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 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!
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.
Need access to the cities but want a small town feel, White Bear Lake has it! I love where I live but every single time I go to White Bear Lake I want to move there! This suburb of Saint Paul just has a good feel to it – from the historic downtown to the lake and parks. If you’re looking for a walkable lifestyle this should be on your list of places you consider! Watch the video below to see what I mean – lots of footage of the downtown and the homes.
White Bear Lake sits north of St Paul (so if you’re not from around here that’s the east side of Minneapolis St. Paul), if you work in downtown Saint Paul you’re about a 15 minute commute or to downtown Minneapolis it’s about 25 minutes. Getting to the airport will take a little longer because it’s on the opposite side of the city, but if you’re only heading there periodically it shouldn’t be a problem, it’s less than 30 minutes in decent traffic.
Downtown White Bear Lake drips CHARM from top to bottom. Most of the homes in the downtown area have a historic look and feel, but are well maintained. As you move out away from that central downtown area homes get a little newer but this is not the place to look if you want new build / subdivision feel. WBL was an old resort town and escape from the city and the rail line still runs right up to it, it retains that feeling of a lakeside vacation area today. The old downtown has a ton of options for restaurants, pubs, bakeries, shops and other services like salons or day spas. The library is downtown as well, it’s a busy bright and modern space that is part of the Ramsey County Library System.
In the summer and fall, Grab your morning coffee and a muffin from one of the bakeries and then enjoy the community and seeing your neighbors while you shop for locally produced eggs, honey, fruits and vegetables at the farmers market held in downtown every Friday morning from June through October.
For a small town white bear lake has a pretty big focus on the arts and you can take classes or take in a show at the White Bear Center for the Arts, The Player’s Theater or the Children’s Performing Arts.
Home prices in WBL range from the mid-$200’s for a townhouse to $1.2M for a new construction lake front home. If you want to live directly on the lake, prices are consistently over $1M, but you can find something more moderately priced with lake front access.
Currently White Bear Lake has a tighter sellers market than the metro area as a whole – they are sitting at only .7 months of inventory whereas the twin cities is a little over a month on average.
White Bear Lake Area Schools are the big cahuna in this part of the metro they serve all or parts of Birchwood, Gem Lake, Hugo, Lino Lakes, Little Canada, Maplewood, North Oaks, Vadnais Heights, White Bear Lake and White Bear Township.There are a lot of schools in the district, so do your research and see which one will work best for your kids. You can look at sites like Great Schools or Niche.com, but schools welcome visitors that want to tour and get questions answered before making a decision.
White bear lake is home to 24 parks including access to docks at the lake, a disc golf course, and access to Bald Eagle-Otter Lakes Park which is one of 4 Ramsey County regional parks. This park has a playground, boat launch, fishing pier, access to the Tamarack Nature Center and an off-leash dog area. If you’re looking for swimming, White Bear Lake County park has a swimming beach, this park is located just north of the downtown area.
A city in Minnesota couldn’t hold up it’s head if they didn’t have an ice arena – White Bear Lake is home to the Sports Center Ice Arena where you can participate in or watch the state sport of MN – ice hockey – or for those without the urge to body check someone simply some ice skating. You don’t have to be a member to use the ice here, it’s pay as you go!
Hey – if you have questions about anything real estate or living in the Twin Cities related, let me know! I’m happy to help!
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 lot of people say that they choose to move to Minneapolis because it’s a nice sized city with an affordable cost of living. Most of the people that I work with are moving to Minnesota from out of state and are often coming from more expensive parts of the country. But not everyone is! Today I want to take a look at the cost of living in the Twin Cities and how it compares to some other areas that I see people coming from as well as other cities in the Midwest.
How is Cost of Living determined?
“Cost of living” is a term used by economists and it’s actually an INDEX, so every place in the US is compared to the national average, which is considered 100%. If a city has a cost of living lower than the national average, it will be expressed as some percentage less than 100 and a higher than the national average cost of living will be a number that expresses HOW MUCH higher than the national average it is as in 100+ x%.
Cost of living in Minneapolis
The magic number for Minneapolis is close to 103% of the national average. This index is broken down into segments like housing, transportation, food, and entertainment and then the number given is the one that consolidates all of these.
Having a cost of living index of 103% of the national average is really a comforting number if you’re looking for an affordable city! I’m going to give you the current COL #’s for other cities in the US as well as cities specifically in the Midwest so you can see how we stack up. Remember that this is looking at ALL areas of the country and typically urban areas are much more expensive.
Housing is the most expensive part of nearly everyone’s budget. Minneapolis is at 117% of the national average. If you’ve ever seen one of my market update videos you’ll understand what drives that, but its a combination of low housing supply, low interest rates and a big bubble of first time buyers that are hitting the market right now.
Here in Minneapolis we are right near the national average for food pricing, sitting at 101% of the national average.
For transportation costs, Minneapolis sits higher than the national average at 108%. This includes an average of cost of gasoline, car insurance and maintenance expenses, and mass transit fare for the area. I was a little surprised by this one because I just returned from a trip to NE Ohio and gas prices were consistently higher than what I have paid in MN everywhere east of us. According to AAA, auto fuel prices in MN are LOWER than the national average.
Healthcare is at a wonderful 75% of the national average! The past couple of years have shown us all how important this piece is for everyone, and not only are our costs lower here, but we also have access to some of the best healthcare in the world with the Mayo Clinic being located within easy driving distance of Minneapolis and many high quality hospital systems within the twin cities area itself.
Miscellaneous costs come in at 108% these include those goods and services not included in the other cost of living categories, including clothing, restaurants, repairs, entertainment, and other services.
Compared to other large metros across the US
If we compare Minneapolis to large metro areas like New York, San Diego, or Chicago we see that, no surprise, it’s more affordable here.
Housing in NYC is 441% HIGHER than Minneapolis, and cost of living there is 141% higher, San Diego is 35% higher overall with housing 110% higher, and Chicago – where I came from – is 15% higher overall but housing in particular is 54% higher than Minneapolis.
Housing is the biggest driver of whether an area is affordable or not – we all need a roof over our heads!
Coming from Texas
I see a lot of people coming to Minneapolis from Texas, most commonly the Austin area, but definitely from all over and Austin is actually coming in at 4% less expensive than Minneapolis. Rents are higher in Austin, but median price to purchase a home is slightly lower there.
Other Midwestern Cities
Looking closer to home, at smaller cities in the Midwest, Madison WI is actually MORE expensive to live in than Minneapolis – housing is 8% higher, food 3% more expensive and healthcare a whopping 19% more expensive.
Minnesotans will definitely question why anyone would pay MORE to live in Wisconsin. I mean. It just doesn’t make sense.
Milwaukee WI (if you love your Pabst!) is the bargain area with overall costs being 2% less, but still getting you where it hurts if you need to go to the dr.
Bargain Cities of the Midwest
Saint Louis has a 17% lower cost of living index than Minneapolis. Everything from housing, transportation, entertainment is lower – they do come in slightly higher on food and Des Moines Iowa is also a bargain, coming in with a lower cost of living on every metric and the net saving is 24%!
If you have questions about living in or moving to Minneapolis or the twin cities reach out! I’m happy to help! If you’re curious about different neighborhoods or suburbs, check out my playlist on my YouTube channel where I talk about exactly that!
Hi and happy new year! Who wants to start the year off with some DATA and a look at what the real estate market is doing PLUS what I believe will happen with the housing market in 2022? I actually LOVE data – it tells a very clear story, so let’s dive in and take a look at what that data is telling us.
I wish I had a crystal ball to tell you what is going to happen to the real estate market in 2022, I don’t, but I will make some educated guesses! In addition to that I’m going to share with you what the offers that have been accepted have looked like in the past month.
I like that info because it is ALSO a gauge for how strong the market is – what are sellers wanting to see and what are buyers willing to do to win?
in 2021, being a buyer (or a buyer’s agent!) could feel like pushing a boulder up hill. It was hard, tiring, a little stressful but it was ultimately satisfying if everyone hung in there (I’m stubborn – I don’t quit).
The market was really rough for buyers because demand for homes here is HIGH and supply is LOW. I think many of us went into this winter hoping for a bit of a break on the horizon, but the numbers are not making it look like that will be the case.
Inventory of homes was really low LAST January first – historically low! and as of the first week of january this year we have 15% fewer listings on the market to choose from than we did then. We are still in a ridiculously strong seller’s market.
Fun fact – the last time the market was considered “balanced” in the twin cities was 10 years ago. It has favored sellers ever since and doesn’t seem to be lightening up at all.
As a colleague said today, there is a lot of national press saying that the market is loosening up but the numbers tell a different story.
It’s important to look at DATA for the market you’re in and understand what that means for your situation. So let’s look at the data for the twin cities – you know that price is a function of supply and demand, and we have already established that supply is low. It has been consistently low for years and the recent challenges with supply chain and lumber prices are not helping supply to correct that quickly. It’s going to be a long term process.
Realtors look at how many months supply we have of homes available to sell if NO OTHER HOMES ARE LISTED in order to determine what kind of market we are in – 5-6 months is considered a balanced market, fewer months worth of inventory favor sellers and the smaller the number of months the more strongly it favors them, and vice versa for buyers.
Currently, the total months supply we have now including ALL property types is 8/10 of one month. .8 months is WAAAAAY less than 5-6 months.
If you break this down further you see that single family homes are at .7 months supply this year (one year ago we had 9/10’s of a month), Condos have been the softer spot and currently have a 1.6mo supply down significantly from a year ago when we had 2.8 months, and townhomes are just like single family homes with .7 now vs .9 a year ago.
An interesting thing to me is that high end homes are seeing the market tighten up a lot now too. That area had more wiggle room last year, but it looks like that is no longer the case.
Median price by property type
If we take a look at prices we see what this high demand has done over the course of a year, single family homes are at a median price of $360,000 UP 10% year over year from $326,300 (emphasizing that this is a MEDIAN price for the entire metro area, obviously prices range widely!)
Townhomes show a similar increase of 8% from $240,000 a year ago to $259,900 now.
Condos despite being the soft spot ALSO rose in price – they are at $191,000 up 11.6% from $171,000 a year ago.
Demand side of the equation
The other side of the equation is DEMAND. What leads to this high demand?
A couple of things that I can think of the first of which are the low interest rates. The Fed is talking about raising them this year but even if they do, these changes are typically incremental as they test to see the effect on the markets for everything – not JUST homes.
If the rates rise a bit – even to 4%? will that tamp down the demand for homes?
I personally don’t think it will have an enormous effect, the demand is so high, and even 4% or 5% are STILL low interest rates. In the past I have paid interest at 8.25% for my first home, 6.5% for my second, we paid 4% and thought we had a steal when we moved to MN! Yes, we refinanced when the rates dipped again, but you get my point. It’s relative, and people want a place to live that belongs to THEM and gives them essentially rent control and a predictable expense PLUS the joys of having your own home.
The second factor in demand is the fact that a very large bubble of millenials is aging into a time when they want to do the things that people do in early adulthood – get married, have a family, BUY A HOUSE. This bubble, or boom, is driving demand for homes.
Tips for BUYERS
If you are thinking of selling, your property will likely get scooped up VERY quickly this year. If you are thinking of jumping into the pool to BUY, I have some advice:
1. Understand that you are going to be in a difficult situation, you aren’t the only one looking at a house and if you decide to offer on it you will be competing with many other people. Do your best.
2.) steal yourself for the process. If you don’t get the first home you offer on, it will likely hurt a bit, get back in the saddle and try again. SOMEONE wins every one of those multiple offer situations – that someone CAN be you. You just need to have the chops to hang in there and keep swinging. If I’m working with you, I’m going to have your back every step of the way and help you present your offer in a way that makes the seller say – YES – that one!
3.) very important! Look at homes listed UNDER your max price. Almost NOTHING goes for list price right now, so you need to put yourself in a position of being able to offer over list.
4.) A corollary to #3 is that you should save as much cash as possible so that you have that wiggle room to cover appraisal gaps or increase a budget and put a smaller percentage down if you need to.
5.) lastly, don’t stop looking at the times when everyone else has stopped looking! If it’s a holiday or WINTER, now is a good time to look because you are competing with fewer buyers even if the supply is lower, too. I love to look on holiday weekends – sign me up for Memorial Day! I’ve not really had a break over the Christmas season this year because listings are selling now as well as buyers getting homes while everyone else is hung over from too much egg nog. STAY IN THE GAME. Take advantage of the situation.
Offers that are getting accepted NOW
Let’s look at what types of offers are getting accepted right now according to Home Free Transaction Coordinators – what are sellers looking for and buyers offering in the effort to get a home?
Offer Acceptance Rate: 52% this indicates multiple offers to me. We have been quite low on this in the recent past – under 30%
Inspections were Waived 30% of the time – summer was over 50%, now seems like a good time to buy if you REALLY want an inspection
Pre-MLS Sales: 4.4%, these are sales that happen off market, private network of agents marketing them to each other.
Average Purchase to List Price is the lowest I’ve seen this year at 100.87%, this was up around 105% in summer!
Cash 19% – this is the highest I’ve seen and I can say that it reflects my own personal experience recently.
Conventional loans 73% – still the big daddy, and always will be.
FHA 2% still tough to get these accepted and that kind of stinks, but when you’re going up against cash, I can’t blame a seller.
VA 4% this is the highest I have seen in a year at least.
Seller contribution to Closing Costs: 37.8%, this can be in lieu of fixing something.
Home Warranties included in the sale 5.6%
Offers Contingent Upon the Sale of the Buyer’s Property are at 6.7% – this is actually DOWN quite a bit, I believe not too long ago it was around 10-12%. Try to avoid this of possible. It’s really tough to get accepted.
If you’re exploring communities, check out my neighborhoods and suburbs playlist on YouTube to take a look at different areas of the metro.
Let me know if you have questions or comments – love to hear from you!
Let’s talk about the Real Estate Market in the twin cities! It’s been a little bit since I’ve done one of these updates, and typically there is some seasonality to the real estate market, with a big slow down in the fall as holidays approach and things picking up in the early spring. Is that the case this year? Let’s find out!
So, how’s the market? If there is one question every agent hears all the time, this is IT! And I think everyone knows the market has been GREAT for sellers and really rough for buyers, so the question is has that changed? The information I’ll give you here applies to the 7 county metro area, but you should know that every neighborhood has its own micro market and behaves a bit independently from the whole, this information is just a snapshot of the general market behavior right now, if you’re curious about your own little niche – let me know and I get you more specific #’s that apply to your specific area in the metro – just send me an email about that and I’m happy to help.
I was able to get a look at some historical data comparing this year to 10 years ago and one of the things that stood out were that the # of active listings that are available to be sold has continually decreased to nearly HALF of what we had then – we had 10,229 homes to choose from in 2016 and now have only 5,692. This isn’t sudden, it’s a distinct trend line going down over the past 10 years. The inventory issue did not sneak up on us and it isn’t going anywhere.
If it’s prices that are freaking you out they peaked in summer and we are now seeing the fall dip. So this could be the time to get a better deal on a home than getting into the scrum with everyone else during peak season.
If you remember from other updates, I like to reference the “absorption rate” how many months would it take for the market to sell or absorb all the homes for sale on the market if no others were listed?
5-7 months worth of housing inventory is considered “balanced” and any number of months less than that indicates a sellers market and a number HIGHER than that is a buyers market.
Right now we have 1.03 mo supply of single family homes, 1.34 mo supply or condos and townhomes, and 1.12 combined mo supply of homes total. A very distinct sellers market! STILL! but better in some degree than earlier this summer when it was less than one month – somewhere around 2-3 weeks, and that takes into consideration days on market and active contingencies like inspection. Reality was that things were sold in a couple of days. And that is STILL the reality depending the price point, condition and the location of the home.
Let’s look at what sellers are deeming a good offer right now:
Offer Acceptance Rate: 62% -this has been as low as about 33% this year
Inspections Waived: 31% which is down from the highs over 50%. I am still seeing this come up a lot in multiple offer situations, and if people are bidding on a competitive house getting an inspection can still be a sticking point.
Pre-MLS Sales: 2.74% – this is lower than it’s been for most of this year – we have seen these off market properties make up around 5% of sales over most of the summer
Average Purchase to List Price: sellers are getting of their asking price 100.67% – great news for buyers and not awful news for sellers. You’ll probably get your asking price.
I will say that this is much MORE likely if it is a single family home as condos and townhomes are still soft spots.
The most recent 3 transactions that I have had have ALL had multiple offers, (7-9 offers), one had an accepted offer at 10% over list price, one at nearly 6% over list and the last I don’t know the outcome because we didn’t get it but we offered (and lost) at 10% over list and were told they accepted a cash offer with NO contingencies (no inspection!).
All of these homes were in the tightest price bracket of $300-$500K. No matter what the statistics say this continues to be an area of really fierce competition when it comes to homes that are in high demand areas and in good condition.
Cash 14%, – if you have the means to make this kind of offer it can really give you an edge. I am aware of some mortgage products that allow you to make a cash offer so if you’re in a competitive price point, and feel like this might be the answer, know that there are options out there and I give help you find out about this.
Conventional loans are still the big dog at 74% of loans.
FHA represented 10% of the accepted offers which is a nice bump up! This is great to see for people that may be first time buyers and need the extra room that an FHA loan grants them. It’s just been difficult to get an FHA loan accepted in this market when you’re being outbid by people that can guarantee appraisal gaps or provide other financial incentives (like cash purchases!).
VA 1% still a tough spot to be in , if you’re not familiar with VA loans, they are a zero down loan. This is a really tough spot when appraisal gap coverage is needed, so if you’re in a position to take any other type of loan, that would probably be beneficial to your offer.
USDA 0% – these are typically on land or rural purchases, seeing a low number here for a metro area is not surprising.
Other = 1%.
Seller Paid Closing Costs: 31% – this keeps going up!
Home Warranties: were included 9.6% – another statistic on the rise – so these indicators all show a very slight softening from the harsh days of early summer for buyers
Contingent Upon the Sale of the Buyer’s Property: 7.5% A little lower than we’ve seen in other months, but present!
Thanks for stopping by! If you’re interested in learning more about the different neighborhoods and suburbs around the twin cities, check out some of my videos highlighting those! I have a playlist dedicated to this with lots of good information if you’re thinking about making a move.
The city of Savage wasn’t named for anything terrifying – it’s actually named after Marion Willis Savage. Marion Savage owned the champion race horse “Dan Patch” in the early 1900’s and if you live in or move to MN you will likely hear that name from time to time. If you know the origins you’ll be ahead of nearly 90% of the people that live there! You’re welcome!
There is a street on the State Fair grounds named after the horse and Prior Lake HS (which serves kids from Savage) named their football stadium after the horse as well.
Savage is what I would consider a bedroom community (if you haven’t heard that term before it simply means a place that people live but don’t work there).
I stopped into the library to check it out and while I was in there I spoke with the librarian to see if I was missing something – a central downtown that I had somehow overlooked?? The librarian agreed with me that Savage is really a community that just grew up in the farm fields as the area near Minneapolis developed rather than growing up around a central downtown.
So Savage is by definition, NOT a walkable community, cars will be a major part of your life in Savage.
Instead of a downtown area, there is one central point that I would consider the “civic center” of Savage. You’ll find the Savage library (which is large, modern and pretty – it seems like an enjoyable place to spend some time), the town hall, the post office,& the police and fire stations all in this one area.
A bonus that I noticed when looking at their web site, the city offers free notary services to residents. That could be your tipping point when weighing your options!
Before I ventured out to Savage I looked at the homes listed in the MLS to get a sense of the range and what types were available for sale right now – there are some really beautiful townhomes that are in the low to mid $200’s, and prices go up to the mid $700’s for homes. The most expensive listing right now in Savage is for the remnants of a farm and will likely be sold for land development at close to $1M.
Shopping in Savage is limited to a few smaller shopping centers as compared to nearby Burnsville which has an abundance of stores, shopping centers, chain restaurants and a mall. If you live in Savage you’re likely to get your groceries at the Super Target, the HyVee or Cub Foods. If you like Costco like I like Costco, rest assured that there is one Savage adjacent in Burnsville.
Savage is served by 3 different school districts, so again, this is a case where if you have a preference for a particular school district you should verify the school boundaries and that your home lies within the district that you want to have. The three districts that serve Savage are:
Prior Lake – Savage district 719
Burnsville-Eagan-Savage district 191
Shakopee District 720.
There are 6 elementary schools, 2 middle schools, and 1 high school serving Savage. In addition, Savage has a Spanish immersion school, an alternative school, and 2 early learner schools.
Savage does have a few parks, and I think that there are often play lots for kids in the subdivisions, but they may lean heavily on the regional park that borders the south side of the city – Murphy-Hanrehan Park.
It’s a very large park and it made me think a bit of my other favorite regional Park – Lebanon Hills in Eagan. The Park offers a LOT of activities – Boating, Camping, Single Track Mountain Biking, Fishing, Hiking, Snowshoeing, Snow Mobiling, x-ctry Ski Trails, and 2 off leash dog parks – you can buy a day or an annual pass for the dog parks. One of the dog parks at Cleary Lake allows the pups to go for a swim. Savage does have one other dog park (I believe this one is part of the Savage Park district rather than the regional park, but it is Free.
Unlike other suburbs, Savage doesn’t have an aquatic center or anything like that, but they have a partnership with LifeTime Fitness for use of their indoor and outdoor pools.
For this one I will defer to the Scott County MN web site because property taxes in Savage vary by which school district the home is in and the value of the home. So you can get an estimated rate quite easily on their site if you are curious as to how they vary.
Fences, Chickens and BEES
And to answer my always asked questions: YES you CAN have a fence! The city regulates the type, workmanship and height depending on where it will be on your property, so you’ll have to check that out. Also – YES – you can have YARD BIRDS. Chickens and BEEKEEPING are allowed.
Savage is a great place to consider if you want a quieter lifestyle & don’t particularly care if the city provides a bunch of amenities which you may be able to easily access in nearby communities. If you want a relatively easy commute to either Minneapolis or St. Paul, or need to be able to get to the airport without a lot of hassle, this is a good option. Home prices in Savage are more affordable in pockets than they are in other parts of the metro and may be a good place to look if you are a first time buyer or if you just don’t have thee budget to live in other more expensive areas of the city.