Minneapolis/St. Paul Housing Affordability Up 4.5%

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According to the Minneapolis Area Association of REALTORS newest figures, the Housing Affordability Index is up 4.5% in November 2007 versus November 2005, from a value of 132 in 2005 to 138 today.

While this is an improvement from much of 2006 and 2007, it is still substantially lower than the index’s record of 160, set in 2003.  The index’s low of 122 was set in 2006.

The Housing Affordability Index formula measures housing affordability for the Minneapolis/St. Paul market. An HAI of 138 means the median family income is 138% of the necessary income to qualify for the median priced home using a 20% down payment, 30-year fixed mortgage.

Twin Cities New Construction Down 31% Over 2006 Through August

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Based upon numbers provided by the Builders Association of the Twin Cities (BATC), new construction unit permits have fallen 31% through August 2007 vs. last year.  Units through August totaled 6,408 permitted thus far, down from 9,402 units permitted through the same time last year.  In fact, in 2004 there were a total of 12,191 units permitted through August, which means we’re near half of the number of new units from just three years ago!

This is a favorable trend for our market and shows that builders continue to scale back their building from the record levels of a few years ago.  While the new construction market is still weak, this dramatic reduction in new construction will help reduce inventory over the long run and sets the stage for a recovery in the future.

Edina Realty Leads the Twin Cities Market

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Edina Realty posted a market share of 19.8% for closed transactions in the 12-month period ending September 31, 2007.  That means that there’s an almost 1 in 5 chance that a home sold in the Twin Cities will be sold by an Edina Realty agent.

In this slowing market, where inventory is at record levels, Buyers have almost too many choices to make and Sellers have so much competition for each of those buyers, make the same choice that nearly 1 in 5 customers in the Twin Cities make, work with an Edina Realty agent.  Since 1955, Edina Realty has helped Buyers and Sellers through both good and bad markets.

Edina Realty – Now, more than ever.

Aaron Dickinson + Edina Realty = Even Better! 

Edina Realty Market Share 10-07

Twin Cities Inventory Falling

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The Twin Cities has seen the peak inventory levels for the year in September and now begins its precipitous fall… likely falling from current levels of approximately 34,000 homes in the 13 county metro to 25,000 by year-end.

While this may sound good to sellers, it isn’t.  Inventory is falling but this time of year buyer demand falls faster than your competition.  What this means for buyers is that there is less and less choice this time of year but the homeowners that are on the market may be more willing to negotiate with you.

August Minneapolis/St. Paul Home Sales Stats

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In August 4,173 closed in the 13 county metro area.  This is down 17.8% over last year and a whopping 40.2% over two years ago.

For the period of January – August 2007, there have been 28,739 closed sales, down 14.9% over last year and down 27% over two years ago.

It’s a slowing market… which is great for 1st time buyers and move-up buyers but not great for downsizing households.  Houses can sell quickly though… just sold one of my listings in 3 days!

Loan Officer: I Have The Same Products As I Did 5 Years Ago

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I was talking to my favorite loan officer, Cheryl Stuntebeck at Edina Realty Mortgage, about the current market for loans.  While most lenders have tightened up lending standards, the current loan loan products she has are almost identical to the ones she had 5 years ago.  This means that 100% financing is very limited, that credit scores and income verification are necessarily most of the time, and that sanity has come to the lending market.

Some of the standout loan products today are geared to 1st time and/or lower income borrowers.  Via government-sponsored programs there is still 100% financing with market rates and no mortgage insurance.  No private loan program can beat that!

The loan products that we had 5 years ago worked just fine for consumers… we had great sales activity and low defaults in those years… and will serve us yet again.  While lending has tightened, it isn’t like we’ve gone back to 1980’s style loans… there’s still a lot of great options in this market and I’m quite confident that qualified buyers will still be able to buy a home in this changed landscape.

House Sold in Under 36 Hours!

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There are still plenty of buyers in this market!  While sales year-to-date are down approximately 14% over last year, and there are 10% more listings for sale today than last year at this time, buyers are still out there.

On Monday August 27th a listing east of Lake Harriet came on the market for $470,000.  On Tuesday afternoon my clients and I went to see the house.  In the less than 36 hours it had been on the market there were a total of 8 business cards left in the house.  When we arrived there was another agent showing it and while we were there another group came through as well.  I call the agent back that evening to let him know we have interest and he informs me that the house sold that afternoon before we even showed the house!  This home was in top-notch condition in an in-demand neighborhood and was priced to drive significant numbers of buyers through the home… it worked!

Morals of the story:
1. No matter how bad it may be, it isn’t as bad of a market in most areas as people think.
2. A house with the right price, right condition, and right location still sells quickly.
3. Buyers need to be ready to jump on a property if the right one comes along…

Weekend Interest Rates

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Weekend Rates – Edina Realty Mortgage
08/24/2007-08/27/2007      
Rates are effective until 9:30 AM on Monday      
 

 Conventional  
 15 Year Fixed 5.875-6.125% 
 30 Year Fixed 6.25-6.50% 
 40 Year Fixed 6.50-6.75% 
 7/1 ARM 6.625-7.00% 
   
 CDMP – 100%, No MI   
 30 Year Fixed 6.750% 
   
 FHA/VA  
 30 Year Fixed 6.375-6.750% 
 3/1 ARM 5.875-6.375% 
   
 Jumbo  
 15 Year Fixed 6.50-7.00% 
 30 Year Fixed 7.00-7.625% 
 40 Year Fixed 7.250-7.875% 
 10/1 ARM 7.125-7.500% 
 5/1 ARM 6.750-7.375% 

Also available: No Closing Costs & Rate Buydowns      
For More Information Contact:      
 Cheryl Stuntebeck   
 Home Mortgage Consultant   
 763-551-6706