There Goes the Neighborhood: KILLER BEES!

When I was a kid my Grandma took me to see this movie - "The Swarm" and it scared the tar out of me. I remember she told me not to worry about it, the killer bees would take years and years to get to us. Well they have made it to Texas, and California, and now New Orleans...

At least winter will be here soon!

Killer bees’ descend on New Orleans

MERAUX, La. - Africanized honeybees, a fierce hybrid strain sometimes referred to as “killer bees,” appear to have established themselves in the New Orleans area, the state agriculture commissioner said.

A swarm of the bees was captured about five miles from where demolition workers found a colony of Africanized bees in January, commissioner Bob Odom said Tuesday.

The most recent find was close enough to the earlier find that the bees might have come from the same colony. But they might also have flown ashore from a passing ship or barge, Odom said in a news release.

“Although the exact source can’t be identified, we have to assume Africanized honeybees are now established in the area and people should be careful when working outside,” Odom said.

The Department of Agriculture and Forestry keeps traps along a north-south line through the state and at all deepwater ports to monitor the bees, which are smaller and more aggressive than the European honeybees raised for honey.

Smaller, but fiercer
“Because Africanized bees have been labeled ‘killer bees’ for years, there’s an idea around that they are bigger than European honeybees,” Odom said. “The truth is they’re actually smaller but a lot fiercer.”

They have the same venom as honeybees, but attack in groups. Experts recommend that anyone confronted with Africanized bees find cover quickly.

Africanized bees are the result of an experiment to increase honey production in Brazil. A swarm escaped a lab in 1957 and headed north. When they mated with native strains, the offspring were as aggressive as the African parents.

They reached Texas in 1990 and have spread west to California and east to Florida. They were first found in Louisiana in Caddo Parish, in June 2005, and identified the following month. They have moved steadily east since then, and were most recently found near Pecan Island and Turkey Creek.

Refi Rescue for Foreclosure?

This CNN/Money Article outlines some potential relief for those facing foreclosure.

Here's the highlights:

It used to be you couldn't refinance into an FHA loan if you'd been delinquent in your payments for any reason. But with the FHA Secure Act, delinquent homeowners qualify for an FHA-insured refi if they have:

• A history of on-time payments for at least six months before their loans reset to higher rates
• Interest rates scheduled to reset between June 2005 and December 2009
• 3 percent equity in their home, or the cash equivalent
• A sustained history of employment
• Sufficient income to make their FHA-insured mortgage payment and all other obligations

The FHA will still insist that lenders verify borrowers' income and ensure that their total debt payments don't exceed 43 percent of their income or that their mortgage payment won't exceed 31 percent of income. If those ratios are exceeded, the lender must explain how the homeowner can compensate for that.

More Good News for Metro Real Estate! (cough)

Not surprising but here's the latest Strib Headline:

Twin Cities home sales plummet in August

Is it just me or does the Strib seem rather breathlessly exuberant in their reporting of the market downturn?

Could it be some residual bitterness they are feeling having lost millions in Ad revenue due to the fact that many local companies no long shell out big bucks to advertise in the paper.

I subscribe to the Strib and I am not trying to bash them - but research clearly showed that placing ads their was not very effective.

Of course, the same could be said about a lot of marketing avenues these days...

One thing remains true:

"With buyers concerned by the news they hear on housing, it's understandable that some are waiting on the sidelines," said Deb Green, association president. "While they wait they're missing buying opportunities."

Don't miss the boat because this situation won't last forever. In fact it will be interesting to see the impact of the expected rate cut next Tuesday...

Weekly Twin Cities Real Estate Market Activity Report

Here's the latest from MAAR:

The Twin Cities housing market is seeing huge week-to-week declines in seller activity as we enter the fall and the school year begins again. Just four weeks ago, home sellers placed 2,324 new houses on the market for sale; for the week ending September 1, only 1,659 new units were listed. Compared to one year ago, this most recent figure is a drop of 16.7 percent. Not surprisingly, buyer activity remains stunted as uncertainties in the mortgage market and a fragile consumer psychology persist. The most recent tracked week shows a pending sales decline of 22.5 percent from this time last year.

Market Share of Local Real Estate Companies

I don't usually spend much time here shilling for Edina Realty, the company that holds my license.
But I did think this was quite interesting. People often ask me who the largest company is and I usually say that Edina and Coldwell are pretty neck and neck, depending on what numbers you choose to look at. However, it seems recently that Edina comes out on top more consistently.

In uncertain times I like to think there is safety in numbers!

Banks Prepared to Woo Borrowers with Good Credit

Banks have plenty of money available for borrowers with great credit and a desire for a conventional fixed rate mortgage, says James Chessen, chief economist for the American Bankers Association.

To attract these customers, lenders are offering fee waivers, competitive interest rates, and a willingness to negotiate.

Banks like conventional borrowers because they tend to be the kind of customers that will take advantage of other products from the lender, including savings accounts, credit cards and checking accounts. "We find that someone who has a mortgage with us will have about five products in addition to the mortgage," says Terry Francisco, a spokesman for Bank of America Corp.

To attract this kind of business, Bank of America is offering "No Fee Mortgage Plus," saving consumers about $3,000 in closing costs, which the bank covers.

Deals like this one make it important for borrowers with good credit to shop around.

Weekly Twin Cities Real Estate Market Activity Report

Here's the latest from MAAR:

Sellers and builders continue to curb activity in the Twin Cities housing market, with the week ending August 25 posting only 1,874 new listings—down 9.5 percent from the same week in 2006 and even further from their early summer peak. Despite the decline in new seller activity, the number of homes on the market remains at a record high for this time of year with 34,225 residential units for sale. This persistently high inventory is due to slowed absorption caused by sluggish home sales; newly signed purchase agreements were 18.7 percent behind this time last year.

This week's edition of the MAAR Weekly Market Activity report features an updated September 2007 figure for our Supply-Demand Ratio (SDR). The SDR grew to 10.39, which means there are 10.39 homes for sale per buyer. This is an increase of 24.8 percent from last September, and this figure should continue to grow through December before declining in 2008 with the end of the winter season slowdown.

For a thorough look at how our market is performing year-to-date and relative to the last several years, take a look at our new Monthly Indicators tool. We've revamped the design for easier use and added several years of important historical trends.

Darkest Before the Dawn?

Another day, another bleak article on the outlook of the Real Estate Market.

Take a peek:

Darkest before the Dawn? Experts Call for another Year of Down Market

Lake Harriet Band Shell

We had a nice time seeing a free concert at the Lake Harriet Band Shell this past weekend. It was a perfect venue for a perfect day. The ensemble we saw was pretty good as well - the Sprucetop Review. They played a few of our favorite Bob Dylan ("All Along the Watchtower")and John Prine ("Long Monday") and Lily had a blast crawling everywhere on the grass.

I am always amazed and grateful for all the free events available to us in the city. We really are fortunate!

Hope you had a nice l-o-n-g weekend!

Farmer Labor Train

From the high Canadian Rockies to the land of Mexico,
City and the country, wherever you may go,
Through the wild and windy weather, the sun and sleet and rain,
Comes a-whistlin' through the country this Farmer-Labor train.

Listen to the jingle and the rumble and the roar,
She's rollin' through New England to the West Pacific shore.
It's a long time we've been waitin', now she's been whistlin' 'round the bend,
Roll on into Congress on that Farmer-Labor train.

There's lumberjacks and teamsters and sailors from the sea,
There's farmin' boys from Texas and the hills of Tennessee,
There's miners from Kentucky, there's fishermen from Maine; Every worker in the country rides that Farmer-Labor train.

There's warehouse boys and truckers and guys that skin the cats,
Men that run the steel mills, the furnace and the blast,
Through the smoky factory cities, o'er the hot and dusty plains,
And the cushions they are crowded, on this Farmer-Labor train.

Listen to the jingle and the rumble and the roar,
She's rollin' through New England to the West Pacific shore.
It's a long time we've been waitin', now she's been whistlin' 'round the bend,
Ride on on into Congress on that Farmer-Labor train.

There's folks of every color and they're ridin' side by side
Through the swamps of Louisiana and across the Great Divide,
From the wheat fields and the orchards and the lowing cattle range,
And they're rolling onto victory on this Farmer-Labor train.

This train pulled into Washington a bright and happy day,
When she steamed into the station you could hear the people say:
"There's that Farmer-Labor Special, she's full of union men
Headin' onto White House on the Farmer-Labor train."

-Woody Guthrie

Time for Realtors to Face REALITY?

ARE WE THERE, YET?

The talk I keep hearing is that while things have spun 180 degrees from a Seller's Market to a Buyer's Market we still don't quite know fr sure if we have reached the bottom...yet.

Currently (and that's all that really matters) sales are on a pace that is 25% lower than last year at this time. And by all accounts last year was the slowest year anyone every remembers seeing.

So if we're not at the bottom, I sure hope we can see it from here!

This has been an extremely challenging time for all of us in the Real Estate Industry. Everyone has been feeling the pain - not just Agents - but also Loan Officers, Title Closers, Home Inspectors, Decorators, Moving Companies, Builders, the list goes on and on.

There have and will continue to be casualties. People are leaving the profession seeking something more stable, and I can't say I blame them. These are scary times.

But those of us who have been in it for the long haul and are determined to stick it out do so because we believe that this market, like all markets, is cyclical. There will be brighter days ahead.

I know a lot of people out there -especially the "Freakonomics" fans - are taking some delight in the current situation. To them, all of us over-payed agents are now getting our "just desserts." The "free ride" we have been enjoying for far to long is over. Time for "Realtors to Face Reality?"

And I can understand these sentiments to a point, only because I remember what the profession looked to me from the outside. But once you live it, and your livelihood depends on it, you really see it an entirely different light. We work solely on commission and if a deal doesn't close -for any reason- we don't get paid. We are all splitting the commissions that are paid with the participating agents and their brokerages and once we get our piece of the pie there are marketing bills to pay, taxes, health insurance, social security, transaction fees, desk fees, and any other business related expenses.

There's not an agent I know who doesn't feel the stress and strain of sweating out deals that we NEED to close from time to time, no matter how big a profile they have, the fancy car they drive (likely lease), and how "successful" they appear- you're always only as good as your last CLOSED deal.

It's definitely not for everyone.

Now I know this might sound like POOR ME and maybe it is a little bit, but I genuinely believe most people have very little idea how our job works. We put our clients first, working evenings, weekends, holidays, late into the night in an effort to provide them with the best possible service.

And sometimes despite our best efforts the deal still doesn't work out, financing falls through, a buyer get cold feet, the market grinds to a halt, a house doesn't pass the inspection...

That's when we pick ourselves out and charge back into the game again, head held high, smile on our faces, stepping back into the void and hoping, visualizing, planning, striving, working for the best.

So the next time you meet some agent at an Open House and they seem a little too friendly or a little too desperate to get you attention or your business, at least now you might know why. And maybe knowing what you know now you'll see just how determined we as Agents are to do our absolute best for you.

Well, I think that is true for most of us anyway.

I'd love to read your comments on this. Please leave them below. Thanks!

Say Goodbye to Pre-Payment Penalties?

This news from NAR (National Association of Realtor's caught my eye today:

To address subprime mortgage woes, House Financial Services Committee Chairman Barney Frank (D-Mass.) is expected to put the finishing touches on legislation upping underwriting standards for all mortgages, prime and subprime. In a main focus, the bill would subject mortgage originators (lenders and brokers) to rules similar to those that apply to depository institutions. The new rules would subject originators to a licensing requirement and prohibit loans to consumers who have no reasonable ability to repay. NAR has been working with Rep. Frank's staff to incorporate its Responsible Lending Principles into the bill, among them a prohibition on prepayment penalties, which critics say can trap borrowers in loans they can't afford.

Separately, NAR will continue to tout FHA reform as a much-needed antidote to the abusive subprime loans that have rocked mortgage markets. The reforms have bipartisan support in the House and the Senate but progress is slowed as lawmakers look at whether a national housing trust fund should be passed as part of the bill. Along with FHA reform, NAR is calling for the federal government to let secondary mortgage market giants Fannie Mae and Freddie Mac temporarily hold more loans in their portfolios than they're currently permitted. Such a move would help calm markets by signalling the companies' commitment to ensuring continued liquidity for lenders' mortgage businesses.

While I am more than a little wary that Government regulation might cripple people chances of getting loans there is no doubt that pre-payment penalties are a bad thing. It puts homeowners in a lose-lose situation way too often.

Here's more of the release:

President Bush Announces Support for FHA Reform

NAR applauded President George W. Bush's statement of support for programs that would give home owners greater flexibility to refinance their loans through the Federal Housing Administration. NAR has been advocating regulatory changes to the FHA program to help families keep their homes in light of the decline of the subprime market and impending interest-rate adjustments. In a press conference last week, President Bush signaled his support for such an effort in “making sure that financial institutions like the FHA have got flexibility to help these folks refinance their homes.” At present, FHA programs do not allow home owners to refinance if their mortgage is in jeopardy.

NAR Urges New Regulations to Combat Deceptive Lending

The financial markets are struggling with the results of abusive lending practices in the subprime market, including the collapse of several investment funds and the failure of more than 100 subprime lenders, noted NAR in a letter to the Federal Reserve. NAR urged the Board to adopt regulations that combat unfair, deceptive, and abusive mortgage lending acts and practices. Among its recommendations: NAR asked the Fed to eliminate prepayment penalties for all categories of mortgages or to bar prepayment penalties for subprime mortgages and other mortgages where abuses are found. NAR also urged the Board to require that subprime lenders mandate an escrow reserve for taxes and insurance.

It will be very interesting to see if the Fed acts on these two issues. These would have a far greater impact in terms of helping borrowers than other protectionist measures in my opinion.

Weekly Twin Cities Real Estate Market Activity Report

Here's the latest from MAAR:

In step with national real estate market news, the corrective recalibration period is still underway in the Twin Cities. For the week ending August 18, newly signed purchase agreements (pending sales) were behind the same week in 2006 by 26.8 percent. New listings on the market are also on the decline but not as dramatically as buyer activity. Compared to this time last year, new listings decreased 2.3 percent.

As summer activity slows into the fall school season, it's time to take stock of our industry. While the big decline in buyer activity and slight decline in home prices seen in the last 18 months have caused short-term discomfort, it is essential to recognize that there is positive value in the correction taking place. Lending standards are reforming as financial markets relearn to properly assess risk, home values are softening after several years of unsustainable increases, and we are being reminded that every market requires sound fundamentals to sustain healthy growth.

In sum, the transformative changes our market is experiencing are paving the way for a better future. Through it all, the public's passion for real estate has not waned, and the undeniable financial, emotional and social benefits of homeownership are firmly rooted.

So You Want to Buy a Foreclosure....

BEWARE THE "BARGAIN" THAT IS FORECLOSURES

I hear from a lot of Buyers who are interested in Foreclosure properties. And why wouldn't they be? In a market that is already on the ropes, the Foreclosures seem like they would be the lowest hanging fruit. Juicy delicious and irresistible?

Unfortunately the reality is not always so appetizing.

For one, many times Foreclosure properties are in very rough shape, they haven't been occupied for months and sometimes they have had the heat and electricity turned off.

Who pays to get the lights turned back on? The Buyers.

Because appliances are considered personal property, Foreclosured properties often have NONE.

Who buys the new Stove, Fridge, Washer, Dryer, Microwave? The Buyer.

In Minneapolis there is a time of sale inspection (The Truth in Housing Inspection) and often time in Foreclosed properties there are a number of "R & R's" - Required Repairs that must be taken care of an reinspected.

Who does this - and pays for it? The Buyer.

Because most Lenders are awash in a sea of Foreclosures they are often unable to respond to the offers than Buyer's submit. Even if they are full price.

Also, most lenders like to play by their own rules. They like to make sure all offers include NON-REFUNDABLE Earnest Money (often 1% of the sales price and typically more). So if the Buyer loses his job and can't get financing or decides after the Inspection that the property is in need of too many costly repairs - rather than getting their Earnest Money back like in a normal sale - they lose it.

It's important that you work closely with your agent to identify properties that might be more rouble than they are worth. And Buyer's need to realize that just because a property is in foreclosure or a short sale is possible - that usually doesn't mean the Bank will unload the property for a low ball offer.

While it's true that you can get some good deals by seeking out Foreclosures you need to be realistic and make sure you can be patient while waiting for a response. You'll want to proceed with caution. And remember - foreclosures aren't the only good deal in town. There are a lot of other properties available at just as good a price for a lot less hassle.

The Subprime Shakeout Continues...

Big Players Appear on a Bad List

The Wall Street Journal Online recently published a very comprehensive list of Sub-prime Lenders that have been shut down and/or had to stop many of their lending programs.

The big names in Minnesota are Countywide, SouthStar, Wells Fargo, First Horizon, Summit, Option One, Millennium, H&R Block mortgage, Ameriquest, Maribella, New Century, Fremont, and First Franklin.

Click HERE to see the complete list.

If you currently have a sub-prime deal going with any of these...BE CAREFUL!

Rates Drop: Buyers to Bust a Move?

Mitch Yost needs to get back in the game. (Pictured are Mitch & Sissy Yost.)


Mortgage Rates Drop to Lowest Point Since May

Freddie Mac reported today that 30-year, fixed-rate mortgages averaged 6.52 percent. That was down from 6.62 percent last week and was the lowest rate since the week ending May 31, when rates stood at 6.42 percent.

This is great news for anyone trying to get a loan in the current belt-tightening environment. Hopefully this will get some of the Buyers off of the sidelines and into the game and start reducing some of the back log of inventory.

Could this be the makings of a legit Spring Market this year?

Stay tuned...

Most People Move Every 6 Years

How Often Do You Move?

According to a recent NAR Survey most people move every six years. In my experience this is pretty accurate but it will be interesting to see how this changes as the Gen X, Y, and Zer's start getting more and more active in the housing market. In an era of instant gratification whether on the Web or TiVo I think this time will become even shorter. People like to be a part of the "next big thing" and this seems to be a different set of values than the pre- and post WWII generations who valued "settling down."

Of course, the next generations make look to rent rather than buy for the same reasons. One thing is clear, the days of looking at your home like you would a stock or other similar investment are on the way out.

NAR President Pat Combs said recently:

“While local conditions vary greatly, a typical owner who bought six years ago is seeing a 45 percent increase in the value of their home. Even so, it isn’t valid to directly compare homeownership with stocks. Although a home is normally a long-term appreciating asset, it is primarily shelter – most owners sell when their needs change, not when the market turns.”

I think those of us who work as Realtors really need to pay heed to these words. We are here not to help people "make a killing in the market" as much as we are here to help people with their changing needs. Service is our primary commodity.

Don't get me wrong, I love to see people make a pile of money when they sell. Likewise, I love to negotiate the best possible deal for my Buyers. Those are both primary aspects of my job. But I am not a stock broker. I am in the service industry.

I am here to help...when you need me!

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!"