Barker and Hedges Real Estate Blog

Once again, the cities of Minneapolis and St. Paul were ranked at the top when it comes to resident participation in National Night Out events. The City of Minneapolis ranked at No. 1 in the category for cities with a population of 300,000 or more. Saint Paul was also ranked No. 1 for communities with populations between 100,000 and 299,999.

This year is the sixth time in eight years that Minneapolis has finished at the top in its category of 300,000 or more residents. On August 5th, 2008, more than 60,000 residents assembled at 1,111 events held to increase neighborhood unity and bring people together to develop anti-crime and drug programs. San Antonio, Texas, was No. 2 for this category. The Washington DC area was No. 3.

St. Paul residents have increased their involvement in National Night Out.  Saint Paul moved up into first from its third-place finish in 2007. Rochester moved up to No. 3 this year after ranking No. 5 in 2007. Orlando, Florida, came at No. 2.

Minnesota’s high turnout, with at least one city in the top 10 in each of the five population categories, was not enough to win the National Night Out Award awarded by the National Association of Town Watch, the event’s sponsoring organization. It bestowed the highest award in the state category to Texas. Last year, Minnesota and Texas tied for the top position.

To discover how other cities in Minnesota fared, read here.  To see all of the categories and all of the winners of the National Night Out award, read here.

Yesterday I wrote about how truer home appraisals are being requested by mortgage lenders before they will dispense a loan.  Today I will write about how two major things right now are directly affecting your appraisal value: foreclosures and short sales. 

For a few months, pending home sales in the Twin Cities have gone up and the excessive inventory of unsold homes has been slowly going down.  However, the local real estate market, and markets in the nation at large, still faces some opposition.  Growing unemployment, wilting wage growth, higher down-payment prerequisites, and stringent mortgage qualifications are all contributing to tumbling real estate prices. Furthermore, the increasing number of foreclosures sales and short-sales taking place are hitting home sellers hard in particular. 

An abrupt increase in foreclosures across the nation is being blamed for dives in home prices that have stunned the economy. The foreclosure crisis has moved lenders and the government to launch broad efforts to keep people in their homes, even if it means renegotiating the terms for thousands of loans and in some circumstances, banks taking a loss. Most troublesome, the high foreclosure rate has translated into home sellers cutting their asking prices just to compete with short sales and foreclosure sales.

While it is true that about one-third of all home sales in the metro area during the July-September quarter were “lender-mediated” transactions, not all communities have been hit in the same way, according to data compiled by the Minneapolis Area Association of Realtors.  In Brooklyn Center, for example, 64% of home sales so far this year have been lender-mediated, while in Edina only 8.3% were. Regardless of what city or neighborhood you live in, if there are foreclosures or short sales happening on your block and you’re trying to sell a house, they will ultimately affect your sale price.

There is a specific reason why foreclosures have struck some vicinities harder than others.  Foreclosures tend to be clustered in areas with a large population of first-time and low-income mortgagees, as they are more likely to have subprime loans. These mortgages are by nature more likely to go into default. Some statistics indicate subprime borrowers at over six times as likely as prime borrowers to end up in foreclosure.

Communities experiencing increases in foreclosure sales also tend to see sharp declines in the median sale price. In the Regional Multiple Listing Service district that includes north Minneapolis, 67.2% of the sales were lender-mediated. As of October, the median sale price of houses in that district fell 70% in two years. In Edina, where foreclosures include a small number of upscale homes but make up a low proportion of the total sales, the median sale price has fallen just 1.2%.

Despite these trends, not all areas are experiencing the same sort of downturn. Even within cities where foreclosures have made an apparent impact on prices, like in Brooklyn Center and Brooklyn Park, parts of residential areas are maintaining their property values.

There are ample buyers, even real estate investors with cash in hand interested in picking up lender-owned properties at a bargain. But many are unwilling to wait through the lengthy and complex process of buying a short sale home or foreclosure home. Because of the enormous number of foreclosures occurring, it can take 90 to 120 days just to get a reply to an offer from a lender. By that time, many buyers have found a more immediately available home.  The lender is then compelled to reduce the price extra to generate more interest in the property, and pushing the prices of nearby seller-owned homes down even to stay competitive.

Those consecutive price reductions can cause trouble in other communities, other houses that are in a similar price range or condition. That’s because foreclosures often become comparisons for appraisals. Because bank-owned houses are going to be priced below market value to move them rapidly, the appraisal values of seller-owned listings will drop. 

There is for even more concern. As more homeowners descend into foreclosure because of increases in their adjustable-rate mortgages instead of job loss or other economic misfortune, a growing number of short-sale and foreclosure homes are well maintained, making it more likely to be used as comparables for traditional home sales.

If you’re a home owner thinking about moving up to a larger or more up-scale house, don’t be afraid of putting your house on the market.  Even if as a seller you lose some money on the home you’re leaving, as a buyer you’ll pay less for the house you’re moving up to.

When it comes to pricing your home for the market, many factors are taken into account. One of these will be “comps”: the comparable sales of other properties in your areas.  Used as benchmarks in home real estate appraisals, buyers and sellers never used to be concerned about “comps” when real estate values were on the upswing.

In this soft market, mortgage lenders recently have begun making these benchmarks a big deal. Because of the rapid decline in home values, instead of accepting sales of comparable properties that closed six to 12 months ago like in years past, lenders and mortgage investors now demand that appraisers include only the most recent comparable home sales, preferably using closings from the last 90 days to support their valuations.

Mortgage lenders and investors are also pushing for more comprehensive data on local listings, pending sales and listing-price to selling-price ratios before they agree to fund a mortgage for pretty much any amount.

As a result, more and more home sales are being complicated or stalled entirely as buyers demand that sellers lower their prices to reflect the lower loan amounts their lender was willing to provide.  Prices are even being renegotiated after contracts have been signed.  In some ways it can help the buyer by fetching a lower price, but if the sellers don’t agree to the new terms it can bring an end to talks. When lenders and sellers wouldn’t budge, transactions that had been a sure thing have fallen through.

Some advocates say the tougher standards are producing valuations that are much more accurate to short-term changes in local price shifts.  Opponents, on the other hand, say that the demands have contributed to valuations lower than the price on the sales contract, putting transactions in jeopardy. Additionally, if sales are slow in some places, there may not be enough comparable closings within 90 days for an accurate measure.

We love our arts here in the Twin Cities.  As it turns out, people and organizations outside of the metro do, too!  Eight Twin Cities arts organizations will share $5.3 million in grants from the New York-based Wallace Foundation.  The money is intended to build audiences and spur student participation. In addition, the foundation will give $1.6 million to Arts Midwest and the Minnesota Community Foundation over four years to create a learning network to available to all Twin Cities arts organizations. A grand total of $6.9 million, it is the largest single-year commitment Wallace has made to local arts organizations.

Six groups will receive grants of $750,000 over four years. They are MacPhail Center for Music, Minnesota Orchestra, Minnesota Opera, St. Paul Chamber Orchestra, the Ordway Center and the MIA. Northern Clay Center will get $500,000, and Mixed Blood Theatre won $300,000.

In a separate announcement, the Wallace Foundation will bestow a $750,000 grant to Minneapolis public schools to strengthen arts education.

Historically, the Wallace Foundation has provided significant funding for Twin Cities arts groups. The Walker received $2 million in 2006 and $1.25 million in 1994.  The Children’s Theatre Company, the Guthrie, the Loft Literary Center and Mixed Blood all have received Wallace money in the past.

Read the full article posted in the Pioneer Press to find out how each arts organization is going to use their gift.

Buying a Home. Topics include the best time to buy, tax advantages, financing and inspections. 7 p.m. Tuesday. $15. Minneapolis Community Education, Roosevelt High School, 4029 28th Av. S. 612-668-4828.

Home Ownership. Overview of steps to take to buy a home. Attendees will receive a copy of their credit report. 7 p.m. Tuesday. $15. Minneapolis Community Education, Southwest High School, 3414 W. 47th St. 612-668-3100.

Selling a Home. Tips on selling in today’s market. 7 p.m. Nov. 25. $15. Minneapolis Community Education, Roosevelt High School, 4029 28th Av. S. 612-668-4828.

Finding and Buying Your First Home. Topics include choosing a mortgage, first-time home-buyer programs, government loans and negotiating the best price in a buyer’s market. 6:30 p.m. Dec. 2. $15. Minneapolis Community Education, Jefferson Community School, 1200 W. 26th St. 612-668-2740.

Buying Foreclosed and Short-Sale Properties. Topics include how to find deals in the foreclosure market and negotiating with banks. For first-time buyers or experienced investors. 7 p.m. Dec. 11. $15. Minneapolis Community Education, Jefferson Community School, 1200 W. 26th St. 612-668-2740.

We also offer our own monthly home buying seminars in the Twin Cities area.  If you are interested in attending one of our monthly home buyer seminars, please sign up here.

The number of new listings in Minneapolis once against declined during the month of October compared to last year, according to the Minneapolis Area Association of Realtors’ Market Update for 100 Twin Cities Communities.  There were 877 new listings, whereas in October 2007, there were 1,012 new listings.  That adds up to a drop of -13.3%. During October, the University and Downtown communities experienced the greatest decrease in new listings.  Conversely, the Camden, Phillips, and Powderhorn communities saw increases in new listings.  Here is an inventory of October 2008 new listings in Minneapolis by community and the percentage of change that has occurred compared to October 2007 (Previous Barker & Hedges article about September 2008 Minneapolis Real Estate Market Activity.)

Camden 151 (+11.9%)
Downtown Minneapolis 85 (-40.6%)
Longfellow 42 (-28.8%)
Nokomis 121 (-11.0%)
North 98 (-14.0%)
Northeast 73 (-6.4%)
Phillips 24 (+14.3%)
Powderhorn 76 (+16.9%)
Southwest 108 (-7.7%)
University Area 7 (-68.2%)
Uptown-Lakes 96 (-20.0%)

Minneapolis’ posted new listing for the 2008 year-to-date is behind about the same as it was last month.  From January through October of 2008, there were 9,859 new listings, compared to the 11,355 homes put on the market throughout the same time period of 2007, a change of about -13.3%. The greatest decreases in new listings for the year-to-date have happened in the Uptown-Lakes, Downtown, and Nokomis communities.  The North, Phillips, and Powderhorn communities have seen increases in listings over last year.  Here is a depiction of new listings in Minneapolis by community for the 2008 year to date and the percentage of change that has occurred compared to 2007:

Camden 1,414 (-2.8%)
Downtown Minneapolis 1,227 (-25.1%)
Longfellow 548 (-9.1%)
Nokomis 1,094 (-24.9%)
North 1,220 (+6.0%)
Northeast 734 (-19.7%)
Phillips 281 (+12.9%)
Powderhorn 824 (+19.2%)
Southwest 1,216 (-15.7%)
University Area 210 (-20.5%)
Uptown-Lakes 1,084 (-26.9%)

Home listings may be reduced, but closed sales within the City of Minneapolis increased during October compared to last year.  There were 429 properties sold (similar to September’s 432), showing +9.7% more closed sales than the 391 homes sold in October of 2007. For the 2008 year to date, the Minneapolis closed sales are finally at and above the level of last year.  During January to October of 2007, there were 4,362 homes sold.  Last month in October, 4,496 homes sold, a +3.1% increase!  Of course, some communities are a hotter real estate commodity than others.  Camden and North have seen increases in sales this year of over 100%. Here are the closed home sales in October broken down by community:

Camden 63 (+103.2%)
Downtown Minneapolis 51 (-15.0%)
Longfellow 27 (+22.7%)
Nokomis 51 (-1.9%)
North 76 (+105.4%)
Northeast 28 (-24.3%)
Phillips 10 (+66.7%)
Powderhorn 24 (+26.3%)
Southwest 57 (-6.6%)
University Area 3 (-82.4%)
Uptown-Lakes 38 (-20.8%)

The average prices of homes sold in Minneapolis are still low.  Last month, the average price of a home sold within the city was $197,320, compared to the $255,010 homes were fetching in October 2007.  For those of you keeping score, that is a decrease in price of -22.6%.  The sales prices of homes sold in Downtown Minneapolis have risen once again, and this month real estate prices in the University Area jumped +43.9%. The average sales price of homes sold within the City of Minneapolis for the year-to-date in is now $217,328.   From January to October of 2007, that number was $259,928. The percentage of Minneapolis homes which sold at their original list price was 90.8% during the month of October, down from 92.7% in 2007. Average prices of homes sold in Minneapolis by community during October 2008:

Camden $58,701 (-46.7%)
Downtown Minneapolis $307,434 (+2.8%)
Longfellow $191,583 (-5.7%)
Nokomis $198,141 (-11.8%)
North $52,251 (-31.2%)
Northeast $133,727 (-34.6%)
Phillips $57,700 (-54.2%)
Powderhorn $115,565 (-37.0%)
Southwest $361,388 (-8.4%)
University Area $359,000 (+43.9%)
Uptown-Lakes $361,641 (-3.6%)

Finally, homes for sale in Minneapolis were on the market for an average of 124 days before they sold in October. Last year during the same month, Minneapolis homes were on the market for an average of 101 days before they were sold.   The statistics vary based on neighborhood and the types of housing on the market. Condos and town homes are selling much more quickly, while single family homes will stay on the market for much longer.

This is a brief analysis of the Minneapolis real estate market based on calculations by the Minneapolis Area Association of Realtors. These statistics do not reflect each individual situation of course.

Browse homes for sale by Minneapolis community:

Calhoun Isle Real Estate
Camden Real Estate
Central Minneapolis Real Estate
Longfellow Real Estate
Phillips Real Estate
Powderhorn Real Estate
Near North Real Estate
Nokomis Real Estate
Northeast Real Estate
Southwest Real Estate
University Real Estate

New posted listings for homes in St. Paul, Minnesota, fell in the month of October according to the Minneapolis Area Association of Realtors’ Market Update for 100 Twin Cities Communities.  During October, there were 515 new listings in St. Paul.  In October of 2007, there were 603 new listings.  That is a reduction of about -14.6%.  There were too many neighborhoods to list here that experienced declines of 20% to over 45%.  The only neighborhoods which saw significant increases in new listings were the Phalen and Merriam Park neighborhoods of Saint Paul.  (Barker & Hedges blog entry about September 2008 St. Paul Real Estate Market Activity.)

Como 31 (-6.1%)
Crocus Hill 40 (-35.5%)
Downtown Saint Paul 21 (-46.2%)
East Side 132 (+0.8%)
Highland Park 25 (-26.5%)
Mac-Groveland 22 (-47.6%)
Merriam Park 12 (+20.0%)
North End/Frogtown 56 (-29.1%)
Phalen 83 (+23.9%)
Southeast 12 (-42.9%)
St. Anthony/Midway 30 (+7.1%)
West 7th 17 (-29.2%)
West Side/Cherokee 30 (-0.0%)

Saint Paul’s posted new listings of homes for sale from January through October are at 6,062.  That is a decline of -9.4% from last year’s 6,688 for the same time period.  Merriam Park, St. Anthony / Midway, and West 7th neighborhoods continue to experience greatest declines in new listings.  The Phalen and West Side / Cherokee neighborhoods were the only St. Paul neighborhoods that saw any boost in new listings for the year to date through October.

Como 348 (-19.8%)
Crocus Hill 450 (-19.5%)
Downtown Saint Paul 352 (-20.9%)
East Side 1313 (-1.5%)
Highland Park 400 (-10.1%)
Mac-Groveland 335 (-21.9%)
Merriam Park 170 (-22.7%)
North End/Frogtown 732 (-9.1%)
Phalen 890 (+15.3%)
Southeast 217 (-23.0%)
St. Anthony/Midway 320 (-26.1%)
West 7th 175 (-22.9%)
West Side/Cherokee 334 (+14.0%)

Time for some good news!  The number of homes sold within St. Paul, Minnesota, increased significantly during October compared to last year.  There were 255 homes sold throughout the month, a +33.5% increase!  It is also nearly equal to the 262 homes sold during September.  For the year to date, there have been 2,589 closed sales from January through October.  Last year during the same time period, there were 2,346 closed sales. That means for 2008, +10.4% more homes have sold so-far than 2007.  Homes in the East Side, North End / Frogtown, and Phalen neighborhoods have seen increases in home sales greater than 100%. Closed sales on homes for October 2008 in Saint Paul by neighborhood:

Como 12 (-14.3%)
Crocus Hill 15 (+7.1%)
Downtown Saint Paul 9 (-0.0%)
East Side 52 (+57.6%)
Highland Park 15 (+15.4%)
Mac-Groveland 12 (-36.8%)
Merriam Park 11 (+10.0%)
North End/Frogtown 37 (+68.2%)
Phalen 43 (+168.8%)
Southeast 6 (-50.0%)
St. Anthony/Midway 21 (+61.5%)
West 7th 6 (-33.3%)
West Side/Cherokee 16 (+220.0%)

Since there was good news, of course there had to be some bad news.  The prices all those homes have been selling for have continued to fall.  The average sales price of a home within Saint Paul was $146,892 in October 2008, a big change from the $208,786 of 2007.  That is a decrease of -29.6%. Only the Mac-Groveland neighborhood saw increases in real estate prices in October.  The average sales price year-to-date in Saint Paul also continues to drop.  Through October, the average sales price of homes sold in Saint Paul has been $175,932. During the same time period in 2007, homes were sold for an average price of $232,261, a difference of -24.3%.  The percentage of St. Paul homes which sold at their original list price has fallen to 89.9%. In 2007, that number for October was 92.1%.

Average prices of homes sold in Saint Paul by neighborhood during October 2008:

Como $169,738 (-14.6%)
Crocus Hill $325,059 (-12.3%)
Downtown Saint Paul $204,776 (-12.9%)
East Side $92,237 (-40.0%)
Highland Park $306,370 (-1.1%)
Mac-Groveland $303,033 (+23.0%)
Merriam Park $225,051 (-22.2%)
North End/Frogtown $60,280 (-49.0%)
Phalen $99,337 (-30.0%)
Southeast $118,967 (-36.4%)
St. Anthony/Midway $139,002 (-40.6%)
West 7th $64,875 (-64.3%)
West Side/Cherokee $113,470 (-26.7%)

In October of 2008, a home in St. Paul was on the market for an average of 132 days before selling.  In October of 2007, homes in Saint Paul were on the market for an average of 135 days before they sold. Houses in Merriam Park and St. Anthony/Miday are selling after being on the market for just 90 days while homes in some neighborhoods are spending 160 days or more on the market.

This is a brief analysis of the St. Paul real estate market based on calculations by the Minneapolis Area Association of Realtors. These statistics do not reflect all situations.

Browse homes for sale by Saint Paul Neighborhood:

Battle Creek & Highwood Real Estate
Como / Como Park Real Estate
Downtown Saint Paul Real Estate
Greater East Side Real Estate
Hamline-Midway Real Estate
Highland Park Real Estate
Dayton’s Bluff Real Estate
Payne-Phalen Real Estate
Macalester-Groveland Real Estate
Merriam Park Real Estate
North End Real Estate
St. Anthony / Midway Real Estate
Summit Hill Real Estate
Summit University Real Estate
Thomas-Dale Real Estate
West Side Real Estate
West 7th Real Estate

Home staging involves using the home owner’s existing furnishings if possible.  However, when dated furniture depreciates the appeal of a house, additional action must be taken.  Below are “quick fixes” to expensive problems:

• Dated/Worn Furniture:  If your furniture has seen better days or is just plain ugly, slip covers offer an inexpensive solution.  Stretchy furniture covers, described by some as “Spanx for your sofa,” eliminates the shiftiness of loose fitting overs.  These wonders can transform wing-back chairs, love seats, and full couches to a like-new appearance. (CLICK HERE to watch a “how to” video)
• Scratched/Knicked Tables:  Scratches in wood furniture pieces can be minimized by using stain pens available in any home improvement store.  You literaly color your problems away!  Table tops and chairs that require more care may be updated with coat of glossy black spray paint.  (CLICK HERE for pen link)
• Dull Cabinetry:  To fill in worn areas of your cabinetry or wood floor, use Old English Scratch Remover.  Although temporary, this oil will help the wood in the worn areas look rich again.
• Outdated Headboard:  A dated headboard can make your entire master bedroom dreary.  Simply remove the headboard all together and keep the mattress on the metal frame.  A visual headboard can be created through your pillows and hanging art work over the bed.

Updating your furniture may be an essential part of home staging, but you don’t need to spend a fortune to make your room look like a million bucks!

KFM Staging & Design is a Minnesota home staging company that creates “First Impressions that Sell” in the Twin Cites and Western Wisconsin.  Many of our staging clients use KFM’s redesign consulting service in their new house to create a designer look.  Visit our website for staging tips or to schedule your in-home or online consultation.

Reverse Mortgages for Seniors. Learn the facts about this potential source of retirement income. 1 p.m. Monday. $9. Robbinsdale Community Education, Winnetka Learning Center, 7940 55th Av. N., New Hope. 763-504-6980.

Community Land Trust. Learn about the City of Lakes Community Land Trust and affordable homeownership opportunities in Minneapolis. 6:30 p.m. Monday. $5. Minneapolis Community Education, Henry High School, 4320 Newton Av. N. 612-668-1922.

Home Loan University. Learn about mortgages and the home-buying process. 7 p.m. Monday. $15. Minneapolis Community Education, Northeast, 2955 Hayes St. NE. 612-668-1515.

Cabin Trust Planning. Learn about group ownership of a cabin, how a cabin trust works and how to set one up. Sponsored by Heers and Heers Attorneys-at-Law and Federated Insurance, Owatonna, Minn. Free. 10:30 a.m. and 7 p.m. Tuesday; 7 p.m. Thursday. Free. Airport Hilton, 3800 E. American Blvd., Bloomington. To register, call 651-641-0001.

Buying a Home. Topics include the best time to buy, tax advantages, financing and inspections. 7 p.m. Nov. 18. $15. Minneapolis Community Education, Roosevelt High School, 4029 28th Av. S. 612-668-4828.

Home Ownership. Overview of steps to take to buy a home. Attendees will receive a copy of their credit report. 7 p.m. Nov. 18. $15. Minneapolis Community Education, Southwest High School, 3414 W. 47th St. 612-668-3100.

Selling a Home. Tips on selling in today’s market. 7 p.m. Nov. 25. $15. Minneapolis Community Education, Roosevelt High School, 4029 28th Av. S. 612-668-4828.

Finding and Buying Your First Home. Topics include choosing a mortgage, first-time home-buyer programs, government loans and negotiating the best price in a buyer’s market. 6:30 p.m. Dec. 2. $15. Minneapolis Community Education, Jefferson Community School, 1200 W. 26th St. 612-668-2740.

Buying Foreclosed and Short-Sale Properties. Topics include how to find deals in the foreclosure market and negotiating with banks. For first-time buyers or experienced investors. 7 p.m. Dec. 11. $15. Minneapolis Community Education, Jefferson Community School, 1200 W. 26th St. 612-668-2740.

We also offer our own monthly home buying seminars in the Twin Cities area.  If you are interested in attending one of our monthly home buyer seminars, please sign up here.

Are you one of the many Minnesotans considering buying their first home while the real estate market is swinging towards a record-setting low point?  You’re not alone!  But with so many low-quality websites out there, how can you begin researching the process of buying your first home from a comprehensive site?

Look no further.  We have launched the Minnesota First Time Home Buyer Website just for you and others like you.  At this site, you can find information about federal first time home buyer programs, Minnesota state first time home buyer programs, and Minnesota county first time home buyer programs.  Additionally, there is information regarding first time home buyer programs for Minneapolis and Saint Paul and neighborhood programs.  

At this site, you can learn about mortgage terms and use a mortgage calculator to find an estimate of how much you could potentially spend on a home.  You can register for a home buying seminar, where you will learn a wealth of information about the home buying process.  Soon, other Minnesota first time home buyer resources will be available to cover various topics a first time home buyer may not have considered in their quest, including the hidden costs associated with home ownership that aren’t generally discussed!

One of the greatest features of this site, though it is not active yet, will be a forum for Minnesota first time home buyers.  Here, people in the area that are pursuing the same goal of owning their first home can discuss the buying process and other related topics.  Stay tuned and check the new site often for enhancements and the activation of the forum!