Real Estate. Economics. Business
The government is always making changes and you have to stay alert to take advantage of the changes.
Recently the government announced that they will be reducing the FHA loan limit for the Twin Cities from a current price of $365,000 to $313,000 for a reduction of 14.25% or $52,000.
Given that FHA’s loan soared in the past year and now represent 60-70% of the loans for homes in this price range, this is going to be another hit to the market.
The loan limit change takes effect January 1, 2009.
I found this picture that I had taken last year of St. Anne’s in Uptown Hamel. It’s a beautiful church that is getting ready to celebrate its 75th anniversary next year!
For more information about St. Anne’s click here for the web site.
Having lived in California for 9 years over the past 20 years of my life, I am always interested in what goes on with California real estate. Before it was more of a personal curiosity, but now it’s about watching business trends.
As I have mentioned before, it’s important that we in Minnesota keep our eyes on what happens in California. While all real estate is local, media is national and when this turns around in California, the news about real estate will turn around. Watch.
Sales continue to rise rapidly in Southern California compared to a year ago. Remember, in August/September 2007 was the initial body blow from the subprime meltdown. Real estate came to a screeching halt and has been trying to recover since then.  Sales activity has been the highest all year in SoCal this past October. Go figure.
The real driver of course is foreclosures, bank owned property, and REOs. The banks are now aggressively listing the property below market value to quickly get rid of the properties. According to DataQuick, about 51% of all closed transactions were bank property.
I’ll discuss the new bank strategy in a new post later this week.
The National Association of Home Builders released it’s monthly builder confidence level reading.  It came in at 9. Yes, 9. That’s the lowest reading by far since the association began tracking this data in 1985.
Once all the builders start throwing in the towel, the bottom will be in.  While their confidence level shows capitulation, their actions do not. There is still too much new construction throughout the country including here in the Twin Cities.
Check out Calculated Risk for an excellent visual on the builders confidence levels.
The Minneapolis Area Association of Realtors has released its latest report this week and incredibly, the pending sales number continues to show better year over year performance as it has done for nearly the past 4 months. This is despite the really difficult economic news.
(Click to enlarge the graph)
Now it does appear that much of the activity is based upon buyers swooping in to purchase “lender-mediated” or distress sale properties. In fact, Jeff Allen’s note says that some 54.4% of the pendings last week were on “lender-mediated”/distress sales and that 43.2% of those were for properties priced under $150,000. (And we wonder why our median sales price is down 18% YTD?)
The other point worth noting is that of the new listings coming on the market 41.1% are lender-mediated (i.e. foreclosures, short sales, corporate owned).
Here’s the report and commentary:
As the fall temperature persists at near freezing levels, home sales activity remains stubbornly higher than it was a year ago, despite weakened consumer confidence and a sluggish economy. Pending sales for the week ending November 8 were 16.9 percent higher than the same week in 2007, and over the last three months have been a robust 26.6 percent higher. Lender-mediated foreclosures and short sales in the lower price ranges are driving the swing upwards; 54.4 percent of the most recent reporting week’s pending sales were lender-mediated and 43.2 percent were priced under $150,000.
Supply remains down from last year but appears to have reached a plateau of sorts. We have had roughly 9 percent fewer total homes for sale than at the same point last year for the last 5 consecutive weeks. New supply coming onto the market continues to slow its velocity and will likely remain commensurate in pace with fourth-quarter 2007. A total of 41.1 percent of new listings over the past week were lender-mediated.
I’m receiving several inquiries each week these days from people interested and curious about possibly purchasing a distress sale property in Medina.  Much of the housing in Medina is in the Wayzata School District.  Some of the neighborhoods you might be interested in include:
I’ve set up a quick subscription service for those who are interested in receiving e-mail updates through my exclusive VIP buyer service. Just let me know what you’re looking for at:
While the city of Plymouth, MN overall is holding up reasonably well in this real estate downturn, the upper bracket is showing signs of continued deterioration.  Average prices appear to be holding up as they are only down 1.5% from a year ago, however, transaction volume is off significantly and supply remains very high.
# of homes sold in 2007:Â 30
# of homes sold in 2008:Â 21 (down 30% from last year)
Average sale price 2007:Â $920,753
Average sale price 2008:Â $906,922 (down 1.5%)
Days on Market 2007: 177
Days on Market 2008:Â 209
# of homes for sale 2008:Â 42
Source: RMLS 13 County metro – search and analysis conducted by John Murphy, Re/Max Results.
We are averaging 2 home sales per month in Plymouth for properties over $700,000. With 42 properties for sale, that means there is a 2 year supply of homes for sale provided nothing new comes on the market. If anything new comes on the market, the supply will only increase. Many of these homes are in the highly rated Wayzata School District.
The Star Tribune picked up my story about clients of mine who purchased this $1.7 million home for $725,000.
While the luxury distress market represents only about 5% of the overall inventory over $1,000,000, there are still some unbelievable opportunities for those with the financial wherewithall to make that kind of purchase.
For properties in the $500,000 to $1,000,000 range, you’ll find that between 8-10% of the inventory is distressed. And to be clear as to what I mean with distressed…it’s generally that the financials, i.e. the mortgage, is in distress. Usually these properties are in pretty good condition.
If you’d like to subscribe to my property search service, please check out www.TCDistressLuxuryHomes.com.
Plymouth home prices seem to be holding their own lately with average home prices down only 2.5% year to date. Below is a snapshot of the October sales statistics that were just published.
The Minneapolis Area Association of Realtors just updated their fabulous report called The 100.  Below is a snapshot for Medina which has seen days on market explode to 228 days until contract and average sales prices down 12.7%. Sellers are receiving 91.3% of their original list price. In other words, homes are still priced too high.
