Tax credit extended!!!

Its now official. President Obama signed the bill to not only extend the first time home buyer tax credit but also extend it to current home owners. The tax credit as far as first time owners is concerned is staying the same, $8,000, haven't owned in the last three years, etc. The expansion for current home owners is where the change occurred. Current home owners who have lived in their home for 5 consecutive years are eligible for a tax credit of up to $6,500.

Congress also made it a bit interesting by allowing people who lived in their home for 5 years, sold it 2 years ago, and have been renting to also qualify. The whole purpose of expanding the tax credit to current home owners is to help stimulate activity in the 200k+ market. The first time home buyer credit helped clear out the 0-200k market but did little to help the higher price points. The main reason is that the lower end market for the most part are foreclosures and short sales, there's no seller "moving up". By expanding the credit the hope is that people who were hesitant about selling will now have some motivation to do so, they sell their 270k house and buy one for 350k. The 350k home owner sells theirs, and moves up/down/wherever, and so on. To be honest there has been fair activity in the 200-300k range, good not great and not good enough to really get the 300+ market really moving again. With the combination of current sellers, and those who may have sold a year or two ago and were waiting for the "right" time things should start moving in a positive direction and will lead us back to a more balanced market.

More to come as soon as I get a chance to read all the details of the new additions to the credit.

Downtown St. Paul Post Office

Well, the main Post Office building in downtown St. Paul is officially on the market. Sounds like its been quietly marketed over the past few months but didn't officially go on the market until last week. Its a great building with so many possibilities for future use. If only I had a spare 8 million laying around.

As the article states it may take some time to get it sold, there aren't many developers out there willing to bite off more than they can chew in today's market. I have no doubt it will get sold, it will be developed into a wonderful new multi-use building. And whomever has the cash and vision will come out on top. Damn, if only I had the cash.

First time home buyer tax credit

We've finally had some movement on this issue. Yesterday evening the Senate approved an extension of the tax credit, there is no word on the details at this point. It now moves on to the House. Based on a few articles I've read it appears that the House will also go ahead and approve it, but we'll have to wait and see.

I think this is good news for the market. We've seen sales soar this year, largely thanks to the first time home buyer tax credit. Low home prices definitely played a roll as well. In fact, homes for under $200,000 have sold so well that the inventory in that price range dropped to a point where we only had a 3 month supply. Compare that to the 350-500k price range where we have a 12 month supply.

As the article in the link above states, there is no indication on the specifics of the extension (ie: how long, amount, only first time buyers or opened to all buyers). It will be interesting to see the details. One article I read, indicates that they were working the idea of having it be 8k for X amount of months, dropping it to 7k for a month, 6k the next, and so on. Personally I think that would be a great move. What we've seen in the last month is a huge push of buyers trying to get offers in and accepted so they can be closed by Nov. 30. With a monthly reduction we won't see so many panicked buyers trying to purchase at the last minute. This should equate to better service from lenders and title companies, many of whom are backed up trying to get everything through by the end of November, causing more stress and problems than necessary.

What I don't want to see happen is the amount get raised for two reasons, one personal, the other professional. Let's go with the personal first. I bought a house this year and will be receiving the 8k, it would piss me off to no end that I could have gotten more (much like what happened to more than one of my clients who received the original 7500 tax credit that they have to pay back, but that's a whole different can of worms). The second reason, the professional reason, is my concern for the future market. I'd hate to see the market get artificially propped up again only to find ourselves behind the eight ball two years down the road.

Check back over the next week or two for any new developments with the House vote.

Banks getting it right??

Are banks finally getting smart? Are they finally realizing a better strategy for getting foreclosed homes off their books?? Its looking like it. The Minneapolis Area Association of Realtors (MAAR) put out a report yesterday with statistics indicating that banks are now receiving a higher percentage of the original asking price than traditional home sellers are. It seems that the St. Paul Pioneer Press has now picked up on the story.

This bank strategy is old news to me, its something banks have been doing since the beginning of the year. There is an agent in my office who deals more or less strictly with foreclosures. The banks he works with have had great success with this strategy. In fact he listed a house last Saturday in St. Paul's east side, priced at 84k. By Monday afternoon he had 100 showings that had either already taken place or were to take place in the next day or so. Monday morning he had 6 offers in hand, last I heard he had 28 offers, everyone of them over list price. He has seen this happen over and over this year, he had one earlier this year that was listed at 40k and ended up selling for over 100k. I too have experienced it, only on the buyers side. I had a client last week put in an offer on a house listed at 37k, my client made a strong offer (significantly above asking) and the house sold for 104k.

I personally think its good news. It will keep the foreclosed homes from sitting on the market, vacant and useless, for long periods of time. Not having a backlog of inventory will eventually help the traditional sellers as well.

Speaking of traditional sellers, some may be wise to use this approach on their own home. I saw it work on a home that another buyer of mine was looking at, they priced it 20-25k below market and got multiple offers after being on the market only 5 days. Now I don't know what the final sales price is on it so it may be even lower which, other than selling it quickly, kind of defeats one of the purposes of this strategy (creating a bidding war). So maybe a traditional sellers prices it 50-60k below what they really want and see what happens. The only trouble there is that now they can't go and raise that asking price without having some sort of backlash from the market. It would take the right seller to take the risk, and I sure wouldn't want to be that agent who pushed for my traditional seller to take the risk and have it end up not working.

A bit behind

Oops! I've fallen a bit behind on the blogging front. Things really took off over the last month, buyer after buyer after buyer. Which is a great thing for me, my buyers, and the market. Nothing too fancy about this post, just a few links to give you an update on the market.

The first is MAAR's Monthly Skinny video. Just a quick look at how things are going in the Twin Cities real estate market.

Link number two is the Twin Cities Weekly Market Activity Report, again put out by MAAR. There's some good news contained in that report. The first bit is that there are fewer homes available per buyer than at any point since 2005 (thanks to Chelsie Foty for pointing that out on her FB post). So, what does that mean?? It means three things to me, more buyers are out buying houses, not as many houses are coming on the market, and houses aren't sitting on the market for as long as they have been over the last few months/years. The second point is one that has been true all year, and that is that pending sales are up over last year. This is the result of two things, pent up demand, and the first time home buyers tax credit. The later has really had an impact and I'm curious as to how things will be when its over at the end of November.

Thats all for now, I'll be posting more soon. No, really, I will.

Monthly Skinny

MAAR has put out its monthly video clip summarizing what has gone on in the market during the previous month. Click here to watch, its only a couple of minutes long.

Prices Creep Up as Traditional Sales Grow

Thats just one of the positive news items coming from the Minneapolis Area Association of Realtors (MAAR). So what makes that statement true? Well, the overall median sales price went up in the month of June, lender mediated sales continue to drop, yet sales are not slowing. Neither MAAR or myself are saying that things a back to "normal" or that the market has completely recovered, what the stats are showing and what us Realtors are experiencing is movement in the right direction. Its not just one month either, we have seen improvements almost every month this year. As Chelsie Foty (handles member relations for MAAR) puts it: "the market is showing signs of slowly moving back towards balance". Thats all were hoping for too, just a bit of balance.

Click here to see the weekly market activity report, all sorts of fun stats.

UPDATE: I found a link to the story with the stats supporting the title of the post. Click here.