads (and plugging our ears) wondering what will happen next.

Stay tuned. I will keep you updated on this story.

Weekly Market Activity Report

Here's the latest from MAAR:

Home sellers in the Twin Cities housing market continue to face a harsh reality: There are too few buyers for the number of homes on the market. Buyer activity remains at levels consistent with the start of this decade, with 871 units sold pending for the week ending June 16—19.6 percent behind the same week in 2006. Builders and home sellers appear to be getting the message that now is a difficult time to sell as they have scaled back new listings relative to a year ago, but year-over-year declines in listings are not keeping pace with larger declines on the buying side. Weekly new listings are down 7.0 percent compared to this time last year.

The message not being heard by buyers is that now may be the time to buy. With plentiful inventory, reasonable interest rates and slightly depressed home prices, consumers may look back and see 2007 as the bottom of the market—the year they should have purchased a home.

PRIDE Weekend & Some Good Link Updates!

Had a great time at the PRIDE Block Party this Sunday. It was a bit HOT but we danced a bit (daughter Lily and I) nonetheless! What a HUGE event that has grown into...pretty amazing. Its this kind of thing that makes me really proud to be a resident of Minneapolis!

In other news...

Here's the Latest on the Airport Noise Lawsuit.

I will be at the Public Meeting this Wednesday and I will report back here what I learn.

An interesting article here in the Strib -Pushing Homes Out of Reach? - highlights the dilemma we are facing as it becomes more and more difficult to find financing if you are a sub-prime borrower.

And just to clarify sub-prime doesn't mean you necessarily have bad credit or are some sort of high risk - it simply means you don't fit into the cookie cutter molds that many lenders are looking for - and that quite frankly seems rather unfair to me!

IT JUST DOESN'T MATTER - Summer is Here!

I got a sixty-nine Chevy with a 396
Fuelie heads and a Hurst on the floor
She's waiting tonight down in the parking lot
Outside the Seven-Eleven store
Me and my partner Sonny built her straight out of scratch
And he rides with me from town to town
We only run for the money got no strings attached
We shut `em up and then we shut `em down

Tonight, tonight the strip's just right
I wanna blow `em off in my first heat
Summer's here and the time is right
For goin' racin' in the street

For some reason, the first day of summer always reminds me of this song, Bruce Springsteen's classic "Racing in the Streets".

Such a passionate, honest song.

Actually there are Three Things from My Youth that I equate with summer:

1. "Racing in the Streets" - Bruce Springsteen
2. "Schools Out for Summer" - Alice Cooper
3. "Meatballs" starring Bill Murray

Bruce for the passion, Alice for the ANGST and Bill for the love of the ABSURD.

That flick convinced me to get a job as a Camp Counselor at the YMCA Camp Pepin near my parents adopted hometown of Stockholm, Wisconsin.

It was a great decision and I really loved my time there. I remember my feet got so tan (well cherry red more likely!) that the flip flops I wore left left stripes on my feet. It was such a badge of honor.

And the biggest lesson I learned from "Meatballs"? "It Just Doesn't Matter!"

CLICK ON THAT LINK!

Hope you like the clips...and I hope you find your passion this summer!

Weekly Market Activity Report

Here's the latest from MAAR:

June is traditionally a busy time for the real estate community and the most recent reporting week is no exception, as Total Active Listings for the 13 County Metro area continues at a record level. While buyer and seller activity accelerated as compared to recent weeks, the Twin Cities market continues at a lackluster pace in comparison to previous years. Weekly Single Family New Listings are down 1.2% and Pending Sales are 17.8% below the same week in 2006.

The Impact of Rising Rates on Our Recovering Market

Recently rates have started to creep up again and the Strib interviewed Edina Realty Head Honcho Ron Peltier about the recovering local real estate market:

Edina Realty President Bob Peltier said that although the spring market was something of a disappointment, he's optimistic that the market is on the rebound.

"I was hoping it would have been better, but it was definitely a bump in the road," he said. "You could see it and you could feel it."

Open house traffic is up, buyers are making offers on houses that are priced right and there have even been reports of multiple offers on houses that "exude pride of ownership," he said.

He cited several recent examples of sellers who sold quickly or received multiple offers on their houses, including a $599,000 house in Eagan that got six offers within three days of being listed and a $1.1 million house in St. Paul that sold, within six days of being listed, for full price.

"Good homes, fairly priced and well taken care of, are selling," Peltier said. "But we have a lot of stale inventory that's had no price reductions."

Mr. Peltier was also asked his take on the impact the recent uptick in mortgage rates might have on the market:

Peltier said that rising rates could actually be a nudge for prospective buyers to act soon, particularly if the bond market continues to put upward pressure on mortgage rates, which haven't crossed the 7 percent threshold in several years. If that happens, though, the market will notice.

"A 7 [percent rate] will be a little scarier," he said, "But as long as there's a 6 in front of [the fraction] it's going to be okay."

I know one thing, Ron Peltier is one of the most respected minds in the Real Estate Biz and I certainly would not bet against anything he has to say. His vision and willingness to change with the times are one reason Edina Realty continues to lead the marketplace despite intense competition from other major brokerages, discount brokers, the Internet and a challenging market.

I rarely ever sing the praises of Edina Realty on this site but make no mistake, they are the best in the business and I am happy and privileged to plant my flag with them!

Forecast Calls for Rain...but Subprime is on the Mend

Here's what NAR has to say about this years market:

Soft, But Shaping Up

Although the market is relatively soft now, home sales activity is expected to show a gradual upturn by the end of the year, according to NAR. Existing-home sales are projected to total 6.18 million in 2007 and 6.41 million next year, in contrast with 6.48 million in 2006. The national median existing-home price should ease by 1.3 percent to $219,100 in 2007 before rising 1.7 percent next year. Lawrence Yun, NAR’s senior economist, reminded buyers that housing is a long-term investment. “Those who are looking for a get-rich-quick scheme are likely to be disappointed,” he said. “Over time, investing in a house will help to build a nice nest egg, especially for buyers using a traditional mortgage instrument that reduces debt,” Yun added.

Pending Sales Are Down, But Subprime Woes are Subsiding

NAR's Pending Home Sales Index dropped to 101.4 in April, down 10.2 percent from a year ago and 3.2 percent below the March index. The index was down in all regions but the South, where it crept up a slight 0.7 percent from March to April. Lawrence Yun, NAR’s senior economist, said the impact of subprime lenders shutting their doors appears to be diminishing and mortgage applications have risen in the last month. “This tells us that some borrowers who originally planned to finance with subprime mortgages are finding suitable loans in the conventional market, which will help to stabilize home sales,” he said.

-----------------------------------------------------------------------------------------------

It will be interesting to see what shakes down in our market. The past couple of years the "Fall Market" hasn't really had a lot of punch. If it is busier than normal that could mean we are in for quite a rebound in the Spring of '08.

We're Gonna Make it After All!

I discovered this gem when I was busy working (okay...surfing) this evening.

The Original Theme Song to The Mary Tyler Moore Show

I have such fond memories of laying on the carpeted floor of my Grandmother's living room as we all gathered to watch this show (and Newhart which followed) with such reverence and with such an overwhelming expectation that you would laugh...and you did!

It's funny how we are here in Minnesota. We like to think that we're just fine being up here in our little chilly piece of land (excepting Summer!)...we don't need any attention. We're unassuming. Happy to live OUTSIDE of the lime-light. We don't need to be constantly in the lime light like NYC or LA or Paris (Hilton).

And yet...I have the feeling that we all swelled with pride, and not just a little bit, that this sitcom decided to put us on the map. Sure we looked silly, just like we did in "Purple Rain" and "Fargo" and...well frankly "Airport" as well. But you know what they say: the camera doesn't lie - it just adds 20 lbs..

How does this relate to the current real estate market? Rising foreclosures? Increasing interest rates? A market in slow gear?

I have no idea. But I do know that if you click that link it will make you smile, and that has to count for something in this world.

Como Zoo ROCKS!

Lily shocked by...FISH!!!!!!!!!!!!!!


My lovely wife and daughter and I went to Como Zoo last Sunday to meet some friends. It's been awhile since I have been over there. Wow! That place seems to keep getting better and better and all for the low, low, price of free! (Or a nominal donation.) I remember when the chimps used to bang their metal cups on the bars and scream "Attica! Attica!" My how times have changed!

Had a fantastic time and I urge you to check it out if you haven't been there in awhile. That place is an absolute zoo...

Weekly Market Activity Report

Here's the latest from MAAR:

The Twin Cities housing market remains in a period of post-boom stasis, with buyer activity slowed compared to previous years. Newly signed purchase agreements (pending sales) for the week ending June 2 were 17.0 percent behind this time in 2006. New listings were 7.2 percent behind for the same time period.

Economists generally describe market corrections like the one we're experiencing as following three basic recovery patterns: a "V-shaped recovery" where a market experiences a sharp, fast decline but comes out strong once it hits bottom; a "U-shaped recovery” where prices decline gradually and recover slowly; and an "L-shaped recovery," a hard, fast fall with paltry price bounce-back following the market trough.

The Twin Cities market correction sits firmly in the "U-shaped" recovery category. Buyer activity declines have been significant but should be near a leveling point, home prices remain relatively flat, and our eventual recovery will be slow to start and gradual in effect. As the pause in buyer activity persists, it is becoming clear that our time in the bottom bowl of the "U" will carry on into the near future.

This week's edition of the MAAR Weekly Market Activity report features several updated figures. The Percent of Original List Price Received at Sale held steady from last month, posting a figure of 95.9 percent for sales closed in May. The Housing Affordability Index declined significantly to 134 due to increases in median home prices and area mortgage rates. Finally, the Housing Supply Outlook posted a figure of 9.2 months for June, which means it will take the current supply of homes for sale roughly 9.2 months to sell through completely

NAR Predicts Lower Prices & Slower Sales

More good news for Buyers!

Today's the latest market predictions from NAR (National Association of Realtors) came out. NAR has a new senior economist, Lawrence Yun, who replaced the recently departed (and always controversial) David Lareah and it comes as no surprise that his take is not quite as "rosy" as his predecessors.

Here's the high points:

• Sales of existing homes to drop 4.6 percent this year to 6.2 million.
• Sales of new homes are forecast to drop 18.2 percent to 860,000 compared with an earlier estimate of a 14.2 percent decline.
• The median price of existing homes, which make up about 85 percent of the market, will fall in 2007 for the first time since the 1960s, when the group began keeping records.
• The median price for existing homes is expected to drop 1.3 percent to $219,000 this year, lower than the group's April forecast of a 0.7 decline.
• The predicted decline comes after a 1 percent gain in home prices last year and an increase of more than 12 percent in 2005.
• Next year, though, the NAR expected the market to rebound, and existing home prices are forecast to rise 1.7 percent.
  

Lawrence Yun added that sales have been stronger in lower-price markets, dragging down median prices, an effect he described as a "temporary distortion."

Keep in mind these National trends and predictions are only slightly indicative of the local real estate scene. As we have seen, things have been going at a slower pace here locally but we have yet to see any significant drops in value.

Stay tuned...

Weekly Market Activity Report

Here's the latest from MAAR:

Buyers and sellers took their annual Memorial Day pause for the week ending May 26. Seller activity dropped precipitously to 2,397 new listings, while pending sales declined less dramatically to 909 newly signed purchase agreements. Compared to one year ago, new listings were down 4.2 percent while pending sales were 22.8 percent behind.

This week's edition of the MAAR Weekly Market Activity Report includes updated June 2007 figures for Supply-Demand Ratio (SDR) and Mortgage Rates. The SDR increased to 7.79, which means that there will be roughly 7.79 homes on the market for every buyer in the month of June. This is an increase of 41 percent from the same time in 2006. Interest rates grew to 6.3 percent after several months of holding steady at 6.1 percent. Rates remain near historical lows but may show slight increases later in the year.

Hanging Tough in a Slow Market

The stats I publish here would seem to back up what most people already know: the market is in slow gear and it is a tough time for a lot of Sellers.

But not every Seller. In fact, one of my listings sold last month in less than two weeks and when it did - we had MULTIPLE OFFERS. Yep. Remember those? People in the market a few short years ago certainly do.

So what made that listing different? I think there are 4 essential reasons we sold it so quick:

1. Committed Seller

Actually, these clients had listed the previous year (with a different Agent) and their place failed to sell. Rather than get discouraged, this time around they looked at the feedback they had received (mainly that the kitchen needed updating) and did precisely what was needed - they updated the kitchen.

2. Marketing

We advertised our first weekend open houses in the City Pages and on Craig's List as well as on my Web Site and got a great turn out. Several people saw the City Pages Ad but most people had seen it on Craig's List- fast becoming an invaluable resource in the online community with respect to reaching prospective buyers. I also sent out post cards to the neighborhood, produced a snazzy marketing brochure that included pertinent info about the neighborhood (light rail and neighborhood association info) and installed a For Sale sign with a brochure box. What made the difference? All of it. In this market you have to try every legitimate avenue to find the right buyer for a property. You can't afford to do anything less.

3. The Home was A+ Show Ready

Lucky for me, my client's have great taste, so their decor was really spot on throughout. They took great pains to stage and de-clutter the home and made doubly sure that the house was CLEAN as a whistle. Clean Houses SELL. There is no doubt about it - it works. Every time.

4. The Price was RIGHT

We looked very carefully at the CURRENT market...not the market of last year...or 3 years ago...and priced the house accordingly. It's a pretty simple process really. You look at what the comparable homes in the same area are listed for and then you look at what they have recently sold for. This is most critical. This is a virtual road map for what you can expect the sale of your home to be like both in terms of how long it will take to sell (market time) and what price you can expect to get.

This is a Formula that can and will work for anyone looking to sell their home - despite the current market conditions - be they favorable or slow. But it is important to really maximize the full potential of each area. Skimping on one will likely lead to longer market time and perhaps even a significant price reduction before you get an offer.

For more tips on Selling be sure and check out my WEB SITE or feel free to CONTACT ME with any questions you might have.

No need to despair...the market still works!