Notes on Real Estate

Happy Summer! I am so pleased by this article that I sent it to you in its entirety. The people at Realty Times allow the complete forwarding of their articles, so I’m sure they won’t have a problem with this.

Minneapolis, Minnesota, Realtors say home price increases and overall market conditions are normal -- no bubble here.

"The Twin Cities, Minneapolis and St. Paul areas provide a wonderful lifestyle with many educational and cultural venues, sporting activities and events for active lifestyles. It's a great place to call home," say Realtor Carole Wallace. "For the greater St. Paul/Minneapolis Metropolitan Area, there is no "bubble" in the Twin Cities housing market! The recent press has contributed even more to consumers' concerns about the overall economy, and how it will affect their pocketbook. The cost of a gallon of gas, food, clothing and other staples have increased dramatically, however, the cost of a home is one of the best bargains here. The housing market in the Twin Cities has seen a healthy 6.7 percent increase from 2003 to 2004 (from U.S. Gov. statistics), a sign of an overall sound housing market. Interest rates remain great, yet, your average buyer is afraid to take advantage of some great bargains. Now is the time to buy your house!"

Explains Realtor Kevin Shannon, "The City of Lakes always rates high on any quality of life index. That's easily understandable, since it boasts one of the nation's best park systems, featuring parkways that connect for miles around the city's many lakes and along Minnehaha Creek, which cuts east to west across South Minneapolis, not to mention the best of professional sports, a downtown that is a growing, vibrant economic center for the whole region, with ever changing and improving nightlife. Much of the city was built between 1900 and 1925, so much of the housing inventory in these areas features the "1920's old world charm," complete with oak woodwork, hardwood floors, built-in buffets, and other vintage details. Because housing along the lakes and the creek is in highly preferred locations, some of this old world charm can come at a price! But for those who value city living, and like to see their home investment grow in always-popular locations, made more and more desirable by the coming light rail system and a chance to avoid the hassles of highway construction for people living farther out -- then South Minneapolis is the place to be, and single family 1920's homes or downtown lofts/townhomes or condos from $250K to $450K are the ticket. For those who are fortunate enough to have developed an equity position that makes it possible, stately upper bracket homes on tree-lined city streets near the lakes will have deserving appeal!"

About the market, Shannon continues, "Demand for the city's prime neighborhoods has not been in doubt for many years, and that will not change. With increasing mass transit (finally!) and several very disruptive highway projects planned for a little further out, the beauties of core-city life will remain attractive. Downtown has been booming with new lofts and condos, both new construction projects and redevelopment of historic properties. This year, with a much higher activity level, the balance between all sellers and buyers has been even a little more even, good news for sellers and developers -- we're a long way from saturated yet! The average price of condo/townhouse properties offered during the first four months last year was $285,356; this year that number is $315,300. More units are available, more buyers are buying, and the prices are rising -- that's a vibrant marketplace! April was good to Southwest Minneapolis (from the south end of Lake Calhoun to Richfield, 35W to Edina). There was one more (161) property sold than new listings (160). Taken as part of the four months of the year so far though, sales have lagged quite a bit behind new listings (297 to 449). There are still good choices for buyers, though as the weather improves, watch for the balanced market to return. From the first four months of 2004 to the same period in 2005, the average sale price (all single family units, including condos and townhomes) went from $303,861 to $329,400. That pace is likely to slow -- some -- in 2005, but still remain strong."

"The Nokomis area of South Minneapolis (roughly 42nd St south to Richfield, and 35W east to the Mississippi) had been lagging behind. The average sale price (all single-family units, including condos and townhomes) for the first third of the year had risen less dramatically, $220,035 to $233,141, from 2004 to 2005, than other districts, but the buyers have noticed, and are showing up. In April, 205 homes went off the market as pended, while only 151 new listings came on the market. There is still inventory for the buyers, but in the Nokomis area especially, it is a good time for sellers."
Published: June 22, 2005

Okay, I just wanted to point out how strong Minneapolis is, how much these comments reflect what I’ve been predicting, and give everybody a chance to feel good about our area. Much of what has been said here is true of some of the suburban situation, although our more costly suburbs might, by my guess, have set themselves up for a little bit of inflationary high pricing in the last few years.

MY PREDICTION: We are going to see a “flattening” over the next year. It’s happening already, to some extent. That means we will see existing home sale prices go down and new listings come on the market appreciably lower. That last part is difficult, because home owners still think their homes are worth far more than they really are (based on what the buyers will pay), and Realtors will be willing to list them at those inflated prices to get the business. Between Realtors getting tired of high listings being reduced, or losing the client to another Realtor because the house didn’t sell, and smart Realtors convincing the sellers to be truly competitive, prices will go down.

Homes in our area will still be selling at a healthy profit for folks who have invested living time in them. We will be in a buyer’s market (already seem to be), but not one that will strangle sellers’ profits. Save this prediction and take it out next April. Remember, nobody has a crystal ball, so it’s just my best guess.

Have a great rest of July, and if you know somebody who wants to sell or buy, or anyone who wants to get into the very stable real estate investing business, please send them my way.

That’s it for now. Except this:

1. If you have interests or questions, please e-mail me or give me a call.
2. Check out my website HERE

The opinions expressed in this newsletter are solely those of Tom Crone and others being quoted and do not necessarily reflect the opinions of Coldwell Banker Burnet or its affiliates.