The BIG Affect a Rise in Interest & Price has on Home Affordability

 

(Or Why NOW may truly be the best time to buy a house.)

For a number of years the housing market in the Minneapolis/St Paul metro has be extremely affordable. Even with the rise in housing prices since the beginning of the year, our market continues to be affordable compared to other areas of the country. A home buyer can find a very good quality starter home for under $200,000 in the Twin Cities if they are flexible with their location. But that appears to be changing.

Housing prices are on the rise across the metro area. And, interest rates won’t be at historically low levels forever. In fact, rates have crept up a bit in the past few weeks. So when a REALTOR® tells you “NOW is the Best Time to Buy”, I’m not just marketing. It will be more expensive to purchase a home next year if the economy and real estate market continue to improve.

Don’t just take my word for it. An article I read on the KCM (Keeping Current Matters) Blog today,  Buying a House: Is NOW the Time? reiterates this point. It shows how the slight uptick in the market really affects the payment on an every day starter home purchase from 2012 to 2013. This is based on prices rising 10% from June 2012 to June 2013. According to KCM, a home priced at $200,000 in June of 2012 would have roughly $100/month higher payment if purchased today. And  the required down payment for the same house would be higher too.

Home prices in Twin Cities north and east metro are continuing to rise. In Anoka County MN, the average sales price of a single family home is up 14% since the beginning of the year. The average sales price of Washington County homes is up 4.5% and Chisago County has seen a dramatic  23% increase in average home value just in 2013.  These rising prices did affect by buying clients this year. Most had to spend more than they had expected as prices changed dramatically from the time they initially began the buying process about 6-12 months ago. Whether they were looking at townhomes in Hugo or single family homes in Blaine, prices jumped since the beginning of the year and it did affect where they bought and what the paid for a home. Almost all buyers were in multiple offer situations too.

Local real estate market remain poised for continued improvement affecting home prices AND interest rates. I don’t need a crystal ball to know that this could be the best time to purchase. Of course, I could look back with my 20/20 hindsight and say that last year was better too. But there are still MANY OPPORTUNITIES in this market still. It would be wise to listen up and realize it isn’t just marketing puffery, NOW is a great time to buy a home!

Copyright 2013 www.terieckholm.com

Good Time to Buy a Home? Terrible Time? That is a GREAT Question!

Several ads are running in all forms of media lately about what a great opportunity it is to buy a home right now. It’s hard to turn on the television, radio or computer without being exposed to an advertisement from the National Association of REALTORS® announcing the expiring tax credit and why this is a once in a lifetime opportunity to buy a home. But is it really a good time to buy? Yes, but maybe not for everyone.


Here are a few facts about the current Twin Cities real estate market:

1. There are many affordable homes across the Twin Cities metro area.
2. Interest rates are still historically low.
3. And, there is that $6500-$8000 tax credit that is going to expire very soon.

But do these reasons alone make it a good time to buy a house?

I ran into an old colleague of mine in a Forest Lake parking lot earlier this week. We used to work for the same real estate broker a few years ago and chat from time to time. This day was no different. After the initial hellos, the conversation drifted to the real estate market. He is not selling much these days as he hates working as an agent in this market. He doesn’t think it is a good time to buy for most buyers. However, he did make a couple of personal investments this past year, choosing to ride out the market by taking advantage of the foreclosures in northern Washington County and rehabbing them for resale. He offered his view of the market as a “terrible time to buy for a first time buyer”. When I questioned his logic he said, “First time buyers have to compete with buyers like me. There were seven offers written in a few days on one of the homes I purchased. I didn’t finance the home. I could close in a week for cash. How can a first time buyer ever compete with that?”
How indeed! That is a good question. But then again I have talked to two other investor/agents this past year with a different view of this current market. These guys were rehabbing homes long before the market took a dive. They paint a picture of the market as a terrible time for a rehabber to buy a home. First time buyers and first time investors are driving up the prices on bank owned properties so they cannot buy at a reasonable price to turn a decent profit.

I find it interesting that three people who have all worked in real estate for years have such differing views on the current housing market.
So, do I think NOW is a good time for a homebuyer to buy?
First, let's turn back the clock a few years to the late 1980’s when my husband and I purchased our first home. According to history, it was a terrible time to buy a home…but we didn’t know any better. We needed a place to live and didn’t want to rent. Interest rates were in double digits at the time and we still had student and car loans so what we could afford versus what we wanted was not quite in line. We ended up purchasing a house from relatives by assuming their 9%, 15 year loan.

We purchased at the time not because someone said the real estate market was good or bad but because it made sense for us to buy rather than rent. We didn’t buy our “ideal” home, we bought an adequate starter home that we could afford. We knew we wouldn’t live in this home forever but it was priced fairly and it was a place to start. We lived there for eight years. Though it wasn’t a good time to buy for many home buyers, the purchase made sense for us.

Many people will be rushing to write a purchase agreement in the next month in order to take advantage of the expiring homebuyer’s tax credit. That should not be the ONLY reason to buy a home. Buying a home in any market is a personal decision and whether it is a good time to buy will really depend on the buyer, the home, the price and what happens in the future. While no one has a crystal ball on the future, a good REALTOR® and loan officer can help potential buyers determine if NOW is a good time to buy depending on their unique situation.
So...In my opinion, it really IS a good time for many people to buy a home…but might not be the right time for all.
If you are buying, selling or relocating to Minnesota and need help from a professional REALTOR®, give me a call or visit my website for a FREE Relocation Packet , Homebuyers Success Packet or sign up for Listingbook Twin Cities Home Search. I specialize in acreage and lakeshore properties in the north and east Twin Cities metro area including Ham Lake, Lino Lakes and all communities in the Forest Lake School District! Serving Anoka, Chisago, Ramsey and Washington Counties in Minnesota.

Copyright 2010 Teri Eckholm 

White Bear Lake, MN Year End Real Estate Market Statistics 2009

Just about everyone who grew up in the Twin Cities north metro is familiar with the White Bear Lake community. Whether your memories are of passing the iconic gigantic white bear statue at Polar Chev, swimming at Bellaire beach or setting sail across White Bear Lake, everyone seems to know the area. But few know the legends that surround the lake and that Manitou Island is at the center of it all. The legend has been documented by several writers but the most notable was Mark Twain who wrote of the Indian warrior who killed the great monster of a polar bear to save himself and his lover in his book, “Life of the Mississippi”.

Legends aside, today the White Bear Lake community is a vibrant area that is continually growing while preserving its rich heritage. While the shores of White Bear Lake are the most well known as one of the largest lakes in the north metro as it spreads from Ramsey County into Washington County , there are two other lakes in the community: Birch Lake and Goose Lake. The community is home to White Bear Lake School District #624 and Century College encompassing 11 square miles of land. Real estate opportunities include both historic homes and more recently constructed residences. First time buyers, executive home buyers, retiring downsizers and luxury lakeshore buyers have a wide variety of options if the choose to call White Bear Lake home.

Single family home inventory levels are at very manageable levels in the City of White Bear Lake. In the price category under $200,000, there is under 3 months worth of homes currently listed as we start January. There is just under 6 months of absorption for homes priced from $200,000-$300,000, while it will take just over a year to sell all the homes listed in the $300,000-$500,000 price range. Things are not quite so rosy for the beautiful lakeshore and executive homes in the half-million plus category. At the current rate of sales, it will take over 3 years before all of the current listings sell .

White Bear Lake townhomes are selling a slightly slower pace. There is just under a 6 month absorption rate for townhomes and condos priced under $200,000 while it will take about a year to sell the current inventory of homes in the $200,000-$400,000 range. But high-end townhomes and condos are in the same predicament as with single family homes as they have about 3 years of inventory to sell through at the current rate of sales.
2009 Average Sales Price of all homes sold in White Bear Lake:
All Homes $186,735
Single Family Homes $192,195
Townhomes/Condos $150,823

2009 Average Cumulative Days on Market in White Bear Lake:

All Homes 146
Single Family Homes 133
Townhomes/Condos 153
Year End White Bear Lake residential real estate statistics for single family homes:
Under $200,000~ 36 Active Listings, 11 Pending Listings, 161 Sold Listings, 112 CDOM (Lakeshore Subgroup 0 Active, 0 Pending, 1 Sold, 246 CDOM)
$200,000-300,000~34 Active Listings, 2 Pending Listings, 67 Sold Listings, 162 CDOM (Lakeshore Subgroup 2 Active, 0 Pending, 2 Sold, 301 CDOM)
$300,000-$400,000 ~ 11 Active Listings, 1 Pending Listings, 8 Sold Listings, 214 CDOM (Lakeshore Subgroup 1 Active, 1 Pending, 1 Sold, 325 CDOM)
$400,000-$500,000 ~ 3 Active Listings, 0 Pending Listings, 4 Sold Listings, 149 CDOM (Lakeshore Subgroup 2 Active, 0 Pending, 0 Sold)
$500,000-$1,000,000~ 8 Active Listings, 0 Pending Listings, 3 Sold Listings, 118 CDOM (Lakeshore Subgroup 7 Active, 0 Pending, 1 Sold, 13 CDOM)
$1,000,000 and Up ~5 Active Listings, 0 Pending Listings, 1 Sold Listings, 901 CDOM (Lakeshore Subgroup 5 Active, 0 Pending, 1 Sold, 901 CDOM)
Year End White Bear Lake residential real estate statistics for townhomes and condos:
Under $200,000~ 24 Active Listings, 2 Pending Listings, 54 Sold Listings, 188 CDOM
$200,000-300,000~ 6 Active Listings, 0 Pending Listings, 5 Sold Listings, 351 CDOM
$300,000-$400,000 ~ 3 Active Listings, 1 Pending Listings, 5 Sold Listings, 198 CDOM
$400,000-$500,000 ~ 4 Active Listings, 0 Pending Listings, 1 Sold Listings, 708 CDOM
$500,000-$1,000,000~ 1 Active Listings, 0 Pending Listings, 1 Sold Listings, 52 CDOM
For additional information on any current White Bear Lake real estate listing or for additional information on buying a home in Blaine contact Teri Eckholm directly at 651-336-7073.
**All Statistical information based on information from the REGIONAL MULTIPLE LISTING SERVICE of MINNESOTA, INC. for the period of 1/1/09 through 12/30/09.
 

 

Copyright 2010 Teri Eckholm http://www.terieckholm.com/