Calling all folks who are sick and tired of where they’re living.
The housing market has picked up big-time. Yep, right here in the Twin Cities.
“It’s hot,” says Jackie Day, an agent for Edina Realty in Golden Valley. “Things have really changed. I’ve sold 52 houses since the beginning of the year.” And, shades of those old bubble days, some properties, she says, are getting multiple offers.
One lure for buyers: teeny-tiny mortgage rates. In fact, they dropped to a new low this week — 3.62 percent for a 30-year fixed-rate loan, down from 3.68 percent last week and 4.6 percent a year ago. Those willing to take out a 15-year mortgage can land an even better deal, a rate of only 2.68 percent, down from 2.74 percent last week.
“Housing is really affordable right now,” says Cari Linn, president of the Minneapolis Area Association of Realtors and an agent for Coldwell Banker in Eden Prairie. The most recent “affordability index” in the 13-county metro is at 233. An index of 120 means that the median income is 120 percent of what’s necessary to qualify for the median priced home at prevailing interest rates. With rates down further, the index should rise.
First-time buyers continue to dominate the market as they have for the past few years. But things are different now, says Aaron Dickinson, also with Edina Realty. “Previously, they could get screaming deals on foreclosures or short sales. Now you have lots of people bidding up the prices.”
Result: buyers are moving to “traditional” purchases — that is, homes owned not by the bank but by people.
“The exciting part of that is that most of those sellers have to get another place,” adds Dickinson. They “buy up” to a more expensive house, causing that higher-end market to effervesce as well.
“It’s a nice progression,” says Linn. “It’s lovely to see.”
And the data are proving the case. Pending sales in the 13-county metro area for the three-month period ending on June 23 rose by nearly 21 percent (to 14,579) over last year’s numbers for the same period. (Pending sales are those in which a deal has been struck but not closed.) At the same time, the inventory of homes for sale has plummeted by almost 27 percent since last year. That’s as low as it’s been since 2004.
In contemplation of writing a story called something like “the 10 hottest neighborhoods,” I asked real estate agents where sales have been brisk. But, fearful perhaps of breaking a fellow realtor’s rice bowl, none would be specific.
“It’s slower further out from the city,” says Day. “Sales haven’t picked up there as much.”
She attributes the lag not only to high gas prices but also to people’s concern about the immense amount of time they spend on the road. “They’re very interested in walkability,” she adds.
Because inventories have dropped so drastically, says Dickinson, real estate agents have been out beating the bushes (or whatever they do) to find more listings. I myself received two letters just in the past month from agents asking me to put my place up for sale. (Sorry guys. My next move will be to a shady plot in that cemetery down on Penn Ave, and I hope not too soon.)
Some of the reluctance to put a house on the market is rooted in sheer practicality. “A lot people are still underwater on their mortgage,” says Linn. Until prices lift enough to bail them out, they’re not likely to jump at any invitation to sell.
In fact, the one blot on this stunningly bright picture is price. The 12-month moving average of the Twin Cities median sales price is down 3.8 percent from the previous year — to $154,000. (In contrast, the Case-Shiller index reported a 3.8 percent gain for Minneapolis for the year ending in April.)
Dickinson believes prices bottomed in January and that new numbers for June will show the median sales price rising to $179,000. That would be nice but still well below where it was in 2003 — at $190,000. In any case, he says, “price is the last thing to come back.”
Nonetheless, it looks as though we’re headed in the right direction.
More on Trader Joe’s
The Minneapolis City Council last week voted unanimously to quash the grocery-liquor store development on 27th and Lyndale. They never bothered to discuss the project because one of their number, Meg Tuthill, who is from the area, opposed the minor zoning change required. Her previous claims to fame: opposition to sampling of tobacco in cigar stores and outdoor dining in Uptown. And they say Puritanism is dead!
Apparently, if a member of the council objects to a project in his ward, down it goes. Tuthill’s rationale: she’s against changing the zoning code for any reason. Which is ridiculous. A zoning code is not the U.S. Constitution. Nobody is going to fight and die for it. And even the Constitution has been amended 27 times.
The council’s I’ll-kill-your-project-if-you-kill-mine practice is stifling decent development projects all over the city. Trader Joe’s is a chain store, but it would have offered the neighborhood an amenity, improved the look of the street, boosted the tax base and increased employment by 75 permanent jobs. Those might have been benefits to the whole city, which is what Tuthill and her colleagues should be thinking about. Now, unless the landowners can launch a legal challenge, the development is dead.
Meanwhile Finance & Commerce is reporting that parcels across the street on which are perched two run-down houses have been sold to somebody who wants to put up a liquor store.
Here we go again.