Your Market Update - June 2014

With the official start of summer right around the corner, let's take a look at the Twin Cities real estate market!

The biggest news we have is on the inventory-front.  Home buyers are finally starting to see more homes to choose from - in June, new listings were up 3% (compared to June 2013) and pending sales were down 9%.  This has given buyers more options than they've had in well over a year. 

Along with increased inventory, absorption rates have fallen.  The absorption rate measures how quickly homes come on and off the market.  In June, the absorption rate fell to 3.9 months, meaning it would take 3.9 months for all homes on the market to sell (assuming no new listings enter the market). 

The mix of home sales continues to move away from distressed properties (foreclosures and short sales) and towards traditional sales.  This continues to be a welcome sign as we move out of a very difficult 5-year stretch for the housing market. 

Homes continue to sell quickly (from a relative standpoint).  In June, it took an average of 80 days for a home to sell.  Compare that to 2011, when homes were taking upwards of 140 days to sell.  Looking at these numbers, it's pretty amazing how quickly things have changed.

And now, the part most people care about - home prices.  In June, the median sales price rose 8.2% to $210,000.  We've now seen 27 consecutive months of year-over-year price gains.  This is certainly welcome news to traditional sellers, who have not seen a market this strong since the bubble-days of the mid 2000's.

If you have specific questions about your area or neighborhood, please feel free to contact me!  My phone number is 763-213-4617 and email is josh.pelto@remax.net

GUEST POST: Your Guide to VA Loans

Our guest blogger is Ryan Juliot (NMLSR ID#369051), Senior Mortgage Banker at Lake Area Mortgage, a Division of Lake Area Bank.  You can find his contact information at the bottom of the post.

In appreciation of the recent holiday I would like to talk a little bit about Veterans Affairs (VA) loans.  VA loans are government guaranteed loans that offer Veterans excellent financing terms for their home mortgages.  These loans require no down payment and do not carry any monthly private mortgage insurance (PMI).  VA Loans also typically offer lower interest rates than standard conventional financing.  VA Loans generally require an upfront funding fee; but this fee can be rolled into the financing, and is waived if the Veteran has any percentage of disability.   

Eligibility requirements change depending on the time period in which the Veteran has served and which branch of the military they served in.  If the Veteran is currently on active duty they will need 90 days continuous active duty to qualify. There are exceptions if the Veteran was enlisted but did not serve on active duty and for spouses of Veterans.  If the Veteran has served in the National Guard or were a Reserves Member they must have six years of service.   If the National Guard or Reserve Member has been called up to active duty they may be eligible for a VA loan before the full six years of service.   

These are just a couple of the many different ways a Veteran can qualify for a VA loan.  If you are interested in seeing if you qualify for a VA loan or would like more information please call me direct at (763) 607-4339 or email me at rjuliot@lakeareamtg.com. 

Thank you to all those who have served and those who are currently serving.  Your sacrifice and bravery do not go unnoticed.  You are the true heroes and I am honored to help you reach the American dream that you have fought so hard to protect.

Lake Area Mortgage, A Division of Lake Area Bank is Member FDIC and an Equal Housing Lender.

What To Expect When Buying a Foreclosed Property

Although the number of foreclosed homes for sale has fallen dramatically over the past year, they are still out there and can oftentimes represent too good of a deal to pass up.  However, buyers should be aware that purchasing a foreclosure is quite different than purchasing a traditional (non-distressed) home.  Here is a list of things to be cognizant of when purchasing a foreclosed home.

• All foreclosed homes are sold "AS IS".  You'll see this in writing approximately 10 times when you are submitting your offer - the foreclosing bank does not have knowledge of the property or its condition, and thus cannot make any warranties to the buyer. 
• Banks do not operate on the same time-frames as we do.  Working with banks can be frustrating.  Expect delays, misdirection, poor communication, etc...  Buying a foreclosed home takes a fair amount of patience.
• Utilties.  One of the most difficult aspects about purchasing a foreclosed home relates to the utilities.  Oftentimes the bank has the water (or gas or electric) shut off, which poses a serious issue for the buyers' inspection and appraisal.  The appraisal piece is particularly important - there are (essentially) no lenders that will loan money on a home without being able to verify that the home has running water.  Make sure your agent looks into this.
• Paperwork, paperwork, paperwork.  Most foreclosing banks use their own purchase agreement to facilitate the sale of the home.  They do this for an obvious reason - they sell houses in 50 different states, each which uses it's own state-approved forms (for example, our Minnesota forms are approved by the Minnesota Association of REALTORS).  Make sure you understand what you are signing, as the forms will differ from the paperwork you might be used to seeing.

This is far from all-encompassing, but should give you some ideas as to what to look for when purchasing a foreclosure.  And of course if you want more detailed/specific information, you can always contact me at josh.pelto@remax.net or (763) 213-4617!

Another Client Testimonial!

There is nothing better than closing a home sale and having extremely pleased clients.  I recently helped a family friend purchase a home and received a heartfelt testimonial from her.  She's happy, and because of that I'm also happy!

Here's the testimonial:

"Josh - Words cannot express the depth of my appreciation for all you've done.  This is more than just buying a home - it's truly make a dream come true for me and I couldn't have done it without you!"

 Selling real estate can be stressful and problem-filled, but kind words like this make it all worth while!

Would You Like $2000 From the IRS? Every Year!

Our guest blogger is Kay Halvorson, a Certified Mortgage Planning Specialist with Mortgages Unlimited.  Her contact information can be found at the bottom of this post.

With so many first-time homebuyers looking for their first home, I want to tell you about a superb new program for them.  Recently I had a client, Susan, who had met with several loan officers before being referred to me.  No one had mentioned this program to her.

After we discussed her situation and financial goals, I told her about this new program for qualified first-time homebuyers.  We qualified Susan for a conventional mortgage with only 3% down!  In addition, she qualified for down payment assistance.  The down payment assistance is not a grant.  It is a second mortgage that the homebuyer pays back (either when they sell their home or move, or they pay back the loan in small monthly payments over a ten year period).  The down payment assistance helped her with the down payment and closing costs so she also had more resources for some remodeling she wanted to do on her new home.

BEST OF ALL, this is a Mortgage Credit Certificate program where she will get a tax credit of up to $2,000 back on her federal taxes EVERY YEAR until she moves, sells or refinances!  This credit reduces her tax liability, dollar for dollar, on her federal taxes by up to $2,000 each year.  This program benefits those borrowers who have a federal tax liability and either reduces their tax bill by up to $2,000 per year or increases their refund from the IRS of up to $2,000 per year as long as they live in the home as their primary residence. 

Susan said, “I am so thrilled to be a first-time homeowner!  Being able to own my very own property to call home is a feeling like no other.”

To find out more about this Mortgage Credit Certificate program and see if you qualify, please call or email me.

Kay Halvorson
Mortgages Unlimited, Inc. (NMLS# 251210)
Cell:612-720-1200 
Email:  khalvorson@muihomeloans.com