Archive for September, 2009

Minneapolis Duplex Market Race Heats Up

said on September 29th, 2009 categorized under: Twin Cities Real Est


from goOn your mark. Get set. Go!

As the summer drew to an end, the race to qualify for the $8000 first time home buyer tax credit before the November 30 deadline started a mad dash toward the finish line.

The numbers are staggering.

Pending home sales for the week ending September 19 were up 33.5 percent over last year’s total for the same week.

New listings were up slightly too, with 3.2 percent more new inventory coming on the market than the same week in 2008.

Duplex and small multi-family sales in the Twin Cities were also up 35 percent from their 2008 mark.

But here’s the staggering part. The average number of days a duplex was on the market before selling last year was 89.9. This year? 41.5. In other words, the average market time for a duplex has dropped by more than half.

Of those properties that received purchase agreements for the week, 84.8 percent involve negotiations with a lender. This is up slightly from the 79.4 percent of the sales for the same week in 2008.  Last year, 76.5 percent of the properties that sold were at prices under $200,000. For the same week this year, 66.7 percent fell below that mark.

The average off market price of a Minneapolis or St Paul duplex for the week was $128,780. This represents a drop of a mere one percent when compared with 2008.

The amount of new inventory also continues to drop; down 27.7 percent from the week in 2008.

Again, much of this activity may be the result of the approaching deadline for the tax credit. We’ll have to wait until December to analyze the results.

1 Comment »

money treeWhile apartment buildings and small multi-family properties might be not be identical twins, they are, nonetheless, siblings. That’s why a report issued by National Association of Realtors research economist George Ratiu  last week was of interest.

There have been persistent reports in the last year or two of the real estate crisis striking the commercial market as well as the single family homes sector.

Retail real estate, for example, has seen declines in property values as consumers pinch pennies and stores close their doors leaving vacancies in their wake. Office buildings have suffered similar fates.

But multifamily properties?

They continue to bloom where they are planted.

According to Ratiu, during the second and third quarters of 2009, demand for rental units increased by more than 89,000 units nationally. It’s important to note that this measure was based on the net absorption rate, which is the amont of rentals leased in a specific area during a specific period of time, less the space vacated in the same area and stretch of time.

Lower vacancy rates mean apartments have not seen the same dramatic decline in revenue, which has allowed them to maintain their value.

The national apartment vacancy rate is now at about 7.4 percent, which is below where it’s been during previous recessions.

According to syndicated real estate reporter Kenneth R. Harney, two additional sources site multifamily property investments as faring better than other commercial buildings in tough economic times.

Harney reports The National Council of Real Estate Investment Fiduciaries reported earlier in the year that multifamily investment returns exceeded all others in the decade it studied.

A study for the National Multi Housing Council also found that over the last 20 years, multifamily buildings have averaged returns of 10.1 percent, while industrail properties have averaged 9.25 percent and office buildings 7.8 percent.

Of course, there’s risk with every kind of investment, and all real estate is local. But statistics seem to indicate multifamily housing like duplexes, triplexes, fourplexes and apartments, continue to be worthy of investigation.

The Housing Market: By The Numbers

said on September 25th, 2009 categorized under: Twin Cities Real Est


numbersThere was a lot of news in the housing sector this week.

First came the report that existing single family home sales, declined 2.7 percent in August from their July mark. While this drop of 140,000 units was disappointing, sales for the month were nonetheless 3.4 percent above their August 2008, mark.

This was the first setback in four months, during which sales rose a total of 15.2 percent.

A survey conducted by the National Association of Realtors reveals first-time home buyers purchased 30 percent of the homes sold in August, and 31 percent of all transactions were for lender-mediated properties.

Of course, these distressed properties tend to warp the median price of existing homes. Selling for 15 to 20 percent less than those marketed by traditional sellers, the foreclosures helped force the national median existing home price down 12.5 percent to $177,700.

New construction accounted for 6.7 percent of the total homes for sale. In other words, traditional homes account for the remaining 93.3 percent.

The one bit of good news is the amount of inventory for both has dropped significantly.

Window Closing On Minneapolis Duplex Short Sales

said on September 24th, 2009 categorized under: Buying A Duplex

1 Comment »

Open white windowIf you’re looking to purchase a property in time to qualify for the $8000 first time home buyer tax credit, it’s time to dive for the closing window; especially if you’re interested in a duplex that’s a short sale.

A short sale property is one that can’t be sold for an amount equal to what the seller owes.  The seller may or may not be delinquent on the payments. In either case, selling the property usually requires lengthy, drawn out negotiations with the lender or lenders who hold the note.

On average, most short sales seem to take about 90 days to resolve. However, some may take as long as six months, depending on the banks involved.

With the tax credit set to expire on November 30, and loans and title work taking, on average, 30-45 days, a 90 day negotiation would put closing on a duplex well past the deadline.

This is bad news for short sale duplex sellers, as many agents have been steering their first time home buyers away from short sales for several weeks for this very reason.

Of course, every cloud has a silver lining. And a patient investor who writes an offer now may reap huge benefits when the rush for the tax credit exit is over.

Minneapolis Duplex Sales Weekend At The Lake

said on September 22nd, 2009 categorized under: Twin Cities Real Est


loon coupleMAAR released its weekly activity report today and, once again, due to Labor Day falling late this year, it skews any comparisions of the first weeks of September for 2008 and 2009.

At least in the single family sector anyway.

New listings for the week ending September 12, 2009, were down 12.9 percent from the same week in 2008. While pending sales dropped dramatically during the holiday stretch from the week before, the good news is they were actually 7.3 percent higher than they were one year ago.

Meanwhile, the small multi-family market buyers and sellers didn’t seem to notice there was a three day weekend. 

Pending sales were actually up 25 percent week over week, with 73 percent of this year’s purchase agreements coming on lender mediated properties. This is not dramatically different from the 23 percent involving a lender at the negotiating table in 2008.

The average off market price for the week, however, was $111,890;  down from 2008’s $124,100.

There were 43 percent new listings for the week than last year. While upon initial glance this may seem to be last-weekend-at-the-cabin related, the 46 new listings are not too far off the weekly average for the year. Seventy percent of these new duplex opportunities will involve lenders in the negotiations, compared with the 59 percent that did for the week last year.

Next week should provide a more accurate reflection of marketplace patterns.

What Should You Repair First In Your New Minneapolis Duplex?

said on September 21st, 2009 categorized under: Buying A Duplex


bicycle trapped in snowIf you buy and intend to owner occupy a foreclosed Minneapolis duplex, triplex or fourplex, it’s likely that it need some work.

So which unit should you rehab first?

While the answer may seem obvious, new landlords don’t see something standing right in front of them.

You should repair and improve the rental unit(s) first. Especially now that it’s almost October. In Minnesota.


Even though it takes only one or two days, people don’t like to move in winter. More specifically, tenants don’t like to move when the thermometer is in single digits.

Something about getting stuck in the snow, slipping on ice, tracking into the house…

And if your rental unit is empty?

You spend the whole winter paying one hundred percent of the mortgage yourself.

If that was your goal, wouldn’t you simply have purchased a single family home?

Can Minneapolis Duplex Market Survive Without The Tax Credit?

said on September 18th, 2009 categorized under: Legislation


Hourglass. The sand falls forming the dollar sign.As the sand in the hourglass of the $8000 first time home buyer tax credit begins to run out, an article in the New York Times this week reported there are doubts that the housing market can function without it.

The Times article estimates that as many as 40 percent of all home buyers this year qualify for the credit. In fact, the National Association of Realtors estimates the credit is responsible for 350,000 in sales this year alone. Moody’s, however, is still more optimistic, putting the figure at 400,000.

Evidence to support this may be found in the fact that mortgage applications for the week ending September 3, showed the largest gain since early April.

Home builders and the National Association of Realtors want Congress to extend the tax credit through at least next summer. The groups are suggesting the program be expanded to $15,000, and the credit granted to all buyers.

Republican Senator Johnny Isakson of Georgia, the sponsor of the original Senate bill, is working on just that. Isakson is submitting a new bill that would give a maximum $15,000 tax credit to any buyer who stays in the home for at least two years.

A former Realtor, Isakson accurately states that “The problem now is not first-time buyers, it’s the move-up market…”

Don’t hold out for the $15,000 credit, however. Washington, being the contentious place it is, is sure to hotly debate any additional stimulus package. If a new housing tax credit is passed at all, expect it to be a watered down version of Isakson’s original idea.

You Mean I Need A License For That?

said on September 17th, 2009 categorized under: Legal Stuff


Adorable border collie and her homeIs there ever a reason you don’t need a rental license in the city of Minneapolis? For any kind of house?

What if you’re selling your Minneapolis duplex, do you need one? After all, you’re almost done with the property, right?  How about if you live there?

The answer is yes. To all of the above.

As long as there are tenants, the city of Minneapolis requires any type of  rental dwelling to have a license; whether it’s a single family home, duplex, apartment or rooming house, regardless of or whether or not it’s for sale.

And yes, if the duplex is owner occupied, it too needs to be licensed.

The rental license application fee is $84. The fine for not having a license is $500.

What if you buy a Minneapolis duplex?

Provided the property has been a licensed rental property in the past, your license application fee is the same $84.

As of June 8, 2009, however, the city doesn’t stop there. When the property changes ownership, you are required to pay a $450 “change of ownership inspection fee”.  A truth in sale of housing report doesn’t count, nor does the independent inspection you paid for prior to purchasing it. The city wants to look at it again to make sure it’s in compliance.

What if you’ve decided to rent out your house instead of selling it? Well, as it’s never been a rental property before, the city requires not only the $84 application fee, but an additional $1000 for inspections.

Are you surprised? After all, these are the folks that require us to license dogs.

Bionic Minneapolis Duplex Sales Distort Market

said on September 15th, 2009 categorized under: Twin Cities Real Est


six million dollarThe Monday holidays always remind me of the Six Million Dollar Man.

For those of you too young to remember the television show, the main character was part man, part machine. And whenever he did something stupendous due to the robotics in his arm or leg, it was shown in slow motion; as if we wouldn’t have been quite as impressed had we seen it in real time.

That’s how the real estate market seems to move on the weeks before and after Monday holidays; in slow motion.

For the week ending September 5, there were 42.9 percent more pending sales in the single family home market than there were one year ago. Of course, a year ago at that time it was the Labor Day weekend. And next week, when we see the numbers for the week ending September 12, it too will seem odd, because it will include 2009’s late Labor Day.

In the multi-family market, pending sales were up 55 percent over last year’s holiday-stifled transactions.  Off market prices for the week continued to lag behind, however, averaging $115,256 in comparison to 2008’s $137,150.

Eighty-four percent of the week’s pended sales involved a lender in the mediation, while 25 percent of those for the same week in 2008 did.

New listings week over week were actually down eight percent, which may actually reveal itself to be a truly remarkable feat. After all, new listings are always slow over a holiday, and the 2009 inventory was down from that.

Of those fresh to the market doors, 40 percent in 2009 belonged to traditional sellers. This represents a significant drop from the 25 percent of the market represented by human sellers in 2008.

Expect more bad special effects next week when the holiday statistics skew the other way.

1 Comment »

homebuyingfordummiesThe other day a client told me he couldn’t write an offer on a property because he had to go home and read.

When I asked what piece of literature was so pressing, he answered, Home Buying for Dummies.

Now I’m a big fan of the Dummies books. They’ve sure simplified a lot of things for countless people.

I’m also a firm believer in being a fully informed consumer.

However, what I didn’t understand is why my client didn’t ask me those questions. Then I realized, it’s probably because he thinks I’m a sales person.

The biggest part of my job isn’t looking at duplexes, writing offers, or getting listing contracts signed.  Instead, I spend most of my time teaching.

I’ve learned a lot from my state-required ongoing real estate education. But I’ve learned far more by doing; from the experiences I and my clients have had, and those I’ve heard of from peers.

I have clients who have all sorts of amazing, wonderful careers. They’re software experts, fly Blackawk helicopters, drive trucks, are financial analysts, green energy consultants, attorneys, and on and on and on. As a whole, they’re incredibly bright people who are experts at what they do.

And if I ever had a question in any of those fields, they would be my first call. I would hope, if they ever had a real estate question, I would be theres.

Full time Realtors actively work day in and day out in the very market we’re all hearing so much about. A Realtor can not only call you when she finds a great deal, she’s also on the front lines and knows long before the media does if the market’s changing.

A Realtor can recognize and point out hazards like friable asbestos, explain 203(k) loans, recommend contractors, recognize and identify trends, explain the inspection process, tell you the difference between REO properties and those that are in the foreclosure process, and a plethora of other up-to-the-minute information.

More importantly, a Realtor works in your market. The author of the Home Buying For Dummies book is a seasoned real estate veteran. However, his business was is in San Francisco. Not Minneapolis/St Paul.

I’m like the chemistry professor. Yes, it helps to read the book before class, but if you’re actually conducting an experiment, it might be best if you had someone experienced on hand; just in case.

If you have a question, don’t be afraid to ask. I’m happy to help. It’s my job.

  • Page 1 of 2
  • 1
  • 2
  • >