Referral Network

Being in real estate, I get to meet a lot of people that do a lot of different things.  Whether it be loan officers, title processors, inspectors, underwriters, handymen, mechanical contractors, etc..., I end up getting to a know a lot of smart, professional, hard working people. 

In light of this, I've started assembling a list of people that I feel comfortable referring my clients too.  The list is relatively small at this point so I'd like to expand it.  If you, or someone you know, provides a service that might be useful to my real estate clients, I would be happy to add them to my list.  You can e-mail me their information at jpelto@therealtyhouse.com.

The goal of having and providing a list of referral partners is to make sure that my clients are getting top-notch service from professionals who care about their well being.  Providing multiple options also encourages competition and, I believe, yields better results. 

Market Update - Warehouse District

Previously, I did a rather lengthy post about the housing market in Uptown.  I promised to do the same for other Minneapolis neighborhoods, and so here we are.

Today's market update is for the Warehouse District in downtown Minneapolis.  Specifically, this update will address the 55401 zip code, which conveniently happens to contain all of the Warehouse District!

Median Sales Price - January 2005 through January 2010 - Warehouse District (55401)

In terms of median price, the Warehouse district has actually not performed as poorly as many other Minneapolis neighborhoods.  For example, during the period between January 2009 and 2010, while most neighborhood were still experiencing drops in median price, the Warehouse District actually saw the price rise from about $235,000 to almost $250,000. 

It's also interesting to note that although the Warehouse District has certainly not been infallible in terms of price, this neighborhood experienced its major price drops well before the overall housing market hit the skids in late 2007/early 2008.  There are a plurality of possible explanations, but I would venture to guess that the Warehouse District's diversity of property types (residential, multi-use, commercial, warehouse, etc..) has helped it stave off the worse effects of the housing crash.  Think of it in terms of personal investing - it makes sense to diversify your holdings so that if one stock falls, other stocks are rising, essentially mitigating your level of risk exposure.  The same concept is playing out in the Warehouse District. 

Percent of List Price Received - January 2005 to January 2010 - Warehouse District (55401)

But while it appears the Warehouse District is performing well relative to other neighborhoods, other indicators point to potential trouble ahead.  The graph above depicts the percentage of the original list price that buyers are paying for properties in the Warehouse District.  As you can pretty clearly see, there is a definitive trend occurring that looks worrisome for the neighborhood.  The percent of list price paid has been consistently trending downwards, which does nothing to push prices up higher.  Without price increases, property owners with negative equity are stuck and the fluidity of the market is seriously challenged (check my previous post titled "Drowning" for more on the equity crisis the housing market faces). 

Months Supply of Inventory - January 2005 to January 2010 - Warehouse District (55401)

The above graph depicts the number of months worth of housing inventory currently on the market.  I think this is something to be positive about, as it looks like there has been a sizable decrease in the amount of inventory sitting on the market.  High amounts of housing inventory indicate a large sell off in the market without ample buyers.  This tends to push housing prices down as fewer buyers compete for more houses.  Buyers have a great advantage of sellers and can typically dictate many of the terms of the sale.  

The sudden decrease in inventory is a good sign because I think it indicates a return of buyers to the market.  Although many people out there are debt-rich and cash-poor,  buyers are returning to purchasing and consumer confidence can sometimes be a self-fulfilling prophecy.  I would expect to see this number to continue to decrease, back to more "normal" levels (is there such thing as "normal" anymore?).

Conclusion

I think the Warehouse District, like other neighborhoods in Minneapolis, will continue to see some improvement in 2011.  I think buyers are gaining some confidence and the housing market should reap some of those rewards.  We are seeing decreasing inventory and relatively stable prices, and so it should just be a matter of time before we see prices start to creep upwards.  By no means are we "out of the woods yet," and many people fear for the worse in other real estate sectors (i.e. commercial real estate), but I think most signs generally indicate that there is reason to be optimistic.  

Sneaking Heat

Photo Source: thedailygreen.com

This won't be a full post but every homeowner in Minnesota should be reading this article about preventing heat from escaping their home.  It offers some very effective, tangible, low-cost solutions that will help you save hundreds of dollars heating your home every year.  Of course, if you have the money to invest in some real alternative sources of energy, you will save thousands of dollars over the long haul.  But most people don't have tons of cash laying around, so they should at least be employing the simple tips provided in the article.

Everyone have a great weekend!

Foreclosures in Minnesota

Minnesota Supreme Court Building (Photo from MPR)

Last Friday, a court in Massachusetts ruled against two of the largest mortgage lenders in America.  The case, which involves US Bank and Wells Fargo, was to determine whether these lenders had the ability to foreclose without holding the actual mortgage note.  The issue at hand is one that is complex, and real estate analysts and economists are moving quickly to determine what the case might mean for other states.

This article in Finance and Commerce is a quick summary of what the Massachusetts case might mean for Minnesota.  The consensus seems to be that, since Minnesota does not have a statute similar to the one in Massachusetts that requires a promissory note to be held by the foreclosing entity, the same problems shouldn't arise.  The Supreme Court of Minnesota has already upheld that mortgage transfers within the Mortgage Electronic Registration Systems (MERS) are legal and that MERS has the ability to foreclose without naming all mortgage assignees.  But that doesn't mean that some foreclosed homeowners aren't trying to fight their foreclosures through legal channels.  I will keep you updated as this case unfolds.

The bigger point here is that, although a small number of homeowners have challenged the banks in court and won, the banks are powerful legal machines and there may be less expensive, more effective ways of avoiding a foreclosure.  Our real estate team specializes in short sales, essentially negotiating with the bank to allow you to sell your house and to forgive the outstanding loan debt.  And in some cases a homeowner in foreclosure can sell their house for enough money to "redeem" their property after the Sheriff's sale.

If you or somebody you know is in a foreclosure situation, we would be happy to sit down and explain the options available to avoid it.  Allowing the foreclosure to go through without any action is probably the worst way to deal with the situation.  We treat our clients with great care and do everything in our power to help them.  We also work with a great team of highly-professional and experienced lawyers to fight the banks for you.  All you have to do is act and pick up the phone!

Ice Dams

After spending the last week worrying about and subsequently dealing with pesky ice dams, I felt it might be an appropriate topic to cover on this blog. 

This winter has been particularly bad for ice dams.  The weather has rapidly changed (going from well below freezing, to rain and above freezing temperatures, and then immediately back to sub-freezing) and most homes (absent a good deal of preventative measures) are experiencing some form of ice build-up. 

The best long-term solution to avoiding ice build-up is to make sure that your attic/crawl space is properly insulated.  Proper insulation keeps warm air trapped inside and away from the roof.  When the roof begins to warm up from inside your attic/crawl space, it causes the lowest layer of snow on your roof to melt.  The melting snow becomes water that runs down the side of your roof.  Once the water reaches a point on the roof where it is no longer warm enough to stay in liquid form, it freezes again.  This typically occurs just before the water reaches the gutter. 

This process, repeated several times, leaves huge build-ups of ice that block water's ability to reach your gutters and downspouts.  Water builds up behind the dams of ice, and the result is usually unwanted water inside.  Water enters through small cracks, nail holes in your shingles, etc... 

Aside from this longer-term solution, there are several other tricks that might prove fruitful in your fight against ice dams.  Heating cables sit on the corners of your roof and run down downspouts to keep melted water moving and off of your roof.  Heating cables come in a variety of lengths and typically cost between $30 and $100.  Home improvement stores also sell small pucks made of salt that can be placed in common ice dam locations.  The salt acts similarly to salt on the road, working to melt away ice that might build up. 

At the end of the day, it is indeed very difficult to deal with ice dams.  Even with heating tape and salt, there is a chance they will rear their ugly heads.  The best solution is to get the insulation in the attic and continuously monitor them.  Check inside to make sure you aren't seeing moisture.  If you can, knock down any ice that isn't strongly affixed to the roof.  These small steps will go a long way in keeping the water outside.