Another Wonderful Testimonial

I received another testimonial from a great client recently:

I would highly recommend Josh to anyone I know who is looking at buying or selling a home.  I already look forward to working with him next year as I look to buy my own condo.

Do you know anyone looking for this high level of care?  Please pass my information along to them, I take great pride in the work I do and making sure it is a positive experience for my clients.

Another Testimonial...

I recently received a very nice testimonial from a client of mine:

Not knowing what I was getting into or what to expect with the short sale process, Josh was very clear in what to expect and what the timeline would be.  We also had to get over the hurdle that I was living out-of-state during the process.  Josh made the short sale easy and worry free.  Everything was handled and communicated above expectations.

I truly appreciate the kind words - my job is to make things stress-free and provide a high level of service, and it's nice to receive confirmation of that.  If you know of family or friends looking to buy, sell, or avoid foreclosure, please refer them to me.  I will take care of them with the same dedication and care that is exemplified in this testimonial.  

Josh's 2012 Real Estate Predictions

Nothing is more enjoyable than wildly speculating about what the future holds.  Of course, there is no way to predict with any certainty, but I think there are some underlying trends that will continue into 2012.  So without further ado, here are my 2012 Real Estate Predictions:

1.  Interest rates will remain at historic lows.
This one seems like a slam-dunk, of sorts.  The Federal Reserve has already pledged to keep interest rates at their current level through the end of 2012, and interest rates have fallen about one percent over the past year.  To the left is a chart that depicts Freddie Mac mortgage rates over the past 40 years.  This should provide perspective on just how low current rates are.  However, buyers should not get complacent - interest rates will not stay where they are forever.

2.  Market inventory will continue to fall.
Over the last year, we have seem a dramatic decrease in the amount of homes coming on the market.  In fact, inventory has fallen roughly 30% in just the last year.  Of course, it has fallen 30% from historically high levels and the market still has room to balance out.  My prediction is that we will continue to see the amount of inventory fall, which leads beautifully into my next prediction!

3.  Prices will be flat or slightly higher.
With declining inventory and low interest rates, it is simply a matter of time before we start to see small price increases.  I've actually been predicting price increases on this blog for the last few months, and conditions seem prime for it to happen.  Expect hesitant buyers to start pulling the trigger once news stories begin talking about prices increasing.

4.  Foreclosure rates will fall in 2012.
There are still a considerably high amount of distressed properties on the market, but I suspect the total number will be quite a bit less than in 2011.  Unemployment numbers have continually improved, and the market has already been in full-blown liquidation for the last three years.  Expect the balancing between traditional and distressed listings  to continue in the next year.

Now, let's be clear:  these are fairly innocuous and conservative predictions.  The market will continue to improve this year, just as it did last year and the year before.  We are still not out of the woods yet.  But expect a more vibrant real estate market in 2012 than we saw in 2011. 

Happy 2012 to all my blog followers, and as always, if you have any real estate questions please do not hesitate to contact me!

Latest Housing Update: Inventory Down Significantly

New data released yesterday by the Minneapolis Association of REALTORs shows a trend discussed several times on this blog:  the amount of inventory on the market continues to fall from the historic highs we've seen over the past 4-5 years.  In fact, inventory has fallen to roughly 2004 levels, and is down 25% in just the past year.

For the past few years, the buzz has been that we are in a "buyer's market".  Buyers could get everything for nothing, and sellers were simply at their mercy.  However, this data confirms what many have been noting:  there is significantly more balance in the market than housing prices seem to indicate.  Most economists feel that it is only a matter of time before the decrease in inventory leads to small price increases.

This is not to suggest that the housing market is out of the woods yet - a disproportionately high amount of sales continue to be foreclosures and short sales.  Many analysts fear that these distressed sales will continue to put negative pressure on traditional sellers, and it is tough to estimate exactly how many properties are in the foreclosure pipeline.

At the end of the day, we continue to see signs of life in the real estate market, but it will be interesting to see just how long it takes until we see a "normal" market again...whatever "normal" means.

Purchasing a HUD Home

Department of HUD Logo - Copyright HUD

Along with the rise in bank-owned foreclosures has come a rise in properties owned and sold by HUD.  HUD is the Department of Housing and Urban Development, an executive branch agency run by the federal government.  HUD is the department that runs the Federal Housing Administration, better known as FHA.  Any recent buyer or seller of real estate will surely attest to the importance of HUD and FHA in these tough real estate times.

When a homeowner with an FHA-backed loan defaults, the house is typically taken back by HUD, not the bank that serviced the loan.  This really doesn't mean much to potential buyers, but it is important to work with an agent that understands how the HUD process works.

Dealing with HUD is quite a bit different than dealing with a traditional seller, and is even different than dealing with one of the large banking institutions (i.e. Wells Fargo, Bank of America, Citi, etc..).  The most notable difference is that HUD accepts offers based on a bidding system.  This leaves very little room for negotiating, and typically forces buyers to offer their strongest bid right away.

Another major difference with HUD properties relates to pricing.  A common tactic used by HUD is to under-price a home.  A buyer may think that, at the list price, they would get a great deal.  However, if the home is under-priced, it will often times sell well above the list price.  This is important because if the buyer really wants the home, they may have to offer above list price.  In today's tough market, it is very hard to convince buyers that they should be offering above a list price.

There is one area where HUD properties are very similar to ordinary foreclosures.  There are certain things that are non-negotiable with HUD.  For example, if the water is turned off at the property (which is typically the case for HUD properties), the cost is borne by the buyer.  In a normal sale, you might be able to negotiate to have the water turned on at the seller's expense.  When dealing with HUD properties, these kinds of costs are almost always paid by the buyer.  This is something to keep in mind when determining how much to offer.

There is a lot more that could be said about HUD properties, but I think this is a good start.  And as always, if you have specific questions please reach out to me.  I have dealt with several HUD properties and I can help to seamlessly guide you through the process.