NOW is still the time to sell!

As of October 2017, we are still seeing continuous growth in home prices, but what is driving that trend? Below is an analysis of the current real estate market and some of the reasons of why now is a good time to sell.

To see the entire market trend analysis, click here.

Please contact me if you want a free and specific analysis of your home and community, and what steps you need to take as a buyer or seller. 

Current Median Sale Prices at an All Time High

Prices continue to soar. Within the Twin Cities market, median sale prices have surpassed the 2006 bubble. Another way to view this trend, and my preferred way to value a home is the Price Per Sq. Ft.

Prices continue to soar. Within the Twin Cities market, median sale prices have surpassed the 2006 bubble. Another way to view this trend, and my preferred way to value a home is the Price Per Sq. Ft.

Price Per Square Ft.png

Shortage of Available homes to Sell

Since the market crash of 2008, we have experienced a gradual decline in available homes to sell. We have sold through all the foreclosures from the market crash, and people are living in their homes longer. Though the supply of homes has declined, the demand has not slowed down, which in turn is driving the average/median prices up.

Since the market crash of 2008, we have experienced a gradual decline in available homes to sell. We have sold through all the foreclosures from the market crash, and people are living in their homes longer. Though the supply of homes has declined, the demand has not slowed down, which in turn is driving the average/median prices up.

Day on Market Until Sale

Homes are flying off the available market.  In 2017, all of our listings sold in 3 days or less!!!   T here continues to be strong demand for homes that are appropriately priced and are staged well. I feel just as confident for our listings in 2018! 

Homes are flying off the available market. In 2017, all of our listings sold in 3 days or less!!! There continues to be strong demand for homes that are appropriately priced and are staged well. I feel just as confident for our listings in 2018! 

Housing Availability Index

As prices have climbed, the affordability index has decreased; however, we are still in a better position than the 2005-2007 real estate bubble. This shows me that there's still a good number of strong buyers that are looking for the right home. 

As prices have climbed, the affordability index has decreased; however, we are still in a better position than the 2005-2007 real estate bubble. This shows me that there's still a good number of strong buyers that are looking for the right home. 

What To Expect in 2016

2015 was one of the strongest residential real estate years since 2005. As reported in the December Skinny Video from the Minneapolis Association of Realtors , home prices continue to recover from the 2007-2008 crash,  unemployment continuous to decline, housing demand was at an all time high in the last ten years, and we have seen 45 straight months of an increase in the housing median sales price within the Twin Cities. All are great signs for continued recovery of the housing market, but what does it mean to you as a future buyer or seller? As you start to have the conversations of if it is the right time to buy or sell, I hope to provide useful information that will assist in making the best decision for your situation. 

Sellers

2015 was one of the hotter markets (seller's market)  in the last 10 years. What made it so great was the high demand from buyers driven by low interest rates, decline in unemployment and a low inventory of available homes on the market. By November we had a months of inventory of 2.7 which is extremely low. A steady months of inventory is 5-6 months meaning at the current sales rate we have 5-6 months of inventory before everything sold. Looking into 2016 buyers will be facing some changes. Interest rates have been increased, but from what I am reading rates will only go up a quarter percent in 2016, on the high end. This should bode well for sellers as there should still be high demand from buyers.

Beyond that, the low inventory means there will be less competition on the market when you list your home. In working with my buyers in the last couple months it has been slim pickings for good homes. If there was a good home on the market and it was appropriately priced, it did not stay on the market long. We are seeing homes sell and close in less time because of the demand for good homes. Granted this time of the year there is a natural decline in available homes; however, November saw a decrease of 31% compared to this time last year. 

Long story short, 2016 looks to be another great year to sell your home. If you appropriately price your home, make sure it is clean and staged right you should have limited problems making a quick sale. In my experience the best time to list is between March and April. Last year the market took off in April, but with the low inventory on the market now, there is a chance to get ahead the other sellers and list a little earlier. 

Buyers

Even though the market looks to be a sellers market, it doesn't mean it is a bad time to buy. I predict interest rates will continue to increase over the next couple years and locking in at a lower rate this year might be the right decision for you. There is still value in owning your home and buying a home has become more affordable for many buyers. Plus you need to buy based on your needs. If you're rent continues to increase like it has for many others or are living in a home that your family has outgrown, it might be the right time for you to start the search. The best advice I can give is to make sure you are looking in areas that have shown to be stable. Look for good school districts, parks, bike paths and well kept neighborhoods. Keeping your focus on this criteria should help minimize the risk of a steep decline in home value. 

Because of the decreased inventory of homes on the market we have also seen a emerging demand for new construction. There just isn't a lot of great homes on the market pushing buyers to build their next home. We have even seen a trend of buyers tearing down old homes and building new homes on the lot. Another option that is becoming more popular is to buy an older home that needs updating. Just turn on HGTV and you can see how much you can do with a hammer and an imagination. 

 

Overall 2016 is looking to be another hot market, but I anticipate that will change in 2017 into 2018. While we have seen 45 straight months of increased sale prices, that should not be considered a constant trend. At some point the market will regress back and correct itself. That said if the interest rates stay low, unemployment continues to decline and there isn't much change in the next couple years that regression might be delayed. 

If you want to know what your options are or to know any information specific to your situation, don't hesitate to reach out. I would love to help however I can. 

Clint Hansen- ClintRHansen@gmail.com

 

 

Is new construction or buying a resale house the right choice for you?

In working with some new clients, I had the opportunity to go through the new home construction process which inspired this blog post. Prior to working with these clients I had never been through the process before. It was a great experience as Kate and I have talked about going down this path for our new home after our wedding, but had no previous experience to know if it is the right choice for us. In this post you will learn, as I did, some of the advantages and disadvantages of new construction compared to buying a resale home. At the end if you have any questions, please reach out and I can walk you through your options!

 

Designing your new home can be very exciting. With new construction you have the opportunity to customize the finishing touches, and with some custom builders you might be able to pick out the layout and floor plan of the house – although this is normally a more expensive option. But for the most part, from the floor plan to the color and style of the counter tops, you get to customize your new home. This might be the right choice for you but understand that it does come at a cost. Most builders we met with offer a base package which comes with the new construction, but for an additional cost you can upgrade to better finishes. Items such as like granite counter tops, upgraded tile/wood flooring and upgraded kitchen cabinets are going to cost you more money. Each item on its own might not be a huge cost, but add up all the upgrades and it can easily climb into the tens of thousands and depending on additional options, hundreds of thousands. Now this is different builder to builder and if you go with a custom home builder you are going to have more say in the final touches.

Lastly, make sure you pay attention to the houses that are already built and will be built in the neighborhood. Some of the new construction lots we looked at had the same style house for an entire block. Most new construction builders offer multiple styles and it is important to check if they force some sort of variety from house to house as to avoid a cookie cutter neighborhood.

Replacement costs for a resale house will also come at a cost. Everything in a new construction house is new ­– such as the furnace, water heater, air conditioning unit, appliances, doors, windows, roof and more. Also each of these items normally come with a warranty that could go as long as 10 years, and with new technology is more energy efficient. When purchasing a resale house you are buying a home that has been lived in for a while. Some of these items might need to be replaced and upgraded which will come at a cost. Beyond that, they might not be under warranty so you might have to shell out the entire cost.

Here are some typical capital improvements that you might need to consider in buying a resale house:

• Heating and Air Conditioning: The typical furnace has a 20 year life expectancy; the typical central air system 15 years. Replacing them could cost you $5,000 (air conditioning unit) and $4,000 and up for the furnace, depending upon the system you choose.

• Flooring/Carpeting/Tile/Hardwood Floor refinish: You’re virtually guaranteed to replace some carpeting in a resale home and you may need to upgrade other flooring or finishes. Costs can run anywhere from a few thousand dollars to well over $15,000, depending on your choices.

• Roof: the average shingled roof lasts about 25 years. Replacement costs can be anywhere from $5,000 up.

• Exterior Painting. With a new house, you get to select the color. With an existing house, there’s a good possibility you’ll want to repaint. Typical cost: $5,000 and up.

• Interior Painting: Again, with a new house, you choose the wall colors of the rooms as part of the package. With an existing house, you’re probably going to want to repaint some of the interior. Even if you do it yourself, it will cost money and time.

• Kitchen Remodel: think anywhere from $20,000 to $40,000.

• Master Bath Remodel: $15,000 and up.

Information found at http://www.newhomesource.com

Location, location, location. It is one of the most popular real estate sayings and still stands true today. As a buyer you might want to live in a specific area and with buying a resale house you have more flexibility. That said you can move into an existing neighborhood, tear down the existing home and build new, however, be prepared to spend. The average tear down costs $8,000-$15,000 plus you need to buy the current house and land.  With new construction you are normally moving into a new neighborhood where an investor bought the land and subdivided it into lots. The lots you buy range anywhere from $0-$100k+ depending on the size, location of the lot and deal the builder will give you by building with them. If you go down this path it is important to look at the school district, future building plans for the area, bike/walking paths close by and many more options that can impact the resale value in the future.  

Bottom line either are great options, it just depends on what you are looking for. New construction is appealing because you can customize the house and the resale value over the first 10 years is great. Buyers are more prone to buy a 1-10 year house rather than a 25 year old. Resale homes are also appealing because you have more flexibility on location and you can get into a home at lower price and then do the upgrades on your own. Just spend a couple hours watching HGTV and you can see the benefit of going this route. Some people are walking away with $50-$90K in equity after fixing up an older home. If you want to walk through your options as a buyer, please call me at 651-247-4804. 

What's the Difference: Homeowners Insurance vs. Home Warranty

Both Homeowners Insurance and Home Warranty protection plans can be great options for a buyer, but how do you know if you need one or both? 

A Homeowners Insurance policy covers any accidental damage to your home and belongings due to theft, storms, fires, and some natural disasters. There are four primary areas covered under the policy: the interior and exterior of your home, personal property in case of theft, loss or damage, and general liability that can arise when a person is injured while on your property.

A Home Warranty is a service contract that provides for repair or replacement of your system components and appliances that fail due to age and standard wear and tear. For example, your electrical, dishwasher, dryer, washer, HVAC and other appliances will be covered under a home warranty. Most warranties are signed with a 12 month contract but are not mandatory in the home buying process. 

You can find more information, including a video that explains the difference in more detail by clicking here.  If you have any questions or are interested in options available to you, please contact me and I can point you in the right direction.

References: https://www.ahs.com/home-matters/whats-the-difference-homeowners-insurance-vs-home-warranty

 

The Proof Is In The Numbers

Yesterday I put a post up about how the market was hot... Well here is the proof.  Thanks to 10k Research and the Minneapolis Association of REALTORS we are able to track the real estate market trends from year to year down to week by week.  

At a high level here is what to look for in this report:

1. Buyers are quickly grabbing the inventory off the market as pending sales have increased by +24% compared to last year!

2. Because the market is moving so quickly, we have less inventory on the market compared to last year (-1.8%).

3. Home owners are catching on to the hot market as new listings have increased by +14.1% and are selling at a higher price as the median sales price has increased by +6.6%.  

4. The market seems to be close to fully recovered as we are seeing similar trends prior to the housing bubble; however, buyers are playing it smarter as the housing affordability index has increased from 145% in January 2004 to 195% in April 2015 (see page 7 for data and definition of housing affordability index).

If you are curious on how this might apply to you, please call me at 651-247-4804 or email me at ClintRHansen@gmail.com.

Click here to see Weekly Market Activity Report.

Twin Cities Real Estate Market Continues to Stay Hot

In my last post I had talked about the market heating up, but I said to proceed with caution as the market was still a buyers market.  Well I stand corrected, for now...  Although there are plenty of homes available on the market,  the numbers can be deceiving.  In my experience with my buyers over the last month, we are seeing homes last 1-7 days on the market with multiple offers made.  If a home is clean, appropriately priced and shows well the seller should have very little problems selling their home this summer.

One of the main driving factors to the increased real estate traffic is the low interest rates buyers are able to obtain on their mortgages.  Individuals are able to lock in at 3.75% interest rate or sometimes lower on a 30 year fixed mortgage.  That is amazing compared to what my parent's generation has seen in their life time.  Back in the 1980's buyers faced 12%-17% on mortgages! OUCH!  Overall this is a great time for sellers to list their homes.  Sellers are selling their homes for more than the asking price, they are seeing offers in the first couple days of being listed and the buyers are hungry for great homes to enter the market.  

If we see the interest rates increase this summer I would anticipate the market to slow down.  Furthermore, we are still in the early part of the real estate season.  Spring is traditionally the time of the year where most sellers list their properties.  As the year progresses the more preferred homes will quickly leave the market leaving an array of investment properties, homes that need a little TLC and less buyers looking for homes which will in turn slow down the market activity.  That said, there will still be good homes and some of the more preferred homes on the market come late summer/fall, but there will be less of them to go around.  

I will continue to provide updates as the summer unfolds.  If you have any questions between now and then, feel free to email me at ClintRHansen@gmail.com or call me, 651-247-4804. 

 

 

Spring Is In the Air and the Real Estate Market Starts to Heat Up

It is that time of the year where the birds are singing, the leaves start budding, the grass gets greener and the real estate market takes off.  We keep hearing that Spring is the start of the real estate season, but what does it mean to you as a buyer or seller?  

Granted, everyone's situation is different.  Some people need to sell out of necessity and don't have an option.  I think of all my peers that were recently laid off from Target and are at an exciting but stressful crossing of finding new employment.  Some will make the decision to move out of state leaving them with the decision to rent or sell their current home.  On the other hand, some families are growing and are blessed with an addition of a child, but that 2 bedroom condo won't cut it anymore.  

Regardless of the reason you are getting into the Real Estate market, here are some facts that you can take with you as you search for a new home or look to sell your current home.

#1.  New Listings versus Actual Home Sales

Since December we have seen an increase of new listings in the Twin Cities by 3,000 homes:

However, Home Sales are only up by 238 homes since January and down 873 homes from December:

Granted it is still very early in the 2015 Real Estate Season and the number of home sales is bound to take off, this still leads me to believe this year continues to be a buyers market.  In my personal experience in the past year, my buyers have had plenty of homes to look at and were able to use that as leverage in the negotiations. 

#2.  Sellers are getting more for their homes when they do sell.

The median sales price is climbing back up from the winter off season from $195,000 (Jan) to over $200,000 (Feb).  Even compared to this time last year the median sales price is up $17,000:

Although it is a buyer's market, this does not mean a seller won't be able to sell their home at the right value.  anticipate we will make our way back up to last summer's median of $219,000 or more.  However, knowing it is a buyer's market, there is more competition as a seller and your home will need to stand out from the rest of the homes for sell in your area.  The best way to ensure you stay competitive is to price the home appropriately, keep the home well maintained and keep the house clean.

#3.  Closed Sales Over the Last 3 Years

All of that said, history has a tendency to repeat itself.  Over the last 3 years we have seen the same trend of closed sales increase starting in the early Spring into the Summer and drastically drop off in the fall and winter:

Knowing this trend you are able to predict the best time to put your house on the market so it sells closer to the top value.

If you would like to see any of this information specific to your home sale or home search I would be more than happy to help.  I can pull up information specific to your house and your neighborhood which will help you stay competitive in today's market.  I can also provide tips and tricks to increase the value of your house with a minimum investment to help increase the chance of a quick sale.