Minnesota's home prices aren't getting any lower
Home prices have been on the rise for nearly two and a half years in our market. And while monthly gains are not in the double digits anymore, we aren’t seeing prices dip. Here’s why:
Foreclosures and short sales are exiting the market
At the height of the housing crisis, more than half the homes for sale in the Twin Cities were “distressed” – meaning that the owners were in foreclosure or listing as a short sale. Eager buyers snapped up these bargain-priced homes, and in January 2012 our local market saw a median home sale price of just $150,000. (Northstar MLS)
Today, less than 19 percent of local homes for sale are distressed properties. The result? A surge in home prices. For today’s local homebuyer, the median price at closing is $215,000, an increase of nearly 70 percent from early 2012. (Northstar MLS)
Seller confidence is on the rise
Owners are paying close attention to their rising home values, and gaining confidence as a result. A recent report from BMO Harris Bank shows that 67 percent of Minnesota homeowners believe their home value will rise in the next 12 months. The short analysis is that Minnesota homeowners know they hold the advantage. They’re not only expecting their full listing price once they decide to sell, they are hoping they have a multitude of offers to choose from.
The last word
It’s easy to kick yourself for not buying in 2011 or 2012, when the prices were low and the options plentiful. But there is good news for today’s buyers. Mortgage rates continue to stay at historically low rates. If you have good credit, you can still save money in the long-term.
Ready to dip your toe into the buyer’s market? Don’t hesitate. Reach out today and we can work to get you pre-qualified for a mortgage.
Four reasons your home won’t sell
Planning on listing in today’s sellers’ market? With our current low inventory, it shouldn’t be hard to find a buyer in Minnesota and western Wisconsin. But it’s important that you prep your home in advance so it doesn’t lag on the market. (Homes that stay on the market for a long time are often deemed unappealing by buyers.) Here’s how to ensure that when you list, you’ll immediately draw the interest of buyers in your price range.
First, start with the exterior of your home. While it’s true that web appeal is the new curb appeal, online home buyers still look for an exterior shot to determine if a home is worth seeing in person. Repaint your house or fix any cracked siding, and landscape the lawn with plants and shrubs. Consider buying a new front door if yours is outdated – the cost of a front door replacement earns homeowners in the metro area 72% back upon resale. (Remodeling Magazine)
Next, move on to the interior and remove personal items. Smart homeowners “stage” their homes by removing personal items like picture frames, knick-knacks and clutter. By offering a neutral appeal, buyers can more easily picture themselves in the home.
Of course, it’s also imperative that you deep clean the home from top to bottom before listing. Rent a wet/dry vacuum to remove dirt and grime from hard-to-reach corners and small nooks. Wipe down surfaces you sometimes ignore, such as ceiling fans, window blinds and baseboards. Minimize odors from pets, compost and even workout gear to ensure buyers walk into a fresh-smelling home.
Third, you may want to consider a partial or full kitchen remodel. Many older houses have smaller, closed off kitchens – but modern homeowners want the kitchen to be the heart of the home. Consider remodeling for flow, by knocking down the walls that surround the kitchen. Another option is to update things like cabinets, countertops, floors and appliances. In our metro area, the average amount recouped on a kitchen remodel is 72-75%. (Remodeling Magazine)
If you’re dealing with outdated appliances or features, go green to enhance your carbon footprint and buying appeal. The National Association of Home Builders (NAHB) shows that high-efficiency HVAC systems, ENERGY STAR appliances, programmable thermostats and high-performance windows are the most popular green energy features. If you’re considering wood floors to replace carpet, look to bamboo flooring instead. Bamboo is not only highly renewable and affordable, it’s also trendy and distinct. Remember - by going green, you may qualify energy efficient tax credits or incentives. Search for your state here to see what is covered in your area.
One last word of advice on renovations: When deciding which projects to take on, keep the improvements practical. “It’s important renovations stay within, but not exceed, community norms,” said Appraisal Institute President Ken Wilson. “If they don’t match what’s standard in a community, owners could have difficulty recouping their investment when selling the property.”
Protect yourself by hiring a professional contractor, who will follow your area’s building codes and can help determine the most cost-effective updates for your home. Here is a guide on how to choose the right contractor from the Minnesota Attorney General’s office.
Last, some sellers are making the mistake of pricing their homes too high. While it’s a seller’s market, it’s important not to price so high that you turn buyers off. Work with your REALTOR® to determine the right price for your home. Everything from nearby parks and schools to roof conditions can affect your asking price. Reach out today for a free comparative market analysis, which gives you the estimated asking price for your home in today’s market.
Tips for searching for your first home
The time has come! Whether you’ve been renting or living with relatives or friends, you are now ready to dive into homeownership. Here are our top tips for first time homebuyers like you.
Don’t rush it
First, give yourself some time to make the right choice. While you may get lucky and find the right home immediately, you should be prepared to spend several months shoring up financials, hiring an agent, researching and touring homes, making offers and closing on a home.
Gain financial footing
Financial experts say that you shouldn’t spend more than 28 percent of your total income on housing, but it really varies for each person.
You can determine your general range by playing around with online mortgage calculators, but it’s best to work with a lender to get pre-qualified or even pre-approved on a mortgage. Why? Well, the difference between a $200,000 and $250,000 home can be stark, and it’s best not to get your hopes up before you know what you can afford. Reach out at any time to get started on this process.
Enjoy the hunt
Now we’re getting to the fun stuff – the search! Just 20 years ago, buyers had to search through thick listing books to find homes that matched their price and location. Luckily, your search can begin from your couch, the bus, or while in line at Caribou Coffee.
Edina Realty’s home search apps have every active, available listing in Minnesota and western Wisconsin, so you can perform the most accurate and up-to-date search. If you’re on the go – like on a boat, or on a walk around your neighborhood – open up the Home Scan feature, which uses your device’s camera to show you homes in real-time.
Finalize your choice
Unless you’re an extremely decisive person, you’ll find yourself falling in love with homes in different locations, with varying styles, prices and features. That’s actually a good thing in today’s seller’s market; to get to the closing table, it may be necessary to keep your mind open.
Together, we can determine your top requirements, and which are “nice to haves.” Then remember the qualities that are unlikely to change. For example, a neighborhood’s walkability is pretty set, but you can always tear up carpet to put in hardwood floors, or refinish a kitchen to get the farmer’s sink you love.
Once you have an established set of needs, it’s time to begin in-person showings.
Tour, tour, tour… and think resale
To be honest, home showings will feel surreal. As you tour the properties, think of yourself as an inspector. Pay attention to when upgrades were done, or if appliances have been replaced recently. You’ll be your own landlord, so it’s important that we take note of how much work your eventual home will need.
And while it may seem a long way off, we’ll talk about the potential resale value of the home. Is it in an up-and-coming neighborhood with great schools? Determine if the appliances and systems are energy-efficient. Today’s homebuyers want green homes, but tomorrow’s buyers will consider these features standard.
Think also about accessibility. Are there highway plans in place to aid long commutes, or public transportation lines in development? For example, some St. Paul neighborhoods near the new Green Line of the Light Rail expect to see the same development as Minneapolis’ Longfellow neighborhood is currently experiencing.
If you’ve been renting over the last few years, you’ve likely experienced heartache over losing “the one” Craigslist property that seemed right for you. As you know, another comes along. Today’s buying market is extremely tight and mortgages can be hard to come by, so it’s best to prepare for a few lost deals before you end up at the closing table.
Of course, the most important part of buying a home is getting started. Reach out today to start the process.
Why Minnesota is one of the most affordable states for home financing
We have plenty to brag about here in the Land of 10,000 Lakes, but we’re especially proud of our recent status as the second most affordable housing market in the nation. Read on to see why it’s a great time to be a homebuyer in Minnesota and western Wisconsin.
While mortgage rates are still low across the country, rates in Minnesota are particularly affordable. According to a second quarter study by GoBankingRates, our state has the ninth lowest mortgage rates in the country. At that time, Minnesota’s mortgage rates averaged just 3.62 percent.
Why is this significant? Remember, a small increase in rates can greatly impact the cost of a house over the life of a loan. For example, if you’re a homebuyer today with good credit, a $350,000 budget and 20 percent for a down payment, you could secure a monthly mortgage payment of around $1,2750 per month. But if rates increase even one percent, more than $150 would be added to your monthly payment. That’s more than $58,000 added in interest over the life of the loan. (The Wall Street Journal, Bankrate.com)
Rates aren’t the only good news for local buyers. The Twin Cities outpaced similar metro areas during the economic downturn and now boast the lowest jobless rate in the country. This is great news for potential buyers — our strong local economy makes it easier to establish the credit and savings necessary to be in good standing with lenders.
But don’t just listen to us – national studies are showing that Minnesota is a great place to buy a home. A recent study from CNN Money put Minneapolis as the 10th best city in the nation for millennials to buy a home. CNN cited great job opportunities and our revitalized downtown as the main draws for recent graduates.
Meanwhile, Interest.com found that our area had the second-highest rate of affordability in the country in 2013. During that year, average metro residents earned 24 percent more than what was required to buy a median-priced home in the area. (Comparatively, residents of the least affordable market, San Francisco, earned 48 percent less than what they needed to buy an average home.)
Rumors of increased rates have been flying for over a year now, and experts predict they will soon come true. If you’re considering purchasing a home in 2014, consider reaching out for a pre-approval, which will determine your budget parameters and likely interest rate should current rates hold.
Three things you should know about today’s new construction market
While the new construction market has lagged for the past few years, it’s now booming across Minnesota and western Wisconsin. If you’re considering purchasing new construction this fall or in the upcoming year, here’s what you should keep in mind.
1. What’s available?
As the market recovers, builders are beginning to develop “spec homes” in addition to model homes. In this case, spec is short for speculative – the builders know there is demand for the homes, so they begin development before the homes are sold.
“Spec homes are already in development, and may be customized slightly as the home is completed,” says Randy Bacchus, Director of Edina Realty’s New Homes Division. “They’re a great option for people who are transferring to the area, or those who have sold their home and need move quickly. Spec home buyers get a brand-new home without having to wait three to four months from groundbreaking to move-in day.”
Ready to begin looking? Search newly built homes in your area.
2. Why can’t supply keep up with demand?
Have you found it’s difficult to get a loan due to tight lending standards? Builders can relate. Today’s builders are walking a fine line as the market recovers – lenders want to be sure they are funding solid developments.
“After the market correction, many developers didn’t follow through on the land that they were planning to develop. So even though demand is high again, lenders are cautious,” says Bacchus. “Plus, the surging market is only one piece of the equation. To go from raw land to a final development takes between 18 – 36 months.”
Bacchus and other experts predict that many more lots will become available in 2015 and 2016, as the housing market continues to stabilize and new home demand remains steady.
3. The cost – and value – of a new construction home
In our market, the median price of homes for sale is $215,000, while newly built homes are priced around $364,000 (Northstar MLS). Simply put, the new construction market is seeing solid growth in upper bracket homes as the market correction continues. The best way to see what’s available in your price range is to work with an expert who knows the market inside and out. Reach out at any time to get started.
Plus, don’t overlook the value of a newly built home. When a buyer purchases a new home, it “comes standard” with energy efficiency and the ability to fully customize everything from kitchen appliances to the wall colors without lifting a finger. A new home also comes with a home warranty.
“When you purchase an existing home, you don’t know if the next storm will bring a roof leak, or if the furnace will go two years from now. The price of a new home represents the true value of the property, including its brand new appliances, efficient mechanical systems, and the peace of mind that a new home warranty offers,” says Bacchus.
Vintage 101: How to incorporate yesterday’s design trends in your home
If you’ve been to a wedding, flea market or Pinterest in the last year, you’ve likely noticed it. Chalkboards replacing dry erase boards, painted wooden furniture with stripped back finish and copper mugs for those oh-so-trendy Moscow mules.
Vintage wares are not only romantic, they’re also utilitarian – we’ve seen mason jars used as everything from vases to indoor gardens to weekly meal planning. Here, we outline some easy ways to search for, and incorporate, vintage design trends into your home.
If you’re looking for ready-to-use items or high-end furniture, head to Stillwater. The charming river town is the perfect day trip, and Main Street has a plethora of antiques shops to choose from. Midtown Antique Mall, a 30,000 square foot antiques giant, is a great place to start. The rest of the stores on Main Street offer a smaller scale approach, specializing in everything from books and kitchen wares to artwork and lighting fixtures.
2. Rummage and restoration
That old saying about one man’s trash took on new meaning when Do It Yourself (known now as DIY) hit the mainstream a few years ago. Provided a piece of furniture is standing upright, DIY-ers can bring new life to it using just sand paper, paint and some fancy drawer pulls. Try it yourself – all you have to lose is a day or two’s work and around $20.
Find pieces to restore at garage sales (which will soon wrap up for the year), estate sales, Craigslist or stores like Savers and Goodwill. Plus, here’s a great list of salvage shops from Minneapolis-St. Paul Magazine.
Next, we’ll show two of our favorite DIY “hacks.”
Beginner level DIY project: Refinish an old window to create a weekly planner chalkboard for your kitchen or office. Find the quick and easy tutorial here.
Moderate level DIY project: Take an old dresser with good shape and freshen it up with gorgeous paint, some aging wax and fabulous new hardware. Plan for a full day for this refinishing job – the tutorial is here.
3. Buy it new, or refinished (shhhhh!)
The vintage craze is so mainstream that many retailers are selling new furniture and decorative items that have an aged look. Nadeau sells inexpensive painted furniture in its small, packed showroom on Hennepin Avenue in Uptown. Guild Collective in St. Louis Park has a small collection of vintage (and vintage-inspired) items and clothing, and the staff loves to chat about their goods. World Market also has tons of faux-vintage items that will fit into homes with more mainstream flair.
Whether you’ve always loved vintage, or you’re eager to jump on the trend, you’ll find plenty of fantastic vintage shopping and restoration options around Minnesota and western Wisconsin. Spend a weekend curating your own collection of goods and share the results!