You’re not helpless when it comes to mortgage interest rates! A lot of buyers are concerned about monthly payments now that the interest rates have gone up.
I talked with Chris O’Connell at Loan Depot about 4 options that home buyers have to pay a lower interest rate and therefore a lower monthly mortgage payment. Chris had one that was surprising to me and we talked a bit about the one that seems to be getting a lot of attention in the real estate world right now, the 2/1 buy down and why that may not be the BEST option.
Take a look at this video interview if that is something that is worrying you as you think about buying a house now.
I suffer from nostalgia and I’m a sucker for charming old homes and neighborhoods that remind me of movie sets. And that’s why I feel squishy inside when I spend time in Highland Park in St. Paul. It’s a condition, don’t mock me!
Types of homes
The Highland Park neighborhood of St Paul is right next to the MacGroveland neighborhood and shares so many of the same characteristics. The homes are here older and filled with all of that original charm. St. Paul was settled before Minneapolis and the housing stock there reflects it in many areas.
Many of the homes were built in the early 1900’s and often have original hard wood floors, beautiful wide wood moldings, built-ins, plaster walls, detached garages and other features of homes built at that time. Another feature that I love on old homes that you’ll often see here are porches where you can sit and enjoy the gorgeous weather that we have here spring through fall. I think porches and sidewalks encourage a sense of community and give opportunities to see and talk to neighbors.
As you enter the neighborhood from the west on Ford Parkway you’ll notice a large construction site which is a planned community / new construction development, so if you want the city lifestyle and access but AREN’T interested in old homes, this can be a great option for you. It’s called Highland Bridge and its a couple of different developments including row homes and a senior living development, community park, shops and restaurants. This won’t be where you find a bargain – row homes are at the upper end of the pricing for this part of St. Paul at $1.5M+, there are also custom single family homes being built with lot prices starting at around $500K.
One of the things I like about city living is the access to sidewalks and bike lanes as well as the ability to get to restaurants parks and shops relatively easily, on foot, on bike, or in a vehicle. Highland Park is home to all of these things, it has a robust commercial area so you won’t need to go far to grab a bite or do some shopping and recreation is convenient as well, it has a golf course, and easy access to the massive park system along the Mississippi River with all of the bike trails that run throughout (72 miles along the Mississippi rover alone!) and connect to so many local and regional trails in the Minneapolis St Paul region.
The average home price in Highland Park for the typical house is a little more than $441K, its charming neighbor, MacGroveland is just a little bit more from an average home price perspective.
This neighborhood also has easy access to both Minneapolis and St. Paul for work – as well as the freeways that lead to the South, SW and SE suburbs, or anywhere that you want to go within the metro area. Typically if you work on one side of the river you try to live on that side for easy commuting, but I think Highland Park benefits from a great central location from a commuting perspective. Light rail is also within 1 mile of the neighborhood and there is a bus system in St. Paul.
It seems like one of the big benefits of the suburbs would be easy access to stores like Target, and Highland Park actually has an adorable little Target in their main commercial area off of Ford Parkway & Cleveland.
Groceries are within easy reach at the Target, Lunds and Byerlys or a short drive to Kowalskis.
Children living in this area will attend St. Paul public schools Horace Mann Elementary, Highland Park Middle School, and Highland Park Senior High.
Whether you like historic homes with that old fashioned charm or you’re looking for new construction urban townhomes, this neighborhood has both, along with all the things that people choose city living for.
I routinely help people move to MN from out of state and because nearly every state is south of us, warmer than us, and doesn’t have quite the winter that we do, most people aren’t mentally or physically prepared for winter here in MN. I sense a lot of excitement, but also fear?
Let me reassure you that people in MN aren’t some mutant breed, we aren’t the huskies of the human race that want to roll around in ice in summer. We just like seasons and recognize that winter is one of them, and have found ways to make it comfortable, safe and doable. In this video I’m taking you to SNOW SCHOOL and giving you the tips that you’ll need to get through winter comfortably and safely!
Winter and snow can be downright magical if you can sit inside a warm house with a cup of coffee and a fire blazing watching it fall from the sky. But eventually you have to leave the house. I’m going to start off with how to DRESS for winter here and I’ll do another video on other considerations like driving in it, managing it around your home and preparing your actual house for winter as well as staying safe outside in winter.
It’s September and that means it is HIGH time to start preparing for winter. Costco has their gloves and hats out, Christmas decor is usually up right around now and its a great reminder to get your act together while the getting’s good.
Today I’m going to start with the basics! How should you plan to dress here in winter?
It will vary across the season, with peak winter gear needed in January when we often see stretches of well below zero weather. Our seasons are pretty prompt here, with a definite change in the air that hits right at the 3 month mark of any season. I’m recording this at the beginning of September, and the weatherman here pointed out that we have just seen our last after 8pm sunset until next April and that means that we are on our way into fall. Our temps have been in the mid-50’s overnight lately (and I LOVE IT) with highs in the mid 70’s. Northern MN has the high 30’s for overnight temps – winter is coming!
I don’t mind the short days (in the depths of winter it’s starting to get dark here by around 4:30 and it won’t be light til well after 8am), I sleep well in winter! I may be part bear. We do have the flip side in summer with extremely long days, so if that’s your cup of tea you’ll have it to look forward to.
Everyone has their own definition of cold, but I would say that it starts to get cold at the end of October (highs in the 30’s lows in the 20’s overnight). We often see at least some snow around Halloween. And fun fact – if you see snow it means it’s NOT THAT COLD. It actually will NOT snow when it is truly cold here, there needs to be some moisture in the air to achieve snow and intense cold is also intensely DRY.
Your mom may have mentioned wearing LAYERS to you, and she knew what she was talking about. If you’ll be outside in very cold weather you should plan to have 3 layers on. The first layer is a snug base layer. Do not wear cotton as it holds moisture and having damp skin or clothes is dangerous. Pick a synthetic material that wicks moisture away from the skin.
Your second layer should be your fleece or other clothing (sweater, sweatshirt, something!) that insulates and holds pockets of warm air close to your body. Do you need 2 layers on your legs -yep! If it’s cold, having warm legs makes a world of difference. I feel like there is an artificial focus on the upper body for warmth, but having your legs warm (I mean 50% of your body?!) makes a HUGE difference in comfort if you’re going to be outside.
My dogs don’t seem to mind cold weather at all and still want their walks, and having snow pants on changes everything. They come in varying styles and weights. I’m a dork and wear the thick (and WARM) snow pants you see on kids. You probably have more shame/fashion sense than me and You can get some “sleeker” pants that insulate and block wind, those can be pricey but you’ll look as amazing as you CAN look while wearing snow pants. If I’m going to be out walking dogs or clearing the sidewalk I’ll wear a base layer – long johns, leggings or even tights – and then pull the snow pants over that and I’m super comfy.
Final layer! You’ll want something WIND and WATER proof! These two elements can literally be the death of you if you don’t prepare. Down is a wonderful insulating material but if it gets wet, it’s worse than useless. Blocking wind and water will be what keeps you feeling toasty warm. And when I say water – I don’t mean rain. Snow can be quite wet and soak right through your coat. I can think of nothing worse than being cold and wet at the same time.
When looking at coats for actual winter weather here, you probably want a parka vs a “jacket”. A parka is generally longer and will cover your backside better. I would actually say that having both is not a bad idea. If you’re running around doing errands and will be in and out of the car and heated spaces you can scurry around in your jacket and be fine, but for warmth – I like a parka. Parkas also come with hoods (often detachable) and when the wind is ripping around I’ll use it. If you buy from a quality place they often have ratings on their winter items and you can see that clothing is rated to X degrees below zero. You’ll need that in winter. My favorite combination is down with a wind and waterproof shell.
For your extremities, you definitely need a beanie or tuque (interchangeable – you’ll hear both words!), gloves or if you really want warm hands, get mittens. Having your digits all together in one pocket of fabric makes for a much warmer hand. Feet should have wicking socks. The best are wool or smart wool (they aren’t itchy – I promise!) and then boots that are insulated and waterproof. I see lots of feet looking stylish and warm in Sorel’s but North Face are super popular here as are less expensive brands like Lands End.
My husband hates the cold and we also stock up on the hand warmer things in winter and he will keep those in his pocket when walking the dogs or clearing. So if you tend toward the chilly side, that’s another option.
My last tip is don’t wait! When winter things appear in the store, buy them. They disappear pretty fast next thing you know it’s -20 and the stores are stocked with swim suits for spring break.
I’ll do another post and video for driving and dealing with cold in general shortly, I also did one a while back on getting your house ready for winter, you can check out my YouTube Playlist for life in Minneapolis and you’ll see that!
Prior Lake is a good place to consider if you’re looking for the following things – LAKES, parks, space around your house, a cute downtown and proximity to the cities! Watch the video if you want to see for yourself.
Where is Prior Lake?
Prior Lake is a suburb south of the Twin Cities, in Scott County MN. It sits about 20 miles from the Minneapolis border on the SW side of the city, and if you’re concerned about commutes or getting to the airport, it’s approximately 25 minutes to MSP and likely about 10-15 minutes more to downtown Minneapolis or into St. Paul.
If you like the idea of taking a commuter bus line into the city you can ride the express (no stops!) Minnesota Valley Transit Authority bus from Prior Lake into Minneapolis. I think some people have a knee jerk reaction to busses and believe they are dirty and uncomfortable but these busses are similar to tour busses. Pure luxury. 😉 and in true Minneapolis fashion they have bike racks!
Quality of life – from the actual people that live there!
96% of residents rated the quality of life in Prior Lake as good or excellent! There are some happy people down there. Approximately 25,902 of the 27,000 people that live there are happy! You still have a 4% chance of running into someone who is a little salty, but odds are better that you’ll be bumping into someone that’s blooming where they’ve been planted.
Prior Lake has that charming downtown that many people like, but most of the city is zoned as rural subdivisions & “low density residential”. It’s not what I would consider “walkable” for the great majority of residents. I do think this will appeal to people who like a bit more space around their homes, the city does have remaining agricultural areas, as well as denser neighborhoods of townhomes and an older town center with homes that are older, closer together and more walkable.
Prices for homes
Prices in Prior Lake range widely – there were 2 condos that were priced at or around $200K when I looked at current listings, but the median price for homes in Prior Lake is $475K. Single family homes in the $300’s tended to be either townhomes or 1960’s to 1980ish split levels. Homes that were built before the boom of subdivisions down there. Split levels can be a little controversial, I feel like people love them or hate them, but the good points are that they typically have a large amount of living space and if they were built in this time period the lots are generally larger as well. I saw one home listed with deeded lake access (not lake front!) in the mid $500’s. There are new construction homes in Prior Lake starting in the $600’s. But, if you want to be ON the lake you’ll pay a premium and will likely be spending upwards of $1M.
I pulled median pricing for neighboring areas over the past three years as well and here you can see how Prior Lake compares to Lakeville and Savage (which I have a video for, check that out if you’re curious!).
Speaking of lakes – if you’re not one of the fortunate ones that owns a little slice for yourself, Prior Lake does have two swimming beaches as part of their extensive park system. They have two major regional parks – Cleary Lake and Spring Lake which are part of the exceptional Three Rivers Park District, as well as having easy access to nearby Murphy Hanrehan Regional Park.
The city has 55 parks within it, mainly community parks, and lays claim to 100 miles of trails and sidewalks. The park district also has two large athletic complexes, an archery range and 14 lakes with fishing piers, boat slips, beaches and green space. The park district sponsors all kinds of sports including the super popular Pickleball, beanbag, and volleyball leagues. In winter the park district maintains 6 outdoor skating rinks.
Minnesotans love a good festival or celebration and Prior Lake sponsors several. In summer they have a large music festival which attracts bigger acts – Lynyrd Skynyrd headlined this year. Freebird!
In fall they host a candy crawl for the kids, and there is a new and I think, interesting event called Chalk Fest. They invite professional sidewalk chalk artists to create works and non-professionals can compete for prizes as well.
If you have school-aged children they will attend Prior Lake Savage Area Schools. There are 7 elementary schools, 2 middle schools and one high school serving the area. You can look up information on their web site, check out what Great Schools and Niche.com have to say about the schools, but schools welcome prospective parents and students for tours as you consider your options and I always think that’s a good step.
If you love books and all the programming and services that the library provides you’ll find that at the Prior Lake Library, which is one of the six branches of the Scott County Library System. It’s located right in the heart of the little downtown area of Prior Lake. The library also hosts Club Prior which is its senior citizen programing.
Chickens, pets and fences!
And the moment you’ve all been waiting for! You can have up to 4 chickens! but only 3 “regular” pets like cats and dogs. Fences are allowed if they aren’t banned by an HOA (thinking about the Wilds golf community where I believe it’s unlikely that you’ll have either of these).
Fences must have 50% transparency in front (picket etc) and be no higher than 4′ and 6 ft with total privacy in back, if you want to build a great wall higher than 7′ tall you’ll need to get a permit from the city.
You should check out the rest of the places I’ve profiled! I have an entire playlist of neighborhoods and suburbs on my YouTube Channel. Lots of good info out there is you’re trying to pick a place to live.
Reach out if you have questions, always happy to help.
I specialize in helping people relocate to MN from other parts of the United States and the world thanks to people finding me on my YouTube channel. It’s a niche that I love to serve, people are choosing Minnesota and I love to welcome them here.
I know that this can be a difficult thing to do – uprooting your life to make a change to a completely different everything! The climate, the people, the way that Minnesotans live – which is very much OUTDOORS. Many people make the choice for that very reason. One of the other themes that I hear often is affordability and high quality of life.
If you’re curious about the perspective of this couple, what things felt like challenges, how they overcame those, what made them choose MN, what surprised them when they got here and what they have enjoyed so far, you’ll probably enjoy this video!
If this is a move you are considering making and you have questions please don’t hesitate to ask! It’s what I do day in and day out. 🙂
I’m sticking closer to home today and taking you on a tour of the Armatage neighborhood in Southwest Minneapolis! If you want to see what the homes and area look like – watch this video!
Homes in the Armatage neighborhood began to be built in the 1940s, and by 1960 most of the neighborhood was established. The homes in the area really reflect the time period, a lot of post-war (WWII!) bungalows and as the construction reached the ’60’s they began putting up what Minnesotans call “ramblers” and the rest of the country calls “ranch” homes. You still see some 1 car garages, and most garages are accessed off the alley which gives the street and yard areas of the homes a really beautiful feel because they aren’t broken up with driveways, cars and trashcans.
I did a comparison of median home prices for Armatage and the surrounding areas including Edina which is the suburb which borders the neighborhood on the west, the Kenny neighborhood to the east and the city of Minneapolis over all. You can see where Armatage stacks up and how it compares to prices in the city overall.
The highest priced home on the market in Armatage today is a house that was originally built in 1948, but has since undergone a complete renovation and has had a second floor added. It was priced at $799,900. It has 5 bedrooms, 5 baths, a 4 car garage and nearly 3,000 sf. This is not a typical home in the area, but we have seen a lot of homes pop upward like this as people try to stay in the neighborhood but want more living space than the 1940’s or 1950’s bungalows provide.
A more typical house for sale right now is a bungalow priced near the median at $445K, built in 1951 and still reflecting the character of the day. It has about 2000 sf and has 3 beds, 3 baths and a 2 car garage. The lowest priced home I saw currently listed is at $285, a 3 bed, 1 bath home that has been used as a rental and can probably use a bit of TLC.
Armatage has a very active neighborhood association and they hold several events throughout the year including a chili cook off, a holiday light display competition, free movies in the park in summer, a fire-on-ice winter celebration with bonfires and ice skating at the park rink, food truck nights and a summer festival. If you have children the park district has after school programs through community education at Armatage Park Community Center and they also have all day programming there throughout the summer.
In addition to the focus on kids, the community center also hosts events like “Tech Help for Seniors” and a community garden tool swap.
Children in the neighborhood are currently zoned for Armatage Elementary (formerly a Montessori magnet school) In 1952, the Armatage Community School was built, children move on to Susan B Anthony Middle School which is International Baccalaureate School, and then Southwest High School.
Armatage has a close community feel and has the benefit of easily accessible local favorites for restaurants including Pizzeria Lola,Red Wagon Pizza, Book Club, Colita, & Cafe Ceres. It’s a quick ride to shopping to Edina for Southdale Mall or any of the surrounding shops and restaurants including the Galleria for more upscale shopping. Groceries are easy to find at nearby Lunds and Byerly’s or Kowalskis, or if you’re just down the street in Edina you can hit Whole Foods or Trader Joes. Costco people will find the St. Louis Park location the closest – but in my opinion it’s also the craziest one – always mobbed and worth it to drive to Eagan or Eden Prairie instead.
In addition to the large community park, Armatage is well located to reach the paths around Lake Harriet or Minnehaha Creek. As with all areas of Minneapolis, there is a large focus on bicycling and public streets have bike lanes which are heavily used. The city of Minneapolis also has sidewalks lining both sides of the street so you’ll be safe if you decide to walk up to the lake or creek as well.
If you’re curious about other area of the city or suburbs, check out my playlist on YouTube! I cover a bunch of them and I’m always adding more, if there is an area that you’re interested in and you don’t see a video – reach out and I may add it to the list, but can at least answer questions.
I went out and looked at some of the homes on the Parade of Homes tour and this custom build was so pretty. Click to watch my tour with the listing agent. It was a truly grim day on the outside, but bright and comfortable inside!
Whenever I venture out into the hinterlands for a client, I like to get some video and some information on that community for my clients but also so I can pass it along to YOU. Today I’ll show you around Buffalo, MN. It’s a small city in the western exurbs of Minneapolis and a great option if you like a small town feel, lake culture and yet still want to be within about a 35 mile drive of the cities.
I ended up out in Buffalo for the reason I think a lot of people may end up out in Buffalo! My clients were interested in getting a lot of house and the prices are more affordable out there, they were also excited about the prospect of being able to avoid “bidding wars” on pre-existing homes by buying new construction. Most new construction in the Twin Cities is going to be on the outer edges of the cities where buildable land is still available.
When I went out there I met the agent representing the builder and was chatting with him about what is drawing people to Buffalo and his impression was that a lot of people discover it when they become priced out of homes in northwest suburbs like Maple Grove for the size and style of home that they are looking for. I pulled the median prices for Buffalo and the MEDIAN price is $329k for a single family home. For comparison’s sake the median price in Maple Grove is $375K and for the twin cities REGION which I believe includes 14 counties it is $340K.
Digging a little deeper I found that right now there are only 39 homes for sale in Buffalo, fully 30% of those are under construction or completed new builds. Prices range from the very lowest end for a townhouse at $250K up to a 120 acre horse farm with a circa 1900 farm house priced at $1.5 million. If you’re interested in a big house with lake frontage there were a couple of these homes hovering around the million dollar plus mark as well, but MOST homes are much more reasonably priced.
Where the in the heck is Buffalo? Well, head about 35 miles north and west of Minneapolis on rt 55 and you’ll drive right past. If you need to be at the airport for any reason you should plan for about a 50 minute drive to get to MSP airport on the south side of Minneapolis.
Things that I found charming about Buffalo were the shops in the historic business district right on beautiful and large Buffalo Lake. The city still has their post office, library (1 of 30 in the Great River Library District), and other city services right there in the center of town. The one that really caught my eye because I have a thing for books and coffee was the charming and aptly named Buffalo Books and Coffee. I would be a regular if I lived out there! Unfortunately I think Covid may have killed the movie theater, but there are quite a few restaurants either of the chain variety or local favorites within the city limits – not all downtown.
If you have children they will attend the Buffalo-Hanover-Montrose schools, when I looked at Niche.com to check out the district it looked like they are rated a solid B or B+.
The good people of Buffalo have quite a few options for grocery shopping they can choose from Cub which is a large regional chain, they also have a Walmart Supercenter, a Target, and one of the smaller local grocery stores called Coburns Market.
I like to see if cities allow fencing and chickens because I always get asked. Fences, la la la … the usual. Get a permit, 4′ facing the street and 6′ in back. When I looked up chickens I was pretty shocked because the answer was short and sweet but the combination of animals was a little odd – Buffalo stipulates that you may not have a mountain lion or chickens and they phrase it as “no wild animals”. I think this may need some clarification and may be contingent on how large your lot size is at least as far as the chickens go – I can’t imagine the city having an issue with chickens on a 120 acre horse farm.
Another somewhat unusual feature of Buffalo is that they have a small municipal airport. So if your hobby is flying – this would be a really nice convenience for you.
Buffalo likes to party and they have a lot of events every year including things like an Arts and Crafts show, a rodeo, the week long Buffalo Days with marching bands, a carnival and a beer garden, you can jump in the lake if you compete in the annual Buffalo Triathlon (or anytime you want to I suppose) there are free concerts in the park all summer, and in the winter they have a Kites on Ice celebration. There were a lot of other events listed as well, for a small city they seem to have a lot going on.
I can’t leave out the parks! Buffalo has 4 larger regional parks as well as 24 community parks. They have a golf course, a dog park, and a skate park. The parks offer bicycle and boat rentals so you can enjoy the paths or the water and they have trails for fat tire bikes or snow shoeing for winter activites.
Check out my YouTube Channel to see more community profiles on my Neighborhoods and Suburbs or Exurbs and Small Towns playlists!
Does the phrase “appraisal gap” strike terror in your heart? Or leave you scratching your head? What about hearing tales of “appraisal guarantees” that are often needed when you’re a buyer in this seller’s market? If you’re a buyer or seller and you’re not spending every waking (and sleeping!) moment thinking about the real estate market, you may be confused about what these terms mean for you, and they may feel a little scary. Knowledge is power, so let’s talk about what an “appraisal gap” is and what an “appraisal guarantee” means for a buyer or a seller.
If you’ve watched any of my market update videos you’ve heard one thing reiterated and that is that we are in a historically strong sellers market. We have a lot of buyers competing for every home and that means that we nearly always have multiple offers and those offers are often for well over list price as buyers do whatever they can to beat the competition.
On the surface you may wonder “how can that be a problem”? if you’re paying with CASH it’s not a problem, you can pay any price you choose to pay for something as long as you can show that you have the funds available to do it. This is a big reason why cash buyers have an advantage right now, the price is the price and the seller doesn’t have to worry about the bank’s appraised value.
However 80+% of people are NOT cash buyers, they have to get a mortgage for their home purchase and as part of that loan the bank will hire an independent appraiser to look at the property and determine if it’s worth the amount they are loaning you for it. They don’t want to be stuck with worthless collateral to sell if you default on your loan. This evaluation of value is called an “appraisal”.
Sometimes your mortgage lender’s appraiser says the house IS worth less than you agreed to pay. This is known as an appraisal gap or a low appraisal.
I sometimes hear buyers with high loan approval amounts suggest that it might be a good strategy to buy a lower priced home and just throw a large amount of money at it because they can qualify for a loan of that size, but that still doesn’t eliminate the issues around homes appraising for the value of the loan. And really, appraisals exist for this very reason.
Options as a buyer
What are your options as the buyer if you’re worried that the appraisal will come in lower than what you have offered? after all – Sellers want to get the price you’ve offered in the contract whether or not the appraiser says it’s worth that amount as loan collateral.
The option that has been most successful with sellers is writing appraisal gap coverage or an appraisal guarantee into the contract for the purchase of the house. We are seeing this happen about 45% of the time now and it is getting to be more common as the market continues to be tight.
What this essentially means is that you will put a larger down payment on the home which bridges the gap between what you’ve offered and what the bank is willing to loan and preserves your ability to finance the purchase and close on the home.
A typical home purchase contract has an appraisal contingency: wording that says the buyer can call off the deal if the property appraises for lower than the buyer offered. But in hot real estate markets, where buyers outnumber sellers, some buyers waive the appraisal contingency. These buyers either pay cash for the home or gamble that they have money to pay the difference between the appraised value and the price, however much that may be.
rather than waiving the Appraisal contingency entirely, offering to cover the gap on a low appriasal is the middle path. You’re offering some amount that you will make up via a larger down payment.
Take the example of the $120,000 offer on the $100,000 home that has a $10,000 difference between the purchase price and the appraised value:
If you had offered to cover an appraisal gap up to $10,000, you would proceed with the purchase, bringing that extra $10,000 as a larger down payment.
If you had offered to cover an appraisal gap up to $5,000, you would be entitled to withdraw your offer and get your earnest money deposit back. That’s because the difference between the offered price and the appraised value is greater than the $5,000 appraisal gap coverage.
At this point, the seller may wish to negotiate with you to keep the transaction in tact and they may agree to lower the price by the remaining $5000.00 difference, or they may choose to go to the next buyer.
You’re more likely to succeed when offering appraisal gap coverage if you include proof of funds to do this as well.
If you’re lucky, you may not have to worry about appraisal at all. The bank may waive the required appraisal if they can see market conditions support it and that the buyer is bringing 20% or more as the down payment. This means that they look at the market data and determine that the property is likely worth the purchase price, but you will not know this until you’re closer to closing.
Things to think about
A couple of things to add as you consider whether or not to do this on your next purchase agreement:
Think about the home you’re buying, it’s condition, price, and location and what you’re willing to do to purchase that home. You want to be doing this for a home that will hold or appreciate in value.
Because of the market conditions, home prices nationally increased over 14% year over year. Median home prices in Minneapolis and the Twin cities went up 10.9% year over year according to the Minneapolis Area Association of Realtors.
Put that into perspective with your purchase.
If you are buying a home priced at $100,000 today and prices continue on their current path, that home would be valued at $111,000 a year from now.
If you’ve agreed to make up $5000, or $10,000 in low appraisal, the likelihood that you will be “whole” in a short period of time is there.
Another consideration is whether or not you will be able to afford a home in a year or two if this continues and if interest rates continue to rise.
So, it’s a math problem. Never been a big fan of math problems, but looking at it this way really adds some clarity and perspective.
Reach out with questions! I’m always happy to help.
A month goes by in a hurry it seems, so here we are! Did a month make a difference with the real estate market? YES. It is notably busier!
I don’t think I’m telling you anything you don’t already know, but the real estate market is on fire. Someone hit the gas pedal on the housing market in February and they have a lead foot. What does this mean specifically? Let’s look at the twin cities housing market as of Feb 18 2022.
If you are a seller – LIST NOW and you’ll be partying all the way to the bank.
Just about every listing is getting multiple offers in the first couple of days. The supply of buyers is so great and the supply of homes is so low right now – 15% fewer listings on the market than last year at this point!
Why are sellers hesitating? I assume that it’s because they are worried about finding THEIR next home. As an agent that represents a lot of buyers, I can tell you that sellers can not only command great prices for their homes they can still get a closing date that suits their needs. For example, if a seller is considering putting their home on the market, but are worried it will be gone in a blink, there is a great likelihood that the seller can ask for and receive a 60 close, flexible closing, or recently I’ve seen them asking for a seller’s home purchase contingency or lastly a rent back situation after closing remembering that most conventional loans require the transaction to close in 60 days on the buy side so no long term rentals this way! but this way the seller will have cash in hand and be able to buy while also have a roof over their heads while they wait for their next home to be available.
One of the things that I really like about real estate is that EVERYTHING is negotiable – as long as the parties work it out (within the law!) and get it in a signed contract, the parties can work together to find a solution that works for everyone. Do you have a creative way to structure a contract that lets everyone get what they need? Bring it up and there may be a way to make it work out!
This past week we had offer acceptance rates at 15%, which means that sellers are receiving 6-7 offers on average. But the average for the month is hovering around 35% according to Home Free Transaction Coordinators. I’ll give you more info on what they see in a successful offer after I take you through current market conditions.
It’s a seller’s market, but to what degree? In the past I’ve explained that the way that we determine this is based on the absorption rate or how many months worth of housing inventory we have at a given time if nothing new were added to the market. 5-6 months is considered balanced, more than that is a buyer’s market and less is a seller’s market. Obviously the more extreme the number the more it favors one or the other. That obviously varies by housing type.
Single family homes have a .56 months (about 17 days) supply now as compared to one year ago when they were at .62 (about 19 days). We have started this year off with available inventory down by 21% year over year. New listings this month are down by 15% from last year.
I was looking for a bright spot and looked at new construction. Builders are responding to the need for houses and have started increasing their production too.
This image shows the big dip and now the increase starting in single family new builds between $400 & $600K. Its not dramatic, but any amount helps – if you have 50 more houses that’s 50 buyers that have found something.
If you have been thinking about selling and are curious about what your home is worth today, let me know. I’ll give you a free estimate of what your home is worth today – absolutely no obligation, just for your information if you want to know – just send me an email. We need homes and now is definitely the time to get the maximum amount of money out of your sale! firstname.lastname@example.org if you’re curious. I’m happy to do it.
Townhouse/ Condo properties are at .97 months (29 days) vs 1.13 a year ago (34 days). Prices on Townhouses are at a median of $267,000 which is UP 12.2%. Average days on market for a townhouse is down 26% to 14.
Condo prices are at a median of $195,000 up 6.6% from last year and are on the market for about 30 days. If you are a first time buyer or someone that likes condo living, this is the softest spot in the market today and your biggest opportunity.
Single family homes in the 14 county metro area have a median price of $370,000, a gain of 12.1% year over year. They are on the market for NINE DAYS. Only about half of what we saw a year ago. And don’t fool yourself thinking you have 9 days to think about it, this is a listing going live on a Thursday, showing through the weekend, closing offers on Sunday and allowing a 5 day inspection period before heading to pending.
The combined absorption rate (all property types) is at .67 months or 20 days of inventory as opposed to one year ago when we had a whopping .75 months or 22 days of inventory.
What can you do if you’re a buyer?
Here are my suggestions and strategies:
1.my office posts properties to agents internally that are off market and that sellers are willing to part with before going onto the MLS, so having that network available helps a lot!
2. make sure you see what is available in “coming soon” and get in there quickly
3. even better if you have the nerve- offer “sight unseen” while in this status. if the seller will do it, you can usually negotiate an inspection this way and if there is something wrong with the property get out of the contract without losing your earnest money, this does require a good offer out the gate. It’s not a way to get a bargain, but is a way to quit losing in multiples.
4. make your offer more appealing are to offer appraisal gap coverage. This means that if you are financing you are stating that you have the ability to make a larger downpayment in order to cover the gap between your offer and what the bank is willing to loan you, having cash is a very important piece of the puzzle in this environment. You can offer any amount of appraisal gap coverage – it doesn’t have to be 100% of the difference!
5 Look at “wallflowers” these are properties that have been on the market for longer than 4 days. This means they have made it through a weekend without getting an offer and may be more willing to negotiate or look at a reasonable but not extreme offer. These can be homes that a buyer got cold feet on, that their financing fell through or other scenarios.
6. Don’t ignore properties that need work! You can get a home loan that rolls a remodel into it. Not everyone can look past a dirty unfinished basement but it’s rarely a bad investment to add finished square footage to a house – especially in an in demand neighborhood.
7. Do you have time? Offer on new construction. You eliminate multiple offers and choose your finishes. Just be aware that contracts allow builders to cancel your contract if the price of materials goes up and you can’t cover the increase. Don’t get yourself in too deep.
8. There aren’t a ton of these available but spec houses are a good option. They may be completed new builds OR they may be nearly completed with an estimated move in date already.
9. my last option coming to mind to look at loans that allow you to offer as if you’re offering CASH – without a financing contingency. This seems like a HUH??! moment, but in my video next week I’ll interview a lender with a program like this that may give you a leg up and I’ll post it here, of course!
OK – lets look at what’s been going on with offers per HFTC:
Buyers are waiving inspection 46% of the time, this is a lot, but that also means that 54% of the time they are getting an inspection.
Off market sales are at 12% – this is the “private listing network” that I mentioned where agents that have upcoming listings market them internally first.
Sales Contingent on the sale of the buyer’s home is down to 5% of the time.
Average sale to list price is 103.2%. I don’t know where these are happening because my buyers have been offering at 15% over and losing… We would be happy with 103%!
Cash is at 17% of offers, Conventional at 69%, FHA has ticked up to 5%, VA is at 0.
Hey! I would love to hear from you in a comment or an email or a smoke signal … reach out if you have questions!