I can’t tell you the number of times I have been driving in Minneapolis trying to find a parking spot that doesn’t have a coin meter because I forgot to bring quarters to feed the machine. It never fails that I then have no choice but to park with a meter, and pray I can be in and out before the meter maid comes around to check the darn thing. It’s a game I really don’t like playing.

Now it looks like Minneapolis will be doing us all a favor by installing“smart” meters that can take credit and debit cards (and coins). Yippie! Right now, the new meters are going in around the Warehouse District, but by 2012, all 6,800 in Minneapolis will be replaced. All this technology doesn’t come cheap – the total cost is $6.6 Million.

Ninety Percent of Americans Do Not Regret Buying Their Current Home

A new study released by Bankrate, Inc. and conducted by Princeton Survey Research Associates International shows that, even with home prices sliding and mortgage rates the lowest in decades, the vast majority of Americans do not regret buying their current home.

Among the findings: 

• Ninety percent of homeowners say they don’t regret buying their home versus a mere 9% who said they do
• Among those who regret buying their homes, the most common reasons cited were because they cannot sell their home and move on along with those who say they regret their purchase since they can’t afford their monthly mortgage payments
• Only 8% of Americans don’t know what type of mortgage loan they have, down from 26% who didn’t in a Bankrate poll commissioned two years ago
• Fixed-rate mortgages are rising in popularity with 79% of those polled saying they have a fixed-rate mortgage on their home
• Wealthier Americans most overwhelmingly favored fixed-rate mortgages with almost 90% of those polled who make over $75,000 saying their home was paid for with a fixed-rate mortgage.

“It’s surprising—and reassuring—to hear 90% of homeowners say they don’t regret the purchase of their current homes,” said Greg McBride, CFA, senior financial analyst for Bankrate.com. “And all the nasty headlines in the past two years have really moved the needle in terms of mortgage awareness, with a significant drop in the percentage of borrowers who don’t know what type of mortgage they have.”

This national random-digit-dialed phone study of 1,001 adults 18 or older was conducted for Bankrate by Princeton Survey Research Associates International. The sample was weighted by demographic factors including age, gender, race, education and census region to ensure reliable and accurate representation of adults in U.S. households. The overall margin of error for the survey is +/- 3.5 percentage points based on the total sample.

For more information, visit www.bankrate.com.

In the hopes to streamline FHA risks associated with the Mutual Mortgage Insurance Fund (also known as MMI), HUD has put out three possible changes to the lending process in the hopes of making home ownership more “sustainable”. Earlier in the year they proposed stepsto manage risk and boost reserves, now FHA is proposing to change credit and down payment requirements, reduce seller concessions, and tighten underwriting standards for manually underwritten mortgage loans.

Of course, what HUD thinks is good for them, is not always good news to buyers looking to utilize FHA financing here in Minneapolis and Saint Paul, so HUD has set up a 30 Day Comment Period, in which the public (and of course us Realtors) can voice our opinion on the proposed changes. The proposed changes are as follows:

1. Update the combination of credit and down payment requirements for new borrowers. New borrowers seeking FHA-insured financing will be required to have a minimum FICO score of 580 to qualify for FHA’s flagship 3.5 percent down payment program. New borrowers with credit scores of less than a 580 will be required to make a cash investment of at least 10 percent. Borrowers with credit scores of less than 500 will no longer qualify for an FHA-insured mortgage.

My take:If you have a credit score of 500, you shouldn’t be buying a house. You have financial issues you need to solve before taking on the responsibility of a mortgage. The larger down payment requirement for those with a credit score of 580 is pretty reasonable in my opinion, so I don’t have  a problem with this proposal.

     2.   Reduce allowable seller concessions from six to three percent. Allowing sellers to contribute up to 6% of the home’s sales price to offset a buyer’s costs exposes the FHA to excess risk by potentially driving up the cost of the home beyond its appraised value. Reducing seller concessions to 3% will bring FHA into conformity with industry standards.

My take:I have a serious problem with this one. FHA is making an assumption that the purchase price will be driven up in order to compensate for the seller paying a buyer’s closing costs, stating this will go above the appraised price. Well, we all know in real estate that if a home doesn’t appraise for the purchase price, then the loan cannot be closed on, and most likely both parties will have to renegotiate the contract to meet the appraised value. Also, many sellers just pay the closing costs as part of the deal, and don’t bump the purchase price simply for the reason that the buyer cannot afford it. Since appraisers have even stricter guidelines to follow, most appraiser will not be fudging numbers to make a deal work. So FHA is making a poor argument for slashing allowed seller concessions, and hurting buyers in the process. Seeing as FHA is the go-to financing options in today’s housing market, I think this proposal will only slow down the housing recovery.

     3.  Tighten underwriting standards for manually underwritten loans. When using compensating factors in the underwriting process, lenders will be required to consider those factors which are the best predictive indicators of loan performance, such as the borrower’s credit history, loan-to-value (LTV) percentage, debt-to income ratio, and cash reserves.

My take: Kinda vague. Who really knows what standards need tightening….standards from my understanding are pretty tight right now in regards to ”compensating factors”, so how far will this really go. HUD needs to clarify this one a little better.

Twin Cities residents, even if you are not currently buying a home, nor plan on using FHA financing, should still take the time to let their voice be heard. Please click on the “Submit a Comment” link on the right hand side of the HUD webpage found HERE, to voice your opinion.

What are your thoughts on the proposed changes?

We all have different reasons for buying a house. Some have to do with relocation, economics, familia status. Others just want to stop paying a landlord or catch the American dream of home ownership. But with the economy and housing market screeching to a halt the last two years, some buyers are worried that housing  prices are going to keep falling, and they are hesitant to take the next step. What ever the reason, buyers should not fear the current market, nor second guess themselves when it comes time to purchase a new home.

I recently had a buyer tell me that they wanted to make a low offer on a home because they were worried about losing the “equity”  once they bought it. They thought that if they got the home for less, they would be “ahead” of the market and wouldn’t lose any down payment equity if the value of the home fell in the future. Even though the home was priced with the current market, they felt the owner should pay for their risk. I have to say that this is completely the wrong reason to buy a house, or at least the wrong reason to make a low ball offer.

Buying a home should be a long term investment. Too many buyers today look at a home as a commodity, or something that they buy low and sell high. When they do, they lose the true value of a home. A stable purchase that will be there for them over the years and provide more than just a roof over their heads. If you are planning on purchasing a home, please remember to look at the big, long picture. Don’t worry about what the value of your home is going to be in a year. Don’t worry about what it will be worth in five years. Simply enjoy your home as much as possible and let the chips fall where they may. No one can control the housing market, not even the government, so buy a home because you love it, not because you are worried what the future may bring.

Many of the baby boomers that are retiring are looking to new construction homes or homes that can easily be modified to fit their aging needs. While many of the homes built around Minneapolis and St. Paul are perfect for those with families, their amenities fall short for those who need more lifestyle conscious homes.

Take for instance the fact that most homes in the Twin Cities have bedrooms on the upper level. Seventy percent  of buyers age 55 and over say they want the master bedroom on the main floor, so most of current inventory would not work.  Other features that are very important to this age group include:

• Washer/Dryer in Unit
• Plenty of Storage Space
• Window that Open Easily
• Garage Door Opener
• Easy to use Thermostat
• Private Patio
• Porch
• Attached Garage
• Bigger Bathrooms

While many of these design features might see trivial to some, they are very important to our Greatest Generation, especially one floor living. Having moved from Florida not too long ago, single level living was the norm, as basements were just not possible. But here in Minnesota, it seems like builders have not quite caught on that they could be passing by a goldmine by not developing for older folks. Sure, I am seeing plenty of Senior Living facilities, but that attracts a client who can no longer, or doesn’t want to, take care of a home, or has health problems. What I am talking about are neighborhoods of ramblers which could become an Over 55 community, fairly priced and affordable. There has to be a builder who could cash in on this underrepresented group, but alas, I am not seeing it. Sadly, it could mean that in as little as 10 years, there may not be suitable housing available for our aging population.

New Architectural Design for American Swedish Institute Addition - photo provided by ASI

I was reading the Star Tribune today when I came across an article about the American Swedish Institute’s architectural design for the new $21.5 Million expansion and renovation they are planning. Now, I understand the trend in Minneapolis is to make every new building “modern” with some outrageous angular design that only an architect could come up with, but please, do we really have to have such a monstrosity next to a classic Beaux Arts historic mansion?

Now I mean no disrespect to the firm of Hammel Green and Abrahamson for their design, but to me it is quite ugly and just doesn’t fit with the historic aura of the property. Yes, yes, but they are building all “green” you might say…well, I simply don’t care. There seems to be a growing trend in Minneapolis and across the country that in order to justify new modern vernacular designs, everything about it has to be environmentally friendly. Each new building has to beat the last one built and go for the Gold LEED certification. For instance, the proposed structure will have a green roof with plants to absorb the rain water and 90 geo-thermal wells will be dug to heat and cool the building, but it still won’t make the building look any better. Hope all that drilling is architectural sound for the 102 year old building a few feet away.

Interestingly enough, a person on the team of architects is quoted as saying that one of the primary criterias that “drove the design…was respect for the mansion, so that the addition refers and defers to the historic structure and the plan keeps the mansion as its centerpiece.” Sorry, but when I drive by the historic Swan Turnblad mansion, I will no longer notice the grand castle, the proposed centerpiece of the Institute, but instead my eye will be drawn to the misplaced structure next to it.

If you just love modern design, please don’t shoot me. I can’t help it, I am a bigger fan of the classic historic stuff then I am of the new age design. After all, I write another blog about Minnesota Historic Homes. Modern design has its place, but just not next to a building like this limestone mansion on Park Avenue. I can only ask, what do you think about the design?

I think one of the hardest things to hear when I speak to someone concerning real estate is that a couple has to sell due to divorce. Being married myself, I can’t imagine getting to that point, but I have lived through it with my parents, and understand how much divorce upsets a family. It changes everything in your life, and as a child of a divorce, it shapes who you will become in the future.

Today I had a very nice lady visit me at an open house and as she was leaving she mentioned that she might be selling due to divorce. She said the kids didn’t know yet so they were keeping quiet about it, but seeing as her kids were with her, her admission tugged at my heart, as I know what the kids are in for. My parents divorced as I was finishing up high school and entering college, but it didn’t make it any easier. I can’t imagine how it would feel to be in middle school and have to go through the emotional roller coaster of divorce.

Granted I am in the business to sell homes, more often I find that I am also a shoulder to cry on, a good listener, a counsler, or even a venting bag. Real Estate Agents have to be Switzerland, the neutral third party, and trust me, it is not an easy thing to do. Entering into a divorce situation sometimes means that one party lives somewhere else, or that signatures might be hard to get. It takes two people to sell a home, so both spouses must sign all listing and selling paperwork, and getting them together is sometimes impossible. If lawyers and courts get involved because one party is unwilling or difficult, it makes the job of the agent even more trying.

If there was one word of advice I would give to anyone having to sell their home because of a divorce, it would be to NOT tell any potential buyers why you are selling. Buyers, and their agents, immediately will discount the price of your home because they know you have to sell. They hope that your plight means you are desperate, and that they will get an even better deal on the home. Also, as hard as it might be, be civil to each other when it comes to selling your home, not forgetting to treat your real estate agent well too. We are all working hard to a common goal, so fighting along the way won’t help matters.

Lastly, talk to your children and be honest about the selling of your home. Understand that they might be leaving the only home they have ever known behind, and it will most likley hurt them more than you will know. But if they know that you love them, in the long run, they will get through it all just fine. I know I did, even if it did hurt at the time.

Each month the Minneapolis Association of Realtors creates a market update video to let us know in general how the real estate market is doing in the Twin Cities. Sometime the news is good, sometimes, not so good. Play it to see what this past month holds!

Probably the thing I hate most to do is give a seller bad news about the value of their home. They call me to find out what there home is worth because they need to sell, having high expectations and the belief that THEY know the true value of their home. I am just being called in to justify their price. Sadly, most of the time, the seller is way off on what the real estate market value is. Of course, going in, I don’t know what they think the home is worth. My job is to do the research, find the comparables, and ”run the numbers”.

Recently I was called in for such a task. The seller wanted me to tell them what their home was worth in its current condition and for the amount of square footage. Luckily the town they were located in was one in which the real estate market was pretty stable and popular, but it had taken a hit. Finding comparable homes that had sold in the last six months was easy.

I sat down with the couple after they toured me through the home, and proceeded to inform them of market value. When I do this, I not only go over sold statistics, but also what is currently active on the market. In this case, the homes that sold were under a certain price point and had sold in a matter of a few months. However the homes that were actively for sale were above this price point, all above 200 days on the market, a couple being close to a full year, with multiple price reductions. These homes were simply overpriced.

It was pretty obvious where they needed to be in order to sell their home. The numbers don’t lie.

I could tell right away by the silence of the room that they were shocked. The number I had just told them was $50,000 less than they had thought their home was worth. It was clearly obvious from the comparable data their number just wasn’t possible. The next question I was asked was whether I felt the market would come back soon to give them that $50,000 increase in value. Unfortunately I had to tell them that no, it would not be coming back anytime soon, and it could take years for the area to start appreciating again. The current real estate market value for their home just dashed their dreams of moving on.

I hate being the bearer of bad news, but I would rather tell a home owner the truth, than lie to them about the value of their home (as sadly some agents do) just to get a listing. All I can do is hope that they appreciate my honesty, and keep me in mind when they decide it is time to put their home on the active market in the future.